Dry summer sets stage for winter electricity price shock

Electricity prices could more than double this winter as low water levels, global conflicts and disrupted supply chains put pressure on the market, SVT reports. Magnus Thorstensson, an electricity market analyst at industry organisation Energiföretagen, advises households to prepare for higher prices.

Sweden and the Nordic region have extensive hydropower, meaning electricity produced by flowing water. But after a warm and dry summer, water levels have fallen well below normal. The shortfall is estimated at 18 terawatt-hours, equivalent to half of Denmark’s total electricity consumption, according to Thorstensson.

The low water levels are expected to drive up prices. Thorstensson estimates that prices could be more than twice as high as during the same period last year.

Southern Sweden expected to be hit hardest

The price shock is expected to affect the entire country, from north to south. As in previous years, however, the impact is expected to be greatest in southern Sweden.

Prices in southern Sweden are forecast at 140 öre per kilowatt-hour, while the winter price has been factored in at 2 kronor per kilowatt-hour in Germany.

Autumn weather could improve outlook

Autumn weather could also influence winter electricity prices. A rainy and windy autumn with mild temperatures could improve the water balance, meaning the availability of water, Thorstensson says. But the opposite could also happen, he warns.

International conflicts are also affecting the market. Russia’s full-scale invasion of Ukraine and the conflict in the Strait of Hormuz have disrupted natural gas supply chains to Europe and pushed up electricity prices.

Even if the conflicts ended tomorrow, supply chain disruptions could continue for some time, Thorstensson says.