We live in a time with countless examples of how the supply of energy characterizes both everyday life and major external events. A robust, functioning system for energy supply is an absolute prerequisite for all societal development. And at a time when we must accelerate the phasing out of fossil energy, the supply of electricity plays a crucial role.
But if we are to succeed in building systems for sustainable travel, housing and entrepreneurship that are both part of and contribute to the transition, we must be able to count on reasonable financial conditions and that it can be implemented in time. The change must not be unsustainably expensive, as it will lose momentum and confidence in people.
But for some time we have seen a worrying development in this very respect. Even before Russia’s invasion of Ukraine, electricity costs rose sharply. During the autumn, many households found it difficult to pay their electricity bills.
Many factors affects the price of electricity, not least the distribution of it. In the wake of the electricity price crisis and the war in Ukraine, the energy policy debate has therefore to a greater extent been about how reasonable, fair and long-term predictable electricity prices can be secured.
Among other things, the division into four different electricity price areas (SE1 in northern Norrland, SE2 in southern Norrland, SE3 in central Sweden and SE4 in southern Sweden) has been questioned when electricity customers have experienced dramatic differences in price depending on where they live. During certain periods, the price differences between electricity areas 1 and 3 and 4, respectively, have been very large due to, among other things, a lack of electricity production in the south and insufficient grid transmission capacity in the main grid.
For the Stockholm region, which belongs to electricity area 3, electricity prices have been significantly higher than the northernmost parts of the country, while prices have been cheaper than, for example, Malmö, which is located in electricity area 4.
This has meant increased costs for companies and individuals. In the worst case, the consequences could be that energy and climate change are slowed down in the capital region as an engine for a changing Sweden. Stockholm has high ambitions to reduce carbon dioxide emissions by phasing out fossil fuels. But if this is to be possible, there must be enough capacity to provide enough electricity at reasonable prices.
In light of this, a process is now underway that risks further increasing Stockholmers’ electricity bills. Statliga Svenska kraftnät, which is responsible for the main grid and system responsibility in the country, is considering making the Stockholm region its own electricity price area. The proposal for a new division of electricity price areas has been formulated in a proposal to the European regulatory organization ACER.
Our assessment is that a new structure with the Stockholm region as its own electricity price area risks additional costs for an ordinary residential household in Stockholm of between SEK 5,000 and 7,000 per year, in addition to the price increases that have already affected customers in the southern parts of the country.
This estimate based on the price differences that prevail between price areas 3 and 4 today. The cost increase would be noticeable on both the invoice from the electricity trader and the electricity network invoice.
The Swedish electricity price areas came into being as a consequence of the introduction of the EU’s internal market for electricity. The purpose was for the electricity price areas to contribute to the EU’s internal market for electricity functioning more smoothly and as predictably as possible from a market and competition perspective.
In addition, the assessment was that the high prices that arise in certain electricity price areas would lead to investments in new electricity production and strengthened transmission capacity. In this way, prices would decrease, in the long run, and even out the supply of electricity across the country.
But then electricity price areas introduced in 2011, such results have not been forthcoming. Skåne, which is located in electricity area 4, has not seen much investment in new production of electricity or created better conditions for transmission capacity, despite the highest electricity prices in the country. Instead, it has paid off to fire with oil to produce electricity during the most strenuous hours.
For Skåne, the division of electricity prices into areas has led to permanently high electricity prices. There is a great risk that we would see the same development in Stockholm if the region was made into its own electricity price area. This would damage the competitiveness of Stockholm and the entire country, as the capital region accounts for almost a third of the country’s total production of goods and services.
Instead, we must concentrate on solving the real problems: the capacity problems in the electricity networks, the transmission capacity between electricity price areas and the lack of controllable power. Decision-makers must make the necessary decisions to shorten lead times and develop regulations to promote investments in new electricity networks and new electricity production. Until these are in place, we should not tamper with the regulations for the country’s electricity price areas.
For Stockholm’s part there is only one reasonable solution. We must expand our electricity networks and increase the capacity for importing electricity to Stockholm. New investments and strengthening of the tribal and regional network need to be made possible.
Here, long lead times and permit processes are some of the clearest obstacles to being able to expand and secure sufficient electricity supply at reasonable prices. Today, the lead times are up to 10-15 years to build a new cable, which is unreasonable.
But now there are ambitions from the government to halve these lead times. The Government has an important role to play in ensuring sufficient resources for licensing authorities and in ensuring that proposals for, among other things, increased legal certainty for electricity networks and clarification of technology choices are actually implemented.
The city of Stockholm always comes to push for increased electricity production in the region, but we note that if we are to solve the future power problems in Stockholm, the answer lies in expanding the electricity networks – not in creating unnecessarily high electricity bills for the inhabitants. The strengthening of the electricity networks will cost money, but if we are to secure the electricity effect in the Stockholm region and make the capital competitive in the long term, there is no other way.
It is important that every krona of electricity network customers’ money is used for the right things when we change almost the entire Swedish energy system. The government must now step in and clarify that the proposal to make Stockholm its own electricity price area is not a solution to the lack of capacity in the region. We must invest and solve the power problem for the capital in a way that has the potential to succeed.