What happens to the price of electricity?

Imagine if the price of electricity were to become a topic of conversation at dinner parties, outside the shop and when dropping off children at nursery school. Nobody has missed the fact that prices are currently high, but why? Is it possible to predict the future? We asked our CEO Johan Skördare to answer some questions that we think we are all asking ourselves right now.

The current price of electricity is historically high, why is it so?

– This is a large and complex issue, but it is mainly related to the fact that the supply of natural gas has decreased significantly due to Russia’s invasion of Ukraine, which has resulted in Russia cutting off a large share of gas, but also that the EU is actively working to phase out dependence on natural gas from Russia. This coincides with a major electrification in the world where electricity demand has grown faster than we have been able to expand both power generation and the power grid. This summer we have also seen extra high electricity prices in Europe as a result of French nuclear power being shut down, both for maintenance but also largely because the temperature in the rivers where the plants are located was so high that production had to be shut down for environmental reasons.

What can be said about the future and how it will develop?

– It’s hard to say for sure, of course, but as things stand right now, it looks like prices will be higher than we are used to in the near future. Although Sweden has a large electricity production and exports a lot of electricity, the shortage is so great in Europe that it will take time to expand production. Since the electricity market is open, Sweden is affected by prices in the rest of the EU.

How can solar energy help lower prices?

– Solar power is by far the fastest to build. It is relatively inexpensive and quick and easy to install and deploy, allowing you to increase the amount of electricity in the grid in a short time. In addition, it is possible to build locally where the electricity shortage is greatest, thus avoiding high electricity transmission costs. Solar panels generate electricity during the daytime when prices are highest. In addition, there are now efficient battery solutions that allow solar electricity to be stored and then distributed to the grid more evenly across days and seasons. In other words, solar energy can effectively lower prices both in Sweden and globally quickly through expansion.

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