The energy market at a glance

You turn on a kettle in Malmö. Where does the electricity come from? Who is paid for it? Who makes sure the lights stay on?

This page answers all three questions in one go. After reading it, you will have a working picture of the Swedish energy market. The rest of the library zooms into each part.

We sell electricity by the kilowatt-hour (kWh). The hard part: wires cannot store much electricity. So the amount made and the amount used must match every second, all day, forever. Most of the strange things about this market come from that one rule.

The journey of one kWh

Step by step, from a river in the north to your kettle in the south.

flowchart TB
    A([1. Source<br/>river, reactor, wind, sun])
    B([2. Power plant<br/>generator spins, output around 20 kV])
    C([3. Step up to 400 kV<br/>at a substation])
    D([4. Long line, 400 kV<br/>owned by Svenska kraftnät])
    E([5. Step down to 130 kV, then 20 kV<br/>at regional substations])
    F([6. Local wire, 400 V<br/>owned by your DSO])
    G([7. Your meter<br/>230 V or 400 V])

    A --> B --> C --> D --> E --> F --> G

    style A fill:#dcfce7,stroke:#15803d,color:#14532d
    style B fill:#dcfce7,stroke:#15803d,color:#14532d
    style C fill:#fef3c7,stroke:#a16207,color:#713f12
    style D fill:#fef3c7,stroke:#a16207,color:#713f12
    style E fill:#fef3c7,stroke:#a16207,color:#713f12
    style F fill:#fef3c7,stroke:#a16207,color:#713f12
    style G fill:#dbeafe,stroke:#1e40af,color:#1e3a8a

Two things to spot.

First, the voltage goes up for the long ride, then back down before it reaches you. Long wires need high voltage to lose less heat. We will see why in a later entry.

Second, two different companies own the wires. Svenska kraftnät is the TSO. It is one company, state owned, and it owns the 400 kV national grid. After the regional substation, the wire belongs to a DSO (a local grid company). Sweden has around 170 DSOs. The biggest are Vattenfall Eldistribution, Ellevio, and E.ON Energidistribution. You cannot pick your DSO. It depends on where you live.

Who pays whom

Money flows along a second chain that runs in parallel.

flowchart TB
    PROD([Producer<br/>operates the power plant])
    MKT([Wholesale market<br/>Nord Pool])
    RET([Retailer<br/>elhandelsföretag])
    YOU([You])

    PROD -->|sells MWh| MKT
    MKT -->|hourly spot price| RET
    RET -->|monthly bill| YOU

    style PROD fill:#dcfce7,stroke:#15803d,color:#14532d
    style MKT fill:#fed7aa,stroke:#c2410c,color:#7c2d12
    style RET fill:#fed7aa,stroke:#c2410c,color:#7c2d12
    style YOU fill:#dbeafe,stroke:#1e40af,color:#1e3a8a

A producer makes the power. Big names in Sweden: Vattenfall, Fortum, Statkraft, OX2.

A retailer sells you a contract. Tibber, Bixia, Greenely, Vattenfall Sälj. The retailer owns no wires and no plants. They just buy MWh on Nord Pool and sell it on to you.

This is why your bill has two parts. The energy part goes to the retailer. The network part (nätavgift) goes to the DSO. The DSO part is the same whoever your retailer is, because the wire is the same. The state then adds energiskatt and 25 percent moms on top.

One more actor to know about. A BRP (balansansvarig) is the company that takes the blame if a plan was wrong. Every MWh has to sit inside some BRP’s portfolio. The BRP signs the imbalance contract with Svenska kraftnät.

How the system stays balanced

Supply and demand must match every second. The system measures the match with one number: the frequency. In Sweden it sits at 50.00 Hz.

flowchart TB
    F([Frequency<br/>nominal 50.00 Hz])

    F --> OK([49.90 to 50.10<br/>healthy])
    F --> LOW([below 49.90<br/>too much demand<br/>reserves push power up])
    F --> HIGH([above 50.10<br/>too much supply<br/>reserves pull power down])

    style F fill:#fef3c7,stroke:#a16207,color:#713f12
    style OK fill:#dcfce7,stroke:#15803d,color:#14532d
    style LOW fill:#fecaca,stroke:#b91c1c,color:#7f1d1d
    style HIGH fill:#fecaca,stroke:#b91c1c,color:#7f1d1d

When the frequency drifts, the system reacts in three steps: FCR in seconds, aFRR in a few minutes, mFRR after 15 minutes. We unpack these in the Reserves entry.

What is special about Sweden

Two facts shape almost everything.

Hydro lives in the north. People live in the south. Most of the cheap hydro is in Norrbotten and Västerbotten. Most of the homes, offices and data centres are around Stockholm, Göteborg, and Malmö. So power flows south on the 400 kV backbone almost every day.

Sweden is split into four bidding zones. Each zone gets its own hourly price.

flowchart TB
    SE1([SE1, Luleå area<br/>lots of hydro, low demand<br/>usually the cheapest])
    SE2([SE2, Sundsvall area<br/>hydro and wind, low demand])
    SE3([SE3, Stockholm area<br/>nuclear, big demand<br/>middle prices])
    SE4([SE4, Malmö area<br/>weak supply, big demand<br/>usually the most expensive])

    SE1 -->|power flows south| SE2
    SE2 -->|power flows south| SE3
    SE3 -->|power flows south| SE4

    style SE1 fill:#dcfce7,stroke:#15803d,color:#14532d
    style SE2 fill:#dcfce7,stroke:#15803d,color:#14532d
    style SE3 fill:#dbeafe,stroke:#1e40af,color:#1e3a8a
    style SE4 fill:#dbeafe,stroke:#1e40af,color:#1e3a8a

When the lines between zones are full, prices in SE4 can be five to ten times higher than SE1 on the same day. Same country. Same hour. Different price.

One day in the market

Every day follows the same clock. Plan yesterday, deliver today, settle next week.

flowchart TB
    A([D-1, 12:00 CET<br/>day-ahead auction closes])
    B([D-1, around 12:42<br/>tomorrow's hourly prices published])
    C([D-1 afternoon onward<br/>intraday market open<br/>traders adjust as forecasts update])
    D([D, the delivery hour<br/>plants produce, reserves balance])
    E([D+1 to D+12<br/>imbalance settled, bills sent])

    A --> B --> C --> D --> E

    style A fill:#fed7aa,stroke:#c2410c,color:#7c2d12
    style B fill:#fed7aa,stroke:#c2410c,color:#7c2d12
    style C fill:#fed7aa,stroke:#c2410c,color:#7c2d12
    style D fill:#fef3c7,stroke:#a16207,color:#713f12
    style E fill:#fed7aa,stroke:#c2410c,color:#7c2d12

Same clock, every day of the year.

Small glossary you can use right away

That is the whole market on one page. Now we slow down and look at each piece.

Next

Start with the thing that gets traded. See kWh: power vs energy.