Sweden’s Power Problems Are Down to Grid Manager: Analysts

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Sweden’s grid manager, Svenska Kraftnat, is the reason why large parts of the country are suffering from a lack of power capacity, according to analysts at Swedbank AB.

On Thursday, one of the coldest days of the winter so far, peak power prices in the south of Sweden were almost four times higher than in the northern regions. The blame for that difference lies mainly with Svenska Kraftnat given its inability to deliver on plans for expansion of the grid, the analysts said in a client note.

Bottlenecks have meant that power generated from the country’s vast hydroelectric resources and an expansion of wind power in the north hasn’t been able to reach consumers in the south. Instead, they are increasingly dependent on imports of fossil-fuel generated electricity from Germany, Denmark and Poland.

Svenska Kraftnat’s Chief Financial Officer, Peter Wigert, says he expects to meet future demands, citing plans to invest 70 billion kronor ($8.4 billion) during the next 10 years.

“We are continuously ramping up our investments,” Wigert said when contacted by Bloomberg News. “Still there are very complex issues regarding concessions, permits and appeals standing in the way for some of these projects.”

But the analysts at Swedbank argue that with annual investments running 30% lower than planned since 2010, the Swedish government can no longer rely on its own grid manager to handle the problem and needs to take further action to ensure a smooth transition to a greener economy.

And while politicians from the Moderates, Christian Democratic Party and Liberal Party are blaming last year’s closure of a nuclear reactor in the south of Sweden as a cause of the problem, Swedbank’s analysts are pointing the finger elsewhere.

“Svenska Kraftnat’s planned investments are not being executed,” the analysts said, adding the Swedish government should take more measures to solve the situation.

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The government has also commissioned an independent investigation into the much delayed Southwest-link project, which was set to start at the end of March. The 1,200 megawatt cable connecting the two most southerly areas of Sweden has now been delayed more than 20 times and is running six years behind schedule.

In the meantime the chorus of complaint in Sweden continues to grow louder. On Feb. 1, for example, forestry company Holmen AB said it was forced to cut production of paper products due to high power prices.

©2021 Bloomberg L.P.

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