Electricity prices in southern Sweden are now approaching winter price levels in the middle of summer. With three of six nuclear reactors out of service and calm weather conditions, August is expected to be the year’s second most expensive month for electricity consumers.
Despite low summer consumption, electricity prices in electricity area 4, which covers southern Sweden, have surged to levels normally only seen during the winter months. The average price so far during August stands at 0.63 SEK (€0.056) per kilowatt-hour (kWh) – the highest level since February, according to the Nord Pool electricity exchange.
Forecasts point to even higher prices ahead. According to Bixia’s electricity market analyst Johan Sigvardsson, dry and calm weather conditions are expected to drive prices toward nearly 1 SEK per kWh in southern Sweden during the rest of the month.
“August looks set to become the second most expensive month of the year (so far) after February”, Sigvardsson states in a written comment to the Swedish news agency TT.
Large regional differences
The price differences between the country’s various electricity areas are remarkably large. While southern Sweden struggles with high prices, northern Sweden (electricity areas 1 and 2) remains at extremely low levels – only 0.06-0.07 SEK per kWh on average during August. Central Sweden and northern Götaland (electricity area 3) fall between these extremes at around 0.34 SEK.
Christian Holtz, electricity analyst at consulting firm Merlin&Metis, explains that the extensive nuclear power shutdown is a main cause of the price differences.
— It affects partly because there is less available capacity. And then it often becomes more difficult to handle large transmission of electricity from north to south when you shut down these reactors, says Holtz.
With limited nuclear power production, southern Sweden ends up at practically the same price levels as Germany and the rest of continental Europe. There, prices have been high at times during the summer when French nuclear power was forced to run at reduced capacity due to cooling water that was too warm.
The high temperatures have also led to increased electricity consumption as air conditioning systems have been running at full capacity, according to Christian Holtz.
Worrying parallels to 2022
Another factor that could drive up prices is the declining water levels in Nordic hydropower dams. After a period with levels above normal during spring and early summer, Norwegian water reservoirs now lie clearly below average.
“It’s starting to resemble 2022 when low Norwegian water reservoirs were a strongly contributing cause to the high prices. If it continues to be dry, we will see higher prices this autumn than we’ve become accustomed to in recent years”, warns Johan Sigvardsson.
For consumers, the high exchange prices represent a significant cost. In addition to the actual electricity price, electricity companies’ markups, electricity tax, VAT and grid fees are added, which together amount to well over 1 SEK per kWh.
Sweden has a total of six nuclear reactors: three at Forsmark, two at Ringhals and one at Oskarshamn. Currently, three reactors are shut down: Oskarshamn 3 is out of service until preliminarily September 17, Ringhals 4 is undergoing annual revision until September 14, and Forsmark 1 is stopped due to damaged piping with preliminary restart on August 24.
