The Government of Sweden has decided to abolish its nuclear capacity tax on existing reactors, as well as establishing new reactors to replace traditional ones.
Swedish government has agreed to phase out the taxes over two years starting from 2017.
Nuclear power producers earlier threatened to shut down the loss making facilities if taxes are not relaxed. The country generates 40% of its energy from nine of its nuclear reactor.
The World Nuclear Association has welcomed the decision which will eliminate about $488m worth of taxes.
World Nuclear Association director general Agneta Rising said: "It is excellent news that this tax will be removed, but it should never have been implemented in such a way as to distort the market and put at risk the operation of Sweden’s nuclear power plants, which provide affordable and reliable electricity and form a vital part of its low carbon generation mix."
So far, a number of policy changes have been made to the nuclear energy sector in the country.
A phase-out policy from 1979 was partially reformed by a new energy policy in 1997, which enabled extended operation of its reactors.
The country agreed on a new policy in 2010 which facilitated the construction of new plants.
However, over the last eighteen months, policies promoted by the junior coalition Green Party saw significant increases in nuclear tax.
The deal signed between Swedish government and main opposition parties will see construction of 10 new reactors, replacing ageing facilities built in the 1970s and 80s, Reuters reported.
Rising added: "Today’s announcement is a positive development. It is vital that there is now consistent policy to give operators the confidence to make the investments needed in their plant to allow for their long-term continued operation.
"Other countries should follow Sweden’s example and ensure that their energy policies provide a level playing field that treats all forms of generation equally on their merits."
Swedish power company Vattenfall said that it confirms the political commitment to a future 100% renewable energy system in the country.
Vattenfall CEO Magnus Hall said: "We welcome that a broad parliamentary agreement on the future direction of Swedish energy policy has been reached, giving us the predictability we need.
"The abolishment of the nuclear capacity tax is an important precondition for us to be able to consider the investments needed to secure the long-term operation of our nuclear reactors from the 1980s.
"Today’s agreement is also a positive signal to the 4,000 employees in our nuclear business."