Electricity prices in southern Sweden are surging to their highest levels since winter, driven by reduced nuclear power production and low wind conditions. With forecasts predicting a dry and windless August, prices are expected to rise further, echoing the high costs seen in early 2022.
Soaring Electricity Prices in Southern Sweden Amidst Nuclear Power Halt
Soaring Electricity Prices in Southern Sweden Amidst Nuclear Power Halt
Electricity prices in the southernmost part of Sweden are on track to reach their highest levels since last winter. The reduction in nuclear power production and low wind conditions are the main reasons. There are concerning signals of a more expensive autumn ahead.
It is still summer, and electricity consumption is low. However, despite this, electricity prices in the southern part of Sweden (electricity area 4) are surging. According to the electricity exchange Nord Pool, the average price so far in August is at its highest level, 63 öre per kilowatt-hour (kWh), since February.
The rest of August is expected to be dry and windless, according to long-term forecasts, with expected prices nearing one krona per kWh in Skåne and surrounding areas, thereby raising the monthly average, according to Bixia's electricity market analyst Johan Sigvardsson.
"August looks set to be the second most expensive month this year (so far) after February," he says in a written response to TT.
Complicating Transfers
At the same time, electricity prices in all of Norrland, electricity areas 1 and 2, remain at a super low level, 6-7 öre/kWh on average so far in August, while electricity area 3, Svealand and northern Götaland, have prices roughly in between, 34 öre.
The large price differences are partly explained by the fact that much of Swedish nuclear power is currently offline, with three out of six reactors shut down.
"This affects the availability of power. It also often makes it more difficult to manage a large transfer of electricity from north to south when these reactors are shut down," says Christian Holtz, an electricity analyst at the consultancy firm Merlin&Metis.
Electricity area 4 is then very close to the German and continental prices, which have been high at times this summer when French nuclear power has been forced to operate at low capacity due to the cooling water becoming too warm in the summer heat. The high temperatures have also led to air conditioning systems running at full capacity, according to Holtz.
Resembling 2022
Another electricity price concern in the Nordics that may arise is drought, at least in the sense that water reservoirs have been depleted to a greater extent. In spring and early summer, water levels were clearly above normal. In Norway, they are now clearly below.
"It is starting to resemble 2022 when low Norwegian water reservoirs were a major contributing factor to the high prices. If it continues to be dry, we will see higher prices this autumn than we have been used to in recent years," says Johan Sigvardsson.
On top of the market prices come the electricity companies' surcharges, electricity tax, VAT, and network fees, which add up to well over one krona per kWh.