Insufficient central government measures for an efficient electricity system

The electricity system is a cornerstone of a functioning society. For the electricity system to function properly, there must be a balance between production and consumption, and a functioning transmission between the two.

The central government bears principal responsibility for ensuring that the electricity system functions properly, and for grid expansion as needed. The Swedish National Audit Office (Swedish NAO) has audited whether the Government and government agencies have implemented measures effectively.

The audit comprises five of the political decisions that have had the greatest impact on the electricity system. The Swedish NAO finds that most of these decisions have been taken without the support of adequate impact assessments, in particular in terms of the impact on secure supply.

This has had several adverse consequences. For example, the raised output tax in 2015 which, together with factors such as existing taxation and low electricity prices, contributed to the closure of four nuclear reactors, which weakened the transmission grid.This decision was taken on grounds that were unclear and contrary to existing knowledge. Another example is the raised energy and carbon tax for district heating plants, which led to production shutdowns and thereby power shortages in several major cities.

The impact assessments are not inadequate due to a lack of knowledge. A partial explanation is rather that the decisions in question were predetermined due to political agreements.

“Impact assessments have sometimes been absent altogether. In other cases, they have not been used to improve the design of the decisions or to address the consequences. This has led to political decisions that have often featured short-termism and ineffectiveness,” comments Auditor General Helena Lindberg.

The Government’s and Svenska kraftnät’s management of the consequences has often been reactive rather than proactive and lacking in coherent processes. The initiatives taken by the central government have therefore been slow. Despite solid knowledge of the rapidly growing need for efforts to shorten the protracted permitting processes, and to speed up the expansion of the electricity grid, it has taken more than a decade for the necessary measures to be planned and for their implementation to commence.

“A clear example of this is that, since the first half of the 2010s, it has been known that a sharp expansion is needed in transmission capacity between northern and southern Sweden. Even so, the first complete power-line project is not scheduled for completion until 2033,” comments Johannes Österström, project leader of the audit.

Within a couple of decades, large parts of society are expected to be electrified, causing rapidly rising electricity consumption. The electricity system must be adapted and expanded at a considerably faster pace than to date, at the same time as there is already a tremendous need for reinvestment in the transmission grid.

It is therefore particularly problematic that Svenska kraftnät has not been able to increase its investments in the transmission grid at the rate that the agency itself has deemed necessary. To successfully achieve their goals, investing activities must now expand at a rate that is several times higher than in the last four years.