Construction of new Swiss nuclear power plant is economically viable, says new report

Switzerland currently has four nuclear power reactors, all of which will reach the end of their functional lives in the late 2030s. A new report has found that constructing a new power plant is not only economically viable but potentially crucial as demand grows.

The study, Economic Impact of Replacing Swiss Nuclear Power Plants, was conducted by the BAK Economics research institute on behalf of the Swiss business federation Economiesuisse.

Using a model-based impact analysis, the study quantified and examined the direct impact that construction and operation of a new Swiss nuclear plant would have on gross domestic product (GDP), employment, and tax revenues.

Electricity demand is rising, whilst the number of nuclear reactors is dropping

Switzerland has four existing nuclear power reactors, which supply around 36% of the country’s electricity year round, rising to almost half in winter. In the late 2030s, the two Beznau plant reactors and the unit at Gösgen will all begin decommissioning works, followed by Leibstadt, which is expected to go offline in 2044.

Meanwhile, electricity demand is expected to rise by up to 33% by 2050 due to increasing electrification.

Generating 15% of project energy consumption- and billions in annual value

Assuming that the current policy of continued expansion into renewables holds, the study works on the scenario of an EPR-type nuclear power plant with an installed capacity of 1.63GW coming online in 2050.

This hypothetical plant would generate 12.1 TWh of electricity annually; 6.7 TWh of which would be produced during the winter, covering 15% of projected consumption during the colder months.

This would increase Switzerland’s energy security, reducing reliance on foreign imports and helping to stabilise seasonal price peaks.

The study did note that risks regarding delays and ballooning costs did remain, even with highly conservative cost estimations, as proven by other EPR projects in Europe.

However, the investments would generate a cumulative domestic value of CHF7.4 billion (USD8.0 billion in 2024 prices), with around 51% of the construction costs retained within Switzerland as value added.

Once operational, the new nuclear plant would generate around CHF1.2 billion in annual value added (both direct and indirect) along the value chain. Dynamic effects would also deliver an extra CHF240 million per year through the impact of lower electricity costs on households, businesses, and export competitiveness.

Over a 60-year operational lifespan, the EPR project would generate an annual value-added impact of CHF1.6 billion and support nearly 3,000 jobs. Taxes paid by the Swiss citizenry and businesses amounts to about CHF95 million per year, meaning that for every franc of subsidy invested – adjusted for the state subsidy component – there is a net GDP impact of CHF1.50 and tax revenue of CHF0.15.

When infrastructure, climate, and environmental effects are factored in, the total economic benefit increases to as much as CHF5.20 per franc of funding.

Switzerland is considering lifting a ban on new nuclear projects

After the Fukushima Daiichi incident in Japan in 2011, Swiss government and parliament swiftly decided to forgo new nuclear projects. This was further codified by the Energy Strategy 2050 initiative, which came into effect in 2018 and sets out a path of gradual withdrawal from nuclear energy. The initiative predicted increased use of renewable energy, but also expected to increase reliance on fossil fuels to supplant power not acquired through nuclear.

However, after a tumultuous start to the 2020s with multiple international tensions straining existing energy supply chains, the dialogue has changed on Swiss nuclear and last year, the Federal Council presented draft legislation that would remove the ban.

“If the current ban on new nuclear power plants were lifted, Switzerland could, if necessary, replace its existing nuclear power plants with modern facilities and thus close part of the expected winter electricity gap,” Economiesuisse said.

Another study from ETH Zurich and the Paul Scherrer Institute, published in late June, concluded that under current conditions, the construction of new nuclear power reactors would not be competitive, but could become profitable with lower construction costs, risk mitigation and state subsidies.