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ELECTRICITY

Swedish electricity firms overcharge: study

Sweden's privately-owned electricity companies behave in a "monopolistic" fashion, according to a homeowners advocacy group, which urges customers to be more proactive in choosing an electricity provider.

Swedish electricity firms overcharge: study

Homeowners in Sweden looking to cut back on their winter electricity bill would be well-served to be more proactive in choosing their electricity provider, according to a new study by the Swedish Homeowners Association (Villaägarnas Riksförbund).

The group’s national comparison of different pricing options offered by Swedish electricity providers also revealed that fixed-price contracts can vary widely, depending on location and the provider.

Sweden’s electricity market was deregulated in 1996 and since then customers have been free to pick the provider of their choice.

However, according to the Homeowners Association, companies which provide customers with access to the electricity grid engage in “monopolistic practices.”

The organisation’s review shows that the most expensive electricity companies are private, whereas most of the cheaper options are publicly owned.

“The conclusion is clear. Private, monopolistic companies raise prices to make a profit,” Jakob Eliasson, an energy policy expert with the Homeowners Association, said in a statement.

According to the association, Swedish consumers can be overcharged by up to 4,000 kronor ($600) per year by their electricity provider for access to the electricity grid.

One in four homeowners in Sweden currently has a floating-price contract with their electricity provider. Last year, a fixed-price contract could have cost households up to 6,000 kronor per year.

In addition, the most expensive floating-price contract in the country cost 13,000 kronor than the cheapest, according to the association’s study.

“It’s unfortunate that so many don’t make an active choice. At this point, we agree with the Homeowners Assocation,” Tommy Johansson, head of market supervision at Sweden’s Energy Markets Inspectorate (Energimarknadsinspektionen), told the TT news agency.

“My assessment, after talking to customers, is that it is primarily customers living in apartments who have flexible-rate contracts,” he added.

At the same time, the percentage of customers with flexible-rate contracts has dropped, from 40 percent in 2008 to 23.8 percent in December 2010.

“The question is now being discussed in connection with efforts to create a unified Nordic market by 2015. But we’re not going to propose any new regulations,” said Johansson.

The most dramatic way to encourage people to be more proactive in choosing their electricity providers and contracts would be to implement measures that have worked in other markets: no choice, no electricity.

“But with our climate, it’s seen as all more important for someone who moves into a new house or apartment to have access to electricity from day one. As such, we have a system with assigned contracts,” said Johansson.

Kjell Jansson, the head of Swedenergy, an association representing the electricity industry, criticised the homeowners association study, claiming it was “too simple.”

“To describe the differences in conditions between different electricity network companies based on one key figure — the length of the line divided by the number of customers — is untenable,” he said in a statement.

He also criticised the homeowners advocacy group for not proposing any alternative solutions for how companies should charge for access to the electricity network.

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ELECTRICITY

Sweden to double wind energy production in next four years

Wind energy is set to double its share of Sweden's power supply over the next four years as a string of giant projects come online.

Sweden to double wind energy production in next four years
The Gabrielsberget wind project in Västerbotten. Photo: Swewind
The contribution of wind energy is scheduled to grow from 17TWh in 2018 to 35 TWh in 2022, taking wind's share from 12 percent to 25 percent of total power produced. 
 
Charlotte Unger, chief executive of the Swedish Wind Energy Association trade body said the pro-renewable policy decisions had been driving growth. 
 
“Sweden has the best regulatory regime for wind power projects from a European perspective, and therefore production costs the least here,” she told Swedish state broadcaster SVT.  “Investors have confidence in wind power in Sweden, and that's because of the policies that exist.” 
 
The largest new wind farm is the giant Markbyygden project outside Piteå, which is expected to supply 10TWh per year as it comes online in stages from this year, making it one of Europe's largest wind farms.  
 
Other major projects are the Överturingen wind farm in Västernorrland, Åskälen in Jämtland, and Valhalla in Gävleborg. 
 
The new farms will make up for the shutdown of two reactors at the Ringhals nuclear power station in 2019 and 2020. 
 
 
Because the majority of the new wind power projects are in the northern counties of Norrland, Västerbotten and Jämtland, the shift will require Sweden's state-owned grid operator Svenska Kraftnät to rapidly improve capacity, especially in central Sweden. 
 
But Niclas Damsgaard, the grid company's senior market strategist, said he believed the company would be able to keep pace with the growth. 
 
“It's going to work, but all this will mean an increase in risk. In an extreme case, some major industrial consumers may not be able to buy as much power as they want, but it's not going to mean difficulties across the country.”  
 
Unger said that if the new production exceeded Sweden's own needs, then the excess could be exported into Europe, reducing the continent's coal use. 
 
Between 2022 and 2040, the Swedish Wind Energy Association hopes to double the amount of wind power produced in  once again, taking it to half of Sweden's total power use.
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