Sweden is divided into four “electricity regions” from north to south, with the two southern regions starting around the town of Uppsala.
The spot price of electricity in southern Sweden is set to hit 5 kronor per kilowatt hour for a few hours on Wednesday afternoon, according to energy market Nord Pool.
The average daily price of electricity is also set to see significant variation, with prices of 2.28 and 2.63 kronor per kilowatt hour in the two southernmost regions – compared to a low and fairly steady 0.02-0.03 kronor in northern Sweden throughout the day.
Johan Sigvardsson, analyst for electricity traders Bixia, put the blame on Germany.
“Germany is very dependent on wind power and on Wednesday they will get extremely little wind. When you don’t have any cheap production, it has to be replaced, and then Sweden will be drained via our export cables,” he told Swedish news agency TT.
Prices are expected to increase even more on Thursday.
Why is there a price difference between northern and southern Sweden?
The answer is that most of Sweden’s energy is generated in northern Sweden, where some of the biggest hydro and wind power plants are located.
Conversely, the more densely populated southern Sweden uses more electricity.
It’s not possible to fully transport all electricity from one part of the country to the other, which means that northern Sweden has a surplus of energy, and the south a shortage.
So as a result, because demand is higher than supply in southern Sweden, prices go up – and notably more so when more electricity than normal is exported.
What does this mean for my bill?
For the average consumer, this won't have a significant impact on your monthly bill. The cost of the electricity itself is actually a relatively small part of what consumers pay, with taxes, fixed prices and electricity grid fees all also factored in.
The extent to which you are impacted by price fluctuations also depends on what kind of contract you have – variable or fixed rate. But the more you use, the more you'll be affected by the kilowatt-hour price, particularly people who own houses rather than apartments, which generally have much higher electricity costs.
ESSENTIAL GUIDES:
Comments