Why does electricity cost so differently in the north and the south?

The winter of 2022 to 2023 shows why southern Sweden worries about the electricity price. When Russia cut gas to Europe, the German price rose to almost five kronor per kilowatt hour in August 2022. SE4 followed up to three kronor, SE3 to just over two, while SE1 stayed below 20 öre. The same power, the same country, but the lines southward were full.

In SE1 and SE2 the price is low almost all the time because hydro and wind there produce more than the region uses. Early 2026 was an exception, when the price rose in the north too.

Until November 2011 Sweden had a single electricity price. That hid a problem: the lines from north to south were not always enough, and Svenska kraftnät then held back exports to Denmark so that southern Sweden would get power. Danish traders complained to the European Commission, which considered that Sweden was favouring its own customers at its neighbours' expense. To close the case, Svenska kraftnät promised to split the country into bidding zones. On 1 November 2011 the four zones were introduced, with borders at the so called cuts where transmission is congested.

The idea is that the price should show where power is needed. A high price in the south should attract new generation and new lines there, and a low price in the north should attract industry. The latter has partly happened with new industrial projects in Norrbotten and Västerbotten. Meanwhile southern Sweden has lost generation: Barsebäck closed in 1999 and 2005, and Ringhals 1 and 2 and Oskarshamn 1 and 2 between 2015 and 2020.

The difference between the zones depends almost entirely on how much can be transferred across cut 2, between SE2 and SE3, and cut 4, between SE3 and SE4. When the lines are full, each side gets its own price. Svenska kraftnät is expanding the transmission grid, but new lines take ten years or more from plan to operation.

The electricity itself, which the retailer buys on the exchange and resells, is only part of the bill. The network charge goes to the grid company that owns the lines up to the house. It cannot be avoided, since each area has a single grid company, and the Energy Markets Inspectorate sets a cap on how much the companies may charge. The energy tax is decided by parliament and was lowered in 2026. VAT of 25 percent is added on top of everything.

The total price rose less than the spot price in 2022 because many households had fixed prices and the electricity support is not included here. Instead it has risen steadily since the crisis, mainly because network charges have gone up.

Since 1999 six reactors with a combined capacity of just over 4,000 megawatts have closed. Barsebäck closed after political decisions. Oskarshamn 1 and 2 and Ringhals 1 and 2 were closed by their owners between 2015 and 2020 when low prices, a raised capacity tax (phased out in 2017 and 2018) and costly safety requirements made them unprofitable. All were in SE3 and SE4. Over the same period wind power has grown so much that the country's production is larger than ever, but it is mostly in the north and follows the wind.

Waste and decommissioning

The owners pay a fee for every kilowatt hour they produce into the Nuclear Waste Fund, set up in 1982 to cover final disposal of spent fuel and the dismantling of the reactors. The government sets the fee per owner on a proposal from the Swedish National Debt Office. In 2025 it was 5.6 öre per kilowatt hour for Forsmark, 8.4 öre for Oskarshamn and 10.0 öre for Ringhals, and in 2026 it is 3.1, 5.3 and 5.3 öre. The fund held SEK 85 billion at the end of 2025. The Debt Office estimates that the whole programme costs SEK 257 billion from start to finish at 2025 prices, and that the estimated cost has risen by an average of 4.2 per cent a year above inflation since 2001. Dismantling all the reactors is now estimated at SEK 27 billion, 21 per cent more than in the 2022 estimate.

The capacity tax

From July 2000 the owners paid a tax on the reactors' thermal capacity, regardless of how much electricity they produced. It started at SEK 5,514 per megawatt and month and was raised in 2006 to SEK 10,200, in 2008 to SEK 12,648 and in August 2015 to SEK 14,770. After the energy agreement it was cut in July 2017 to SEK 1,500 and abolished at the turn of the year to 2018. When the tax was abolished, the government estimated that it raised about SEK 4.2 billion a year gross and SEK 1.4 billion net. What the existing reactors cost to build and what operation costs are not reported together in any open source, so they are not included here.

New nuclear power in Sweden

On 21 May 2025 the Riksdag passed a law on state support for new nuclear power (2025:587). The state can lend money for construction and sign two-way price contracts: if the owners get less than an agreed price for the electricity, the state pays the difference; if they get more, they pay it back. Support is given for at least 300 megawatts at one site. The Social Democrats, the Left Party, the Centre Party and the Green Party entered reservations. In the budget bill for 2026 the government asks for authority to lend up to SEK 220 billion and to take on price contracts worth up to SEK 400 billion between 2035 and 2085.

In the bill the government assumes a construction cost of SEK 80 million per megawatt at 2023 prices and seven years to build. That gives a production cost of 110 öre per kilowatt hour at a 7 per cent real discount rate. At SEK 100 million per megawatt it becomes 133 öre, with ten years to build 124 öre and with both 146 öre. With the state's loans and price contracts the government assumes a 4 per cent rate, and an agreed price of 80 öre is then judged sufficient. What the contracts cost depends on the electricity price. In a scenario with lower prices the state pays about SEK 7.5 billion a year, roughly 3 öre per kilowatt hour or SEK 45 a month for a house. In one with higher prices the companies pay about SEK 1.4 billion a year to the state. The Swedish Energy Agency and several other consultation bodies considered the cost to electricity customers insufficiently investigated.

In June 2026 Vattenfall and Industrikraft chose Rolls-Royce SMR for three reactors of 470 megawatts each at Ringhals, with first power in the mid 2030s. No cost has been published.

Projects in other countries

• Hinkley Point C, United Kingdom, two reactors of 1,630 megawatts. In January 2024 EDF put the cost at £31 to 34 billion at 2015 prices and in February 2026 at £35 billion, with the first reactor in operation in 2030. The electricity is sold at an agreed price of £92.50 per megawatt hour at 2012 prices for 35 years.
• Flamanville 3, France. The budget was 3.3 billion euros at the start in 2012. In January 2025 the French Court of Audit estimated the cost at 23.7 billion euros in 2023 prices. The reactor was connected to the grid in December 2024, twelve years late.
• Olkiluoto 3, Finland, 1,600 megawatts. Construction began in 2005 and the reactor has been in regular operation since April 2023. No official final cost has been reported.

The production cost, LCOE, is what each kilowatt hour must cost to pay for construction, fuel, operation and decommissioning over the plant's lifetime. For nuclear power almost the whole cost is the construction itself, so the discount rate weighs most. In the IEA and NEA comparison new nuclear costs about the same as onshore wind in Sweden at 3 per cent, but one and a half times as much at 10 per cent. Rebuilding existing reactors for longer operation is the cheapest option in the comparison. The American advisory firm Lazard assumes market financing at just under 8 per cent and in 2026 gives 37 to 99 dollars per megawatt hour for onshore wind, 40 to 98 dollars for solar power and 175 to 255 dollars for new nuclear modelled on Vogtle in the United States.

The comparison per kilowatt hour does not include what it costs to keep the power system in balance. Wind and solar produce when it is windy and sunny, which requires reserves, storage and lines. In 2019 the NEA put those costs at under 10 dollars per megawatt hour when wind and solar provide a tenth of the electricity, 28 dollars when they provide half and over 50 dollars at three quarters. Without interconnectors and flexible hydro it comes close to 50 dollars already at half. New nuclear instead has long construction times and cost risks, as the projects abroad show. According to the bill, Svenska kraftnät has estimated that 1,000 megawatts of nuclear power make it possible to connect 740 megawatts of new demand, against 460 megawatts for 4,000 megawatts of onshore wind.

• 1980. The referendum on 23 March had three options. Option 1 got 18.9 per cent, option 2 39.1 per cent and option 3, which wanted a phase-out within ten years, 38.7 per cent. Turnout was 75.6 per cent. The Riksdag then decided that the last reactor should close by 2010 at the latest.
• 1997. After an agreement between the Social Democrats, the Centre Party and the Left Party, the Riksdag decided to begin the phase-out with Barsebäck. The Nuclear Phase-out Act came into force in 1998. How the parties voted is on Major decisions.
• 1999. Barsebäck 1 closed on 30 November. As compensation the owner Sydkraft received 25.8 per cent of Ringhals AB from Vattenfall, which in turn received a claim on the state of SEK 2,639 million.
• 2000. The capacity tax was introduced on 1 July. It was raised in 2006, 2008 and 2015.
• 2005. Barsebäck 2 closed on 31 May.
• 2010. The Riksdag repealed the phase-out act and allowed new reactors to replace old ones at the existing sites.
• 2015. In April Vattenfall announced that Ringhals 1 and 2 would close earlier than planned because of lower profitability and low electricity prices. In October the owners decided that Ringhals 2 would be taken out of service in 2019 and Ringhals 1 in 2020, and the majority owner of OKG decided to close Oskarshamn 1 and 2 early.
• 2016. The energy agreement of 10 June between the Social Democrats, the Moderates, the Green Party, the Centre Party and the Christian Democrats. The target became 100 per cent renewable electricity by 2040, "a target, not a deadline". At most ten new reactors may be built at existing sites, state support for nuclear power cannot be counted on, the capacity tax would be phased out over two years and the energy tax on electricity raised by 4.2 öre per kilowatt hour.
• 2017. Oskarshamn 1 produced its last electricity on 17 June. Oskarshamn 2, which was shut down for rebuilding, was never restarted.
• 2019 and 2020. Ringhals 2 closed at the end of 2019 and Ringhals 1 on 31 December 2020.
• 2023. Riksrevisionen (the Swedish National Audit Office) called the state’s measures to develop the electricity system reactive and poorly substantiated. The Government responded in a communication to the Riksdag.
• 2025. The law on state support for new nuclear power came into force on 1 August.

Until 2010 Sweden alternated between buyer and seller depending on how much rain and snow fell. Since 2011 the country has been a net exporter every year, and since 2022 by more than 30 terawatt hours. Exports mean the power is sold where it is more expensive, which brings revenue to producers and congestion income to Svenska kraftnät. They also mean Swedish prices are pulled up towards the neighbours' when the lines are not full.

The exchange and the marginal price

Every day before noon, producers and retailers submit bids for each quarter hour of the next day: how much they want to sell or buy and at what price. The bids go to the power exchanges, of which Nord Pool is the largest in the Nordics, and a common European algorithm calculates the price in each zone. Everyone who sells gets the same price, namely what the most expensive bid needed to cover demand asks for. This is called marginal pricing. Hydropower, which costs almost nothing to run, therefore gets the same price as a gas plant when gas is needed.

Defenders argue that it gives everyone the right signal: the cheapest runs first, and low cost producers earn money to invest. Critics argue that households end up paying for gas that Sweden hardly uses.

Flow based capacity calculation, 2024

On 29 October 2024 the Nordics began calculating how much power may flow between zones in a new way, so called flow based market coupling. Instead of a fixed limit per line, the calculation considers how power actually spreads through the whole grid. Svenska kraftnät expects the grid to be used better, and according to the agency transfers from north to south rose by up to 30 percent in the first month. Test runs also showed that prices could rise in several zones and that the gap between north and south could grow. Critics, including the Centre Party, wanted the method paused.

The EU electricity market reform, 2024

After the energy crisis the EU adopted a reform in 2024 (Regulation 2024/1747 and Directive 2024/1711). Marginal pricing remains, but new support for power plants should as a rule take the form of two way contracts: the state guarantees a price, and when the market price is higher the producer pays back the difference. Consumers get the right to both fixed and variable price contracts and protection against disconnection, and countries may lower household prices if the EU declares a price crisis.

The electricity support of 2022 and 2023

After the record winter, the Social Insurance Agency paid electricity support to households from February 2023. The first round covered consumption from October 2021 to September 2022 in SE3 and SE4, about 17 billion kronor. The second covered November and December 2022 across the country and was highest in the south. The money largely came from congestion income.

Congestion income

When the price differs between two zones, the system buys power cheaply on one side and sells it dearly on the other. The difference goes to the grid owners, in Sweden Svenska kraftnät. In 2022 the income was a record, and the Energy Markets Inspectorate approved up to 55.6 billion kronor going to electricity support. In 2023 it was about 21 billion kronor and in 2024 about the same. Under EU rules the money should primarily go to expanding the grid and keeping transmission open.

Vattenfall is wholly owned by the state and is Sweden's largest electricity producer. In 2010 parliament decided that the company should operate on business terms and generate a market return. The owner has set the target at 8 percent return on capital employed, and the dividend should be 40 to 70 percent of the year's profit. For 2021 Vattenfall paid 23 billion kronor to the state. From time to time it is proposed that the company should instead sell power more cheaply to Swedish households and businesses.