Cheap, clean electricity is not only a climate advantage, but also one of Sweden’s strongest competitive advantages in a geopolitically uncertain world where fossil energy has become both expensive and its availability volatile.
Sweden has a structural electricity surplus, which is increasingly exported to neighbouring countries and onward into the European market. As a result, Swedish electricity prices are increasingly influenced by the continent’s fossil-based marginal pricing—especially during periods of high demand and low availability of renewable energy.
Yet there is no national strategy for creating maximum value from our fossil-free electricity system, one of Sweden's most important competitive advantages.
Several Swedish companies already take responsibility today by securing new renewable electricity on a long-term basis. H&M’s agreement to buy all electricity from Sweden’s largest solar park outside Hultsfred is a clear example.
To create maximum benefit, the following is
required:
Today, Sweden exports electricity, while new domestic industry faces uncertainty about availability, prices and connection lead times. When the surplus is exported, we risk creating value that to a greater extent ends up outside the country. When new domestic demand is added—for example through the establishment of new data centres—it must not stand in the way of existing industry’s ability to transition. Investments in data centres and digital infrastructure are absolutely necessary if Sweden is to remain relevant in the AI and digitalisation race.
Here, Sweden can learn from the United States, where several states set requirements or introduce strong incentives for parallel investments in new energy production. Expansion must not happen at the expense of other sectors that are vital to society. That is a perspective Sweden can learn from.
Several Swedish companies already take responsibility today by securing new renewable electricity on a long-term basis. H&M’s agreement to buy all electricity from Sweden’s largest solar park outside Hultsfred is a clear example.
At its core, Sweden needs a strategy for value-creating electrification, where electricity is used to maximise productivity and build robust domestic value chains.
In this situation, exports and increased interconnection with the outside world play an ever larger role. Through new and reinforced links to neighbouring countries—most recently the Aurora interconnector to Finland—the Nordic electricity markets are further integrated. This has contributed to increased price equalisation between countries and price areas, which at times has meant higher electricity prices in northern Sweden than has historically been the case, despite the region’s large surplus of fossil-free electricity.
When Swedish electricity is, in practice, priced in competition with the continent’s use of fossil energy, the historical price advantage therefore risks being gradually eroded—even though our electricity system is fundamentally fossil-free.
It is worrying that, despite rapidly growing electricity demand, relatively few new large-scale projects have today progressed to the actual construction phase. Measures are therefore needed to reduce uncertainty about future demand and revenue streams, thereby lowering the thresholds for more projects to reach an investment decision and break ground.
To achieve this, increased risk sharing is required to create predictability for producers, industry and investors/financiers, so they dare to invest. An important tool is long-term power purchase agreements (PPAs) with credit support, where public guarantees or state counterparties can strengthen quality and thereby enable financing of new electricity generation capacity.
In addition, clearer coordination is needed between industrial policy and energy policy, so that the establishment of new electricity-intensive industry goes hand in hand with decisions on new generation and the necessary grid investments.
Sweden has a unique opportunity to build future prosperity thanks to the fact that, already after the oil crises of the 1970s, we deliberately began reducing our dependence on fossil energy in the electricity system. The question now is how this advantage is used.
In a couple of decades, we will know whether we invested wisely to create the industry, jobs and competitiveness of the future in Sweden—or whether we allowed our most important competitive advantage to be reduced to an unused opportunity.
Sweden has a structural electricity surplus, which is increasingly exported to neighbouring countries and onward into the European market. As a result, Swedish electricity prices are increasingly influenced by the continent’s fossil-based marginal pricing—especially during periods of high demand and low availability of renewable energy.
Yet there is no national strategy for creating maximum value from our fossil-free electricity system, one of Sweden's most important competitive advantages.
Several Swedish companies already take responsibility today by securing new renewable electricity on a long-term basis. H&M’s agreement to buy all electricity from Sweden’s largest solar park outside Hultsfred is a clear example.
Sara Lindahl
Sustainability Analyst, Danske Bank
1. Prioritisation
First, a clearer prioritisation is needed for how electricity should be used. Not every kilowatt-hour creates the same value in the Swedish economy.Today, Sweden exports electricity, while new domestic industry faces uncertainty about availability, prices and connection lead times. When the surplus is exported, we risk creating value that to a greater extent ends up outside the country. When new domestic demand is added—for example through the establishment of new data centres—it must not stand in the way of existing industry’s ability to transition. Investments in data centres and digital infrastructure are absolutely necessary if Sweden is to remain relevant in the AI and digitalisation race.
Here, Sweden can learn from the United States, where several states set requirements or introduce strong incentives for parallel investments in new energy production. Expansion must not happen at the expense of other sectors that are vital to society. That is a perspective Sweden can learn from.
Several Swedish companies already take responsibility today by securing new renewable electricity on a long-term basis. H&M’s agreement to buy all electricity from Sweden’s largest solar park outside Hultsfred is a clear example.
At its core, Sweden needs a strategy for value-creating electrification, where electricity is used to maximise productivity and build robust domestic value chains.
2. Pricing
Second, Sweden must ensure that electricity remains competitively priced even as demand grows rapidly.In this situation, exports and increased interconnection with the outside world play an ever larger role. Through new and reinforced links to neighbouring countries—most recently the Aurora interconnector to Finland—the Nordic electricity markets are further integrated. This has contributed to increased price equalisation between countries and price areas, which at times has meant higher electricity prices in northern Sweden than has historically been the case, despite the region’s large surplus of fossil-free electricity.
When Swedish electricity is, in practice, priced in competition with the continent’s use of fossil energy, the historical price advantage therefore risks being gradually eroded—even though our electricity system is fundamentally fossil-free.
3. Risk sharing
It is worrying that, despite rapidly growing electricity demand, relatively few new large-scale projects have today progressed to the actual construction phase. Measures are therefore needed to reduce uncertainty about future demand and revenue streams, thereby lowering the thresholds for more projects to reach an investment decision and break ground.To achieve this, increased risk sharing is required to create predictability for producers, industry and investors/financiers, so they dare to invest. An important tool is long-term power purchase agreements (PPAs) with credit support, where public guarantees or state counterparties can strengthen quality and thereby enable financing of new electricity generation capacity.
In addition, clearer coordination is needed between industrial policy and energy policy, so that the establishment of new electricity-intensive industry goes hand in hand with decisions on new generation and the necessary grid investments.
Without local acceptance, there is a risk the electricity surplus will shrink.
Sara Lindahl
Sustainability Analyst, Danske Bank
4. Legitimacy
Finally, local legitimacy for new electricity generation must be regained. Today, a large share of new projects is stopped by municipal vetoes, especially within onshore wind power. Without local acceptance, there is a risk the electricity surplus will shrink. If we want to maintain low and stable electricity prices, local communities must receive a clearer share of the benefits through revenue sharing, local development and more predictable permitting processes.Sweden has a unique opportunity to build future prosperity thanks to the fact that, already after the oil crises of the 1970s, we deliberately began reducing our dependence on fossil energy in the electricity system. The question now is how this advantage is used.
In a couple of decades, we will know whether we invested wisely to create the industry, jobs and competitiveness of the future in Sweden—or whether we allowed our most important competitive advantage to be reduced to an unused opportunity.
