How does the electricity market work?

The electricity market in Sweden consists of a great many parts that are all linked to one another. For us to maintain a reliable supply of electricity, we need to generate electricity in all parts of Sweden, to have a well-functioning electricity market, and to be able both to import and to export electricity.

In Sweden, electricity is produced from a combination of different sources. The majority comes from renewable sources of energy such as hydro-, wind and solar power. Only around 2 percent is produced from fossil fuels.

The electricity market, now and then

The demand for electricity is sure to increase in the future. The reason for this is that we are buying more electric vehicles and that a number of industries are switching to more fossil-free production. New conditions translate into new demands on electricity generators, on electricity grid owners (elnätsägare) and on you – as an electricity consumer.

How is the price of electricity set?

Nord Pool, the Nordic electricity exchange, sets what is known as a spot price (spotpris). A spot price (spotpris) is the price that your electricity supply company pays to buy the electricity that it then sells to you. You can look as Nord Pool as an “electricity wholesaler”, while your electricity supply company is the “reseller”. In this image, we at Tekniska verken are the “trucks” that ship the electricity to your home.

Why is the price of electricity rising at the moment?

There are many factors that affect the price of electricity. For example, in order to achieve the stated climate goals, we need to replace fossil electricity production with electricity from renewable sources. Given that renewable production – wind and solar power, for instance – is increasing, but also dependent on the weather, we may see more fluctuation than usual in electricity prices.

Click here to find out more about the electricity situation right now and to read tips and hints for what you can do yourself to cut your costs.

What is cheaper: fixed or variable price?

There are many advantages and drawbacks associated with fixed price (fast pris) and variable price (rörligt pris) contracts. With a fixed price (fast pris) agreement, your costs remain constant over time, but with a variable price (rörligt pris) contract the price varies from month to month. Find out more about the different agreement Bixia offers.

How many electricity regions (elområden) are there in Sweden?

Sweden is divided into four electricity regions. Electricity region 1 is in the north of the country, while electricity region 4 is in the south.

Why is Sweden divided into electricity regions?

The majority of Swedish electricity production takes place in the north, where it principally comes from hydropower. In this region, the production of electricity is greater than demand. The situation is the opposite in the south of the country, where consumers need more electricity than is produced. On account of this imbalance between production and demand within the country, we need to transport electricity from the north to the south.

Whenever electricity is transported through the grid, there is always some shortfall, known as “transmission loss”. As a result, it is better to spread electricity production evenly throughout the country instead of concentrating it in the north. The boundaries between the electricity regions also indicate where in the national grid we have limited capacity to transfer the full demand for electricity. The intention behind the division is to make it more profitable to divide electricity production up evenly, which in turn reduces the need to transport electricity.

The division is a result of the case in 2011, where Sweden was reported to the European Court because at times, we limited the export of electricity to Denmark on cold winter days.

Our electricity grid (elnät) is linked to Europe

Not only is the electricity grid (elnätet) in Sweden joined together, but we are also linked to other countries in Europe. This is necessary because we both import and export electricity.

There is no shortage of electricity in Sweden, so why do we need to import it? As we currently have no capacity to store large volumes of electricity – and because electricity can be considered “perishable goods” – the electricity we generate has to be used here and now. That is why we sell off the surplus and buy additional supplies at times when we are not generating enough ourselves to cover demand. Because electricity consumption and production are constantly fluctuating, electricity is being transferred all the time – both within Sweden and between the countries of Northern Europe. The links with other countries thus give us the opportunity to access the electricity we need, when we need it. Find out more about how the Swedish electricity system functions at the Swedish Energy Markets Inspectorate.