In recent years, Sweden has experienced significant fluctuations in electricity prices, severely impacting households and businesses. The current situation stems from multiple factors, both domestic and international. Articles from Expressen describe how electricity prices are soaring, forcing some households to take drastic measures, such as turning off heating. With the introduction of new systems and methods for electricity transmission, the market now faces new opportunities and challenges. Let us examine the reasons behind these price swings and who should be held accountable.

Why Are Electricity Prices Soaring?

1. International Factors:
   • Russia’s invasion of Ukraine has led to energy crises across Europe, with disruptions in gas supplies and an increased reliance on electricity production.
   • High electricity demand due to nuclear power plant shutdowns in several countries, along with a strong transition to renewable energy, which has not yet fully met the demand.
2. Swedish Factors:
   • Sweden has divided its electricity system into four price zones. The southern regions, which rely more on imported electricity, have seen the largest price increases.
   • Investments in the national grid and production have not kept pace with demand. Experts point out that maintenance and modernization of the electricity grid have been neglected for a long time.
   • The shutdown of Swedish nuclear power plants has created a production gap that wind and hydropower cannot always fill.
   • The introduction of flow-based capacity calculation in October 2024 has had a direct impact on prices. This method optimizes electricity transmission between regions, resulting in higher prices in the north (SE1-SE3) and lower prices in the south (SE4).

Why Aren’t More Investments Made in the National Grid?

Expanding the national grid is a complex and costly process. The grid is owned and operated by Svenska kraftnät, which has limited resources and often faces lengthy approval processes. Key factors include:

• Bureaucracy: Approvals for new power lines can take up to 10 years. However, the government has proposed legislative changes to shorten these processes, with the new law planned to take effect on July 1, 2024.
• Local Resistance: Protests against new power lines often arise due to environmental and land issues.
• Economy: Investments in the national grid have been deprioritized compared to other state initiatives.

International Comparison

Many Western countries face similar challenges. In Germany, prices have been extremely volatile, partly due to their rapid nuclear phase-out and reliance on Russian gas. Belgium and France share similar situations, with higher electricity prices than Sweden. This has increased demand for Swedish electricity, putting upward pressure on prices in the southern parts of the country.

In the Nordic region, Norway has maintained a more stable situation thanks to its large surplus of hydropower. However, prices have occasionally been high in the southern part of the country. Denmark, with its focus on wind power, has experienced significant price fluctuations when wind levels drop. According to recent data, electricity prices in the Nordic region are considerably lower than in Germany and Belgium but are higher in some southern areas.

The Responsibility of the Government and Political Parties

1. Current Responsibility:
   • The government, led by Ulf Kristersson (Moderates), has proposed several measures during its term to address the electricity crisis, including a capacity mechanism to ensure resource adequacy and legislative changes for faster approval processes.
   • A new energy policy goal of 100% fossil-free electricity production by 2040 was adopted by Parliament on June 20, 2023.
   • Investments in electrification and green transitions have included over SEK 1 billion in the budget.
2. Past Responsibility:
   • Over the past decades, multiple governments, regardless of political alignment, have neglected investments in the national grid and electricity production.
   • Earlier decisions to phase out nuclear power plants without replacing their capacity have played a major role. This can be traced back to the 1980 referendum, which laid the foundation for today’s nuclear power debate.

How Does the Electricity Market Between Countries Work?

The European electricity market is interconnected, meaning Swedish electricity is often exported to countries like Germany, Belgium, and France, where prices are significantly higher. This gives these countries an economic incentive to purchase Swedish electricity, increasing demand and driving up prices in Sweden, particularly in its southern regions. This export helps reduce price disparities in Europe but simultaneously creates challenges for domestic consumers.

Conclusion

Sweden’s energy situation is a result of long-standing political mismanagement, international crises, and technological challenges. The introduction of flow-based capacity calculation brings both opportunities and challenges. In the short term, this has led to higher prices in some regions, but in the long term, it is expected to contribute to a more stable and efficient electricity system. Achieving better stability requires long-term investments in both infrastructure and diversified energy production. The government has taken several initiatives, but questions remain about whether these measures are sufficient and whether they will be implemented in time.