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Who Pays When Generation Fails? Cross-Border Effects of Swedish Nuclear Outages

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  • Lundin, Erik

    (Research Institute of Industrial Economics (IFN))

Abstract

I estimate the cross-border effects of Swedish nuclear outages using hourly data on day-ahead prices, generation, and consumption across 15 bidding zones in Northern Europe from 2021 to 2024. I exploit unplanned outages as exogenous variation in nuclear supply and find that a 1 GW reduction in Swedish nuclear capacity increases the day-ahead price in the SE-Stockholm bidding zone by approximately 28 percent (17 EUR/MWh). Although less precisely estimated, prices in Finland, Denmark, and the Baltics increase by about 12–13 EUR/MWh. In Norway, contemporaneous price effects are largely offset by increased hydro generation, implying an intertemporal displacement of costs as reservoir levels decline. Since short-run demand is approximately inelastic within the relevant price range, changes in consumer surplus are well approximated by the price change multiplied by the quantity consumed. Abstracting from dynamic effects due to hydro substitution, Swedish consumers bear approximately half of the total short-run loss in consumer surplus, with Finland accounting for the largest share among neighboring countries.

Suggested Citation

  • Lundin, Erik, 2026. "Who Pays When Generation Fails? Cross-Border Effects of Swedish Nuclear Outages," Working Paper Series 1556, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1556
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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