Sweden has a goal to reach 100 per cent renewable energy production by 2040. According to CERE researcher Jurate Jaraite, now is the time to discuss more flexible renewable electricity policies.

jurate windpowerThe Nordic countries are well-known for their ambitious national climate and renewable energy targets. For instance, Sweden aims to have zero net emissions of greenhouse gases by 2045. This goal will be supported by more efficient energy use and Sweden’s transition to a carbon-free energy system. More specifically, the goal is to reach 100 per cent renewable energy production by 2040.

These stringent goals for climate and energy action will require effective approaches. Furthermore, transition towards achievement of these goals will transform the Swedish power system beyond imagination. First, it is likely that nuclear power, which currently contributes about 40% in total Swedish generation, will gradually be phased out of the system. Second, it is expected that nuclear power will be predominantly replaced by carbon-free renewables, mainly wind and solar power.

In 2017, wind power capacity stood 6 611 MW and, according to the IEA’s report “Nordic Energy Technology Perspectives 2016” , it is expected to increase to 31 500 MW by 2050. Without a doubt, this change in the mix of power generation will put some strain on the Swedish power system’s flexibility – i.e. the capability to respond to rapid changes in consumption and production.

Though it cannot evenly compete with flexibility characteristics of hydro and fast-ramping thermal power generators, wind power is also a flexible resource. With the growing share of wind power generation, it is crucial that wind power operators react to the power system’s needs for flexibility and provide services to the grid including frequency support and assistance with supply-demand matching.

To encourage wind power operators to provide flexibility services, two types of economic incentives should be in place. First, support for wind power generation should reflect the real market price of electricity. Second, wind power operators should have an explicit incentive to act flexibly.

Currently, a key policy implemented to increase the production of renewable electricity in Sweden is the Swedish-Norwegian Tradable Green Certificate (TGC) System. Under this system, producers of electricity from renewable energy sources are given a tradable green certificate for each kWh of renewable energy they produce and feed into the grid. This provides them with two streams of revenue: sales of electricity in the electricity market and sales of TGCs in the TGC market, which help renewable power producers to cover the cost gap between renewable power and conventional electricity generation.

Even though the Swedish-Norwegian TGC System is a market-based policy, TGC market price does not depend explicitly on the actual market price of electricity. Furthermore, it is important to note that renewable electricity capacity that has been installed after 1 May 2003 receives TGCs for a maximum of 15 years. This creates incentive to wind power operators produce as much electrical power as possible within those 15 years and to disregard the actual power system’s needs for flexibility. Jurate reason that this feature of the TGC system is unsustainable in the future when the demand for the provision of flexibility increases.

Given that the Swedish Ministry of the Environment and Energy has recently given the Swedish Energy Agency an assignment to suggest potential mechanisms to phase out the Swedish TGC system , there is a good opportunity to discuss future “more flexible” renewable electricity policy options to ensure an effective transition of the Swedish energy system.


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