Sweden's Energy Funds Pile Up Amidst Grid Challenges

Swedish electricity consumers are paying billions in fees, yet the funds are accumulating at the government agency. This is an unreasonable situation.

165 billion SEK is more than a tenth of the national budget. It is also what Swedish electricity consumers are estimated to pay due to the enormous differences in electricity prices in recent years. The larger these differences become, the more money the state-owned enterprise Svenska kraftnät receives in so-called bottleneck revenues.

The years 2020-2025 are expected to set records, writes Dagens industri. This follows an upward revision of the current year's forecast.

Bottleneck revenues are effectively paid by electricity customers and result from price differences between the four electricity areas, which in turn are due to limitations in transmission capacity. The purpose is for the money to be used to strengthen the power grid. More and better lines should allow electricity to flow from north to south.

However, progress is slow. Svenska kraftnät cannot spend the money fast enough. The price differences, and thus the bottleneck revenues, have been so high in recent years that the agency is accumulating funds.

This is a sign that something is wrong.

Funds are needed not only to expand the grids but also to create more production.

How fortunate that there are 165 billion just lying around, some might think. But it doesn't help.

"Electricity production in southern Sweden, which has been significantly weakened mainly by closed nuclear power, must also be strengthened," says Svenska kraftnät's acting Director General Peter Wigert to Di.

How fortunate that there are 165 billion just lying around, some might think. But it doesn't help. According to EU regulations, the capital cannot be used to build production. Bottleneck revenues can only go to the grids, and in some cases back to customers, as during the electricity crisis of 2022-23.

This is an unreasonable order. Wigert is right. To create a robust power system, it is not enough to improve transmission capacity between different parts of the country. A lack of stable electricity production also leads to a deterioration in the quality of the power grid.

In addition, there are pure security aspects. Through the invasion of Ukraine, Russia has shown that it does not hesitate to attack civilian targets, such as power supplies. From a security perspective, it is therefore crucial to be able to operate the power system with so-called island operation. Larger cities must be able to disconnect from the national transmission network and instead use local electricity production.

But for this to be possible, local electricity production is required. It is not available to a sufficient extent.

Here, Energy Minister Ebba Busch has a clear topic of discussion when she meets her colleagues in Brussels. The EU's electricity market regulation must be updated. Sweden must be able to use the bottleneck billions to invest in new, absolutely necessary electricity production in the form of pumped storage, gas plants, and in a few years' time, nuclear power. This would help fulfill the purpose of the regulations, namely to level out electricity prices. The opposite is nothing but a waste of electricity customers' money.