Electricity Market Design for a Reliable Swedish Power System

Sweden has benefited from a stable and well-functioning electricity system, but now faces a fundamental question: can the current organisation of the electricity market continue to work well in a situation of new, emerging pressures? In particular, the debate in Swedish in recent years has focused on whether or not the current energy-only market, whereby power generators are paid the for electricity they deliver to the market, can sufficiently provide the needs society places on the power system.

The main conclusions of our study are

• The current market design can continue to serve Sweden well, even in the case of large changes to the production mix. There is ample opportunity to adapt and further develop the current market design to a new situation.
• We identified and elaborated a number of concrete measures in this report that together define an approach to continue using liberalised markets to further future economic, energy, and environmental goals.
• Several reform options are available to improve the functioning of the energy-only market, but these require a number of reforms to allow a market-based system for investment.
• Taking these steps will require decisive steps, not least by politicians. Reducing the political uncertainty surrounding the power markets may be the single most important factor in enabling investments required for a reliable electricity system.

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