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Swedish electricity prices hit three-month high

Despite a brief dip over the weekend, electricity prices hit their highest level since March on June 20th, and prices look set to stay high for the rest of the year.

Published: 20 June 2022 16:41 CEST

Swedish electricity prices hit three-month high

Photo: Anders Wiklund/TT

On Monday June 20th, prices hit a high of 2:37 kronor in south Götaland (electricity zone 4), with prices in north Götaland and Svealand (electricity zone 3) following close behind.

That was the highest daily rate in zone 4 since March 15th, and the highest for zone 3 since March 9th, according to power market Nordpool.

In Norrland, the increase was noticeably lower, rising to a rate of just 39 öre/kWh.

During some hours of the morning, where usage is highest, electricity prices on June 20th were over 5 kronor/kWh in southern Sweden, and even higher in Germany.

Heatwave using power

The increase is partly due to a lack of wind causing low production from wind power, and rising gas prices pushing up costs in Germany, which affects electricity prices in southern Sweden.

“The heatwave in large areas of Europe is keeping electricity use at a high level, now that air conditioning is on full blast,” said Björn Björnson, electricity analyst at electricity company Godel.

On Monday morning, wind power produced just two percent of Swedish electricity, compared to an average of 20 percent.

And now coal prices are also rising, since the German government announced this weekend that coal-powered power plants should increase production to compensate for the lack of Russian gas. On Monday alone, coal prices rose by between 7 and 8 percent, energy analyst Johan Sigvardsson from energy trading company Bixia told TT newswire.

Expensive for the rest of the year

According to Sigvardsson, Swedish consumers should get used to high prices – at least from now until the end of the year. Trading for future electricity contracts stands at around one krona per kWh between July and August, with this increasing to 1:44 kronor in the fourth quarter this year – and these prices cover the whole of the Nordic region, which usually means prices will be noticeably higher in southern Sweden.

Lower water levels in southern Norway are also making a difference, as it hasn’t been possible for hydroelectric power plants to generate as much electricity as usual.

During the past weekend, the situation was conpletely different. On Saturday, the average price of electricity was 10 öre per kWh in all four of Sweden’s electricity zones – the lowest in Europe, with the exception of northern Norway.

Windy weather kept the wind turbines going, which contributed towards lower prices. At the same time, electricity almost always costs less on weekends, when usage is lower.

The final price of electricity for the consumer consists of the base price of electricity on the Nordpool power market, plus energy company fees, tax, VAT and electricity grid fees.

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What Taylor Swift's Stockholm gigs tell us about the Swedish economy

The weak Swedish currency, the krona, means tickets for Swift’s three Stockholm dates are more affordable than elsewhere for many foreigners.

Fans around the world seem to have heeded Swift’s lyric “Grab your passport and my hand”, with “Swifties” from 130 countries flocking to Stockholm. Many queued through the night outside the Stockholm arena before the US star’s first concert on Friday.

“In total we will see approximately 150,000 people attending the concerts in Stockholm. Of them, 120,000 will be traveling to Stockholm,” Stockholm Chamber of Commerce chief economist Carl Bergkvist told AFP.

“They will be spending approximately half a billion Swedish kronor ($46 million) during their stay here in Stockholm,” he said.

That is money dished out on hotels, meals, shopping and transport, among other things, but not concert tickets or flights, Bergkvist said.

After opening her European tour in Paris last weekend, Swift’s Stockholm shows are her only dates in the Nordic region.

The Visit Stockholm tourism agency was also in on the hype, with its webpage on Friday proudly declaring “Welcome to Swiftholm”.

But last-minute tourists will struggle to find a hotel room in the city.

“We have approximately 40,000 rooms in Stockholm – 80,000 beds – and 120,000 people coming here. So we will be out of hotel rooms and we see a price spike of approximately 295 percent,” Bergkvist said.

“As soon as these three concerts were announced, there was immediately a surge in demand,” Åsa Lilja, commercial director at hotel chain Ligula Hospitality Group, told AFP.

“This also led to a rise in prices,” she said.

Swift-flation?

Sweden has only recently managed to bring down recent years’ stubbornly high inflation.

Economists have expressed fears that the Swift craze could send Swedish consumer prices rising again, as they did when pop diva Beyoncé opened her European tour in Stockholm last May.

“There’s a risk that prices will rise for hotel and restaurant visits, the concert tickets and everything that goes along with” the show, Danske Bank economist Michael Grahn wrote in a note.

However, “the price pressure would have to be even stronger than (the Beyoncé effect in May) last year to be reflected in the inflation figures”.

Swedish central bank governor Erik Thedeen even took the influx of foreign Swifties as a sign that the Swedish “krona was fundamentally undervalued”.

“It’s clearly a bargain to come to Stockholm,” he said.

Meanwhile, fans seemed ready to spend whatever it takes to see Swift perform.

“I spent around 7,500 kronor ($697) in total for three tickets. I think it’s worth it,” said Filippa, a 21-year-old Swedish fan queuing up early Friday for the evening’s concert.

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