Sweden faces higher power prices as EU warns of difficult winter

Sweden could face high electricity prices this winter, as the European Commission warns that Europe is heading for a very difficult winter with higher energy costs, SVT reports.

“We are facing a very, very difficult winter when it comes to higher energy prices,” Commission spokesperson Anna-Kaisa Itkonen said on Wednesday. She described the situation as unstable and difficult to predict, and said the crisis affects households’ and businesses’ ability to afford energy.

Magnus Thorstensson, an electricity market analyst at Energiföretagen Sverige, a Swedish energy industry organisation, said he shared the Commission’s assessment. Weather will be a major factor, but fuel prices will also matter. The war in Ukraine and the crisis around the Strait of Hormuz are affecting fuel prices and, in turn, electricity prices, he said. Natural gas prices are particularly important.

Water reserves for hydropower are also below normal. The hydrological balance, which includes water in reservoirs and waterways, is about 15 terawatt-hours below its usual level, Thorstensson said. That leaves hydropower less able to cushion the effect of high prices on the European continent, meaning those prices could have a greater impact in Sweden.

A cold, calm winter with little sunshine could put further pressure on prices. The energy industry calls a period with little wind or sun a “Dunkelflaute”. Several Swedish nuclear reactors are also offline for maintenance, but their owners have said they plan to return them to operation in October and November, Thorstensson said.

Southern Sweden’s electricity price area 4 is particularly exposed because it is strongly connected to the continental market and has a weaker power balance, he said.