What is spot price (spotpris)?

A term that has become increasingly common in conversations at the moment is “spot price”. But what does it actually mean? Simply put, the “spot price” is the purchase price that the electricity supply company pays for your electricity. However, the spot price comprises several different parts, which we explain step by step below.

The spot price is set hour by hour on Nord Pool, the Nordic electricity exchange, based on supply and demand. The spot price is then used as the basis for calculating the price that the electricity supply company charges for selling the electricity on to us – the consumers – out on the electricity grid (elnätet).

The cost for the electricity you use is not based exclusively on the spot price, however. It is also determined by other factors such as energy tax (energiskatt), VAT and power transmission and distribution network fees (elnätsavgifter).

Who decides the spot price?

In partnership with our neighbouring countries – Denmark, Finland, Norway and the Baltic States – Sweden has set up a shared electricity market where the prices are set on Nord Pool, the Nordic electricity exchange. The majority of all electricity trade (elhandel) in Sweden is run through Nord Pool. The price that Nord Pool sets is the spot price.

How is the spot price set?

If demand is low and the majority of the available electricity comes from wind and hydropower, the price falls. If, in contrast, demand is high and the majority of the electricity comes from nuclear power or other sources of energy with higher production costs, the price rises.

The spot price is normally higher during the day when industries are operating, and lower at night when electricity consumption is lower. As a general rule, the spot price is lower in milder, wetter weather, while colder temperatures and dry weather result in a higher spot price.

The spot price is set around lunchtime for a full day in advance – divided up hour by hour over the coming day.

What factors affect the spot price?

The spot price is affected by a range of different factors. For example, the price is influenced by supply and demand, how full the Swedish reservoirs are, how strongly the wind is blowing, and what the outside temperature is.

Here are some other examples of factors that can affect the spot price:

  • available power from Swedish nuclear power plants
  • raw material prices
  • political decisions.

How does the spot price affect me?

The spot price primarily affects people who have entered into a variable price electricity agreement (rörligt elavtal). The higher the cost the electricity supply company needs to pay on Nord Pool, the more you, as a consumer, will have to pay your electricity supply company. If you have a variable price electricity agreement, the cost to you follows the development in the spot price, which means it can go up or down. If you have a fixed price electricity agreement (fast elavtal), you will not be affected by major fluctuations in price, but you may find yourself paying more in the long term.

The spot price is also influenced by which electricity region (elområde) you live in, because the price is different in the different regions. Electricity consumption is higher in the south of Sweden than in the north, while electricity production in the north of Sweden is higher than in electricity region 4 (the south). As a result, large volumes of electricity have to be transported from the north of the country to the south, which in turn means that electricity prices are usually higher in Southern Sweden than in the northern region. Find out more about the electricity regions in Sweden

The spot price primarily affects people who have a variable price electricity contract. In this case, the price they pay is based on the spot price and their actual electricity consumption. In contrast, those people who have fixed price electricity contracts pay the same price per kWh every month. In addition to this come the costs for tax, VAT and the fees charged by the electricity supplier and the electricity grid owner (elnätsägaren).

The electricity charge you pay therefore consists of three parts: the price you pay to your electricity supply company, the fee for transmission via the electricity grid (elnätet) and the taxes and fees you have to pay to the Swedish state and local authorities. The spot price affects the price you pay to your electricity supply company. Find out more about what makes up the cost of your electricity.

Can I save money on the spot price?

If you have an agreement based on hourly rates, you can benefit from low spot prices. Nord Pool sets the spot price for the coming day roughly one day in advance.

This means that you have the opportunity to affect the cost you pay by checking when during the day the spot price is lower. Generally speaking, the spot price is lower during the night than during the day, because other electricity consumption is lower then, and this is therefore a good time to plan to run your dishwasher or washing machine. In order to save money, you can run your dishwasher at night rather than during the day.