Sweden Power Report Q2 2016
BMI View: This quarter our fundamental assumptions for Sweden continue to be relevant. Taking intoaccount relatively positive macroeconomic expectations for the Nordic region as well as sector trends, wecontinue to expect power consumption growth in 2016. Similarly, we maintain our long-held view that,while growth expectations in the region are improving, economic woes in the eurozone remain a major riskfactor for the consumption and generation outlook of the country, as more regional instability couldundermine their economic activity.
Latest Updates And Structural Trends
In Sweden, where nuclear and hydropower dominate electricity supply, the energy outlook for themedium- and long term looks less promising. The Social Democrats' and greens' minority government inpower since September 2014 have announced their intention to phase out nuclear power and replace itwith renewables. It should be noted, however, a change to Sweden's long-term energy strategy is likely torequire support from the conservative opposition, thus introducing uncertainty. The deterioration of theoperating environment for nuclear power in Sweden will prompt generators, such as E.ON andVattenfall, to phase down their output, as low electricity prices coupled with new nuclear taxation rulescurb profit potential for power generators. Other domestic sources of electricity, such as hydropower,combined with an increase in electricity imports from Norway will therefore have to pick up slack in thepower mix over the next decade.
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