“The Hansa PowerBridge Rejection Risks Weakening Sweden’s Export Industry”

“In Sweden, we generally take pride in our export industry. For example, when the prices of timber in the forestry industry rise, and more can be earned for the products produced, we are delighted and welcome the additional revenue to the state treasury. But when it comes to another export industry, namely electricity exports, we worry that prices will rise and households will suffer.

When the government now decides to halt the 10-year-long plans for a new power line from Sweden to Germany, the argument is that it protects households from high electricity prices. They emphasize that Germany, unlike Sweden and many other countries, does not have electricity price zones, negatively impacting electricity prices across Europe, making trade between countries unfair.

Even though Germany’s lack of price zones has long been a subject of debate, the Swedish Government’s decision almost seems like an attempt to force the Germans to change, which is harmful to Sweden and Swedish industry as a whole. In the past two years, high electricity prices have been the norm, but the fact remains that Sweden will struggle to always meet its domestic energy needs in the future, according to a forecast by the Swedish TSO Svenska Kraftnät. Thus, we are also dependent on strong foreign trade to maintain delivery security. Hansa PowerBridge is a worrying example where we now risk being without a critical connection to Germany when the Baltic Cable is decommissioned in 2035.

When it comes to protecting Swedish consumers, there are several other alternatives that are better than refraining from building new infrastructure, such as price caps or redistributing bottleneck revenues. A reasonable tax on electricity production can also ensure that the benefits of the industry remain local and national, continuing to build on Sweden’s fantastic opportunity to remain a leading electricity exporter.

Electricity systems are complex, and electricity markets need to be designed to stimulate the right type of investments. In Svenska Kraftnät’s market analysis, the importance of flexible consumption and production is highlighted as an effective measure to meet energy demand, significantly reducing the volatility of electricity prices.

Sweden should build a electricity system it wants for its citizens. To do so, we must accept that the energy transition will be a long and somewhat uncomfortable journey. The alternative is to remain passive, which unfortunately became the outcome for Hansa PowerBridge.”

– John Diklev, Founder & CEO, Flower