How the electricity market works

The price of electricity on the free market is determined by supply and demand, just like other markets. At the same time, the electricity market has undergone a transformation in recent years - before, each country had its own power grid, separate from those of other countries. Now, the northern European electricity grids are increasingly interconnected and the market is free. This means that producers have more competitors and that electricity can flow across national borders.

The market is set up in this way to make the best possible use of the combined resources.

98% of the electricity produced in Sweden is fossil-free.

Unlike many other free markets, the electricity market requires a balance between production and consumption - or supply and demand. If there is no balance in the market, it has a direct impact on the price of electricity. An energy market that is largely based on water and wind also becomes a volatile electricity market. There are periods when it rains a lot, when hydropower provides a lot. Other periods there is a drought. Some periods the weather is windy, when the wind turbines spin. Other periods are more calm. Nuclear power is, in these respects, more stable as an energy source because it is not weather dependent. That said - everyone is needed! Because the electricity market thrives on electricity produced from different sources.

Electricity consumption - ever increasing

No one will be surprised if we say that electricity consumption is increasing in Sweden. We are in the midst of an electrification of society that is affecting the future of electricity production worldwide. This is, of course, because we want to reduce our dependency on fossil fuels such as oil and coal so as not to exacerbate climate change and accelerate warming. This means that heavy industry also wants to be at the forefront of developments and electrify its processes. At the same time, the development of electric cars and other vehicles is also progressing rapidly, increasing the demand for electricity throughout society.

During the 1960s and 1970s, Sweden also experienced a dramatic increase in demand for electricity, largely because more and more people started using electricity to heat their homes.

The Nordic electricity exchange, called NordPool, was set up to trade electricity, and about a third of the electricity produced in the Nordic region is sold via NordPool. The rest of the electricity goes to sales regulated in contracts directly between the supplier and the customer.