Swedish Energy

I don’t understand. I’ve had it explained to me two or three times, and I still don’t get it. Moreover, I rather suspect that those who have explained it to me don’t really get it either. Or is it just my deteriorating brain, in my old age?

The problem is this. Sweden is self-sufficient in energy, nearly all of it coming from renewable sources, situated in the country itself: wind, water, biofuels (those bumps on the tops of our buses), solar, plus some nuclear (not much). Sweden for long has been a world leader when it comes to ecologically-friendly sources of power. We don’t rely on Russian or any foreign sources at all. So we should be able to control our energy costs, surely, in a way that our neighbours apparently can’t. Yet our electricity bills are about to go soaring, too, albeit hopefully not quite as high as elsewhere. Why?

The answers I’ve had given to me include nuclear decommissioning (for environmental reasons), less wind blowing (!), profiteering, and a number of others; but mainly the fact that we are exporters of energy to countries like Germany and Poland, and so have to be bound by their pricing systems. That’s what I don’t understand. Why should we need to pay what they have to pay, when they have supply problems which we don’t?

The Vänster (Left) party is I think the only one in the forthcoming General Election (11 September) which has latched on to this, and is advocating pricing Sweden’s energy with reference to the Swedish supply-and-demand situation alone. That is being painted as over-nationalistic and uncommunitarian. Is this fair? Or have I misunderstood the whole thing? (Which is likely, I have to say.)

Lastly: isn’t the same true, although to a lesser extent, of the UK? How much gas does Britain get from Russia? Or electricity from France?

Incidentally, I’m following the election here – it will be the first one I can vote in as a citizen – and am impressed by how polite and civilised – boring, if you prefer – the debate is, compared with the British; and also by how competent and reasonable most of the candidates seem to be, again by comparison. (Kajsa thinks I’m flattering them; but then she hasn’t been enmired in British politics these past few years.) The main exception seems to be the Sverigedemokraterna  (SD: very right-wing: think UKIP on akvavit), which has as nasty a line in political invective and lies on social media – not on national telly – as Britain’s wannabe fascists. They’re on 21% just now; Vänsterpartiet (V) is at about 8%; and the Social Democrats (S: equivalent to Labour) on 30%. I’ll be voting V, but hoping that S wins, and takes the Vs into coalition.

About bernardporter2013

Retired academic, author, historian.
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4 Responses to Swedish Energy

  1. Neil SHADDICK says:

    That’s vy interesting, Bernard – what you say about energy prices in Sweden. Here in NZ just about everything has gone up with global inflation rates except electricity bills. The power market was denationalised (semi-privatised) in the nineties, but the key to understanding what’s not happening here is that little prefix ‘semi’: the government retains a 51% interest in certain providers and obviously instructs their boards to hold charges down at the moment. The fully-privatised companies can’t move on prices for fear of losing customers. Pity the government doesn’t have an interest in broccoli or cheese, for which we are paying a fortune at the moment.
    The answer to your questions, in short, as I suspect you already know, is very simple: profiteering: much as Phil says but in a more sophisticated English way. Only countries with strong interventionist policies are going to ride the coming economic tsunami out. Even the bl**dy Telegraph is saying that to-day!

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  2. Phil says:

    [Sorry if this is a duplicate comment – WordPress is being weird]

    Energy pricing in the UK is even worse, because energy supply is (a) privatised and (b) regulated in such a way as to keep it viable while privatised. (All information from an interesting recent Twitter thread by Richard Murphy.)

    Basically there are multiple different suppliers of energy from multiple different sources, but only one energy tap at the customer end (well, two – gas and electricity – but the principle applies). So what consumers pay is – or rather, should be – an aggregate of the different prices charged by different suppliers, varying depending on the overall mix of sources and what those suppliers charge.

    Nobody wants to leave suppliers free to set their own prices, so the market is regulated. The trouble is, this creates the possibility of the government setting the price so low as to drive one or more private supplier into bankruptcy; this would be anti-competitive and must not be allowed to happen.

    Now, there are more and less expensive ways to supply energy; buying Russian gas is the most expensive, and consequently Britain doesn’t do very much of it. But private companies supplying Russian gas do exist in the UK energy market. So the government pegs the price of energy to a level which enables those companies to survive, i.e. to the cost of Russian gas. So although we’re only (say) 5-6% exposed to fluctuation in the Russian gas supply in terms of supply, we’re 100% exposed in terms of price. This also means that suppliers of other forms of energy are making money hand over fist, as the price per unit paid to them is far higher than what they would normally charge – except for renewables suppliers, who are already locked into fixed price contracts with the government. The excess paid by consumers to renewables suppliers goes to the government instead – so they are also benefiting from high prices.

    Isn’t free market capitalism great?

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  3. Are the energy providers privatised or state-run entities?

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