KEY POINTS
- Sweden’s strategic power reserve tender failed after all bids exceeded the price cap.
- Svenska kraftnat says the grid is more vulnerable this winter.
- The strategic power reserve remains a priority for future reforms.
Sweden’s effort to build a strategic electricity reserve for the coming winter has collapsed after bids exceeded the maximum price allowed, leaving the Nordic country without additional backup generation capacity for its coldest months.
Backup power tender hits roadblock
The national transmission system operator, Svenska kraftnat, confirmed on Tuesday that its tender for up to 800 megawatts (MW) of reserve capacity received three offers, but all surpassed the set ceiling of 120,000 Swedish crowns ($12,777.24) per MW.
The failure means the grid operator cannot contract any suppliers to provide extra power between November 16 and March 15, when heating demand typically surges across the country.
Pontus de Maré, Svenska kraftnat’s operations manager, described the outcome as “worrying” and warned that without a strategic reserve, the Swedish electricity system will be more vulnerable this winter.
Rising risks amid tighter energy balance
According to the grid operator, the rejected bids stem from price restrictions that made participation unattractive for potential providers.
Svenska kraftnat has urged the government and the national energy regulator, the Swedish Energy Market Inspectorate, to review the current cap or risk facing a repeat of this winter’s setback next year.
The agency also said the risk of power shortages remains low for now. However, it warned that the likelihood could increase in coming years as energy consumption outpaces new generation capacity.
This year’s tender was the first conducted under a revised model aligned with European Union state aid regulations, said Reuters. The framework replaced an older approach to ensure compliance with EU competition rules, but the change has introduced tighter limits on pricing and eligibility.
Under the tender conditions, any unit contracted for the strategic power reserve must meet strict reliability requirements and is prohibited from participating in regular or balancing markets during the contract period. Svenska Kraftnät said it will continue working with policymakers to design a more viable solution for future winters.
