Vattenfall's CEO Anna Borg looks on after the presentation of the sales report at the headquarters in Stockholm, Sweden April 29, 2021. Janerik Henriksson/TT News Agency/via REUTERS

STOCKHOLM, June 28 (Reuters) - Swedish state-owned utility Vattenfall said on Tuesday it will begin a pilot study for the potential construction of small nuclear modular reactors to meet rising power demand by boosting generation in southern Sweden.

The study will look into the building of two small modular reactors close to the existing Ringhals nuclear plant in the west coast of Sweden south of Gothenburg, Vattenfall said.

"We will need all fossil-free energy sources to meet the increasing demand for electricity in Sweden," Vattenfall CEO Anna Borg said in a statement.

"Provided that a pilot study concludes that it would be profitable and all other conditions for a future investment decision are met, in particular, new regulations for nuclear power, it should be possible to have the first SMR reactor in operation by the early 2030s."

Swedes voted in 1980 to phase out nuclear power, but attitudes have been shifting.

Sweden's main political parties struck a deal on nuclear power in 2016, agreeing that six existing reactors could continue to operate and that up to 10 new reactors could be built at existing sites.

Unlike in Finland, which in recent years has moved to bring new reactors online, the steep cost of new full-scale plants has been widely seen as making them uneconomical unless a future government agrees to generous subsidies.

Several Swedish parties are reluctant to do so, but small modular reactors (SMRs) require significantly less spending.

"No investment decisions have been made," Borg said.

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Wall Street's main indexes opened higher on Tuesday after China relaxed some COVID-19 quarantine requirements for international travelers, raising hopes of a revival in global growth.

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