Continuing low energy prices and renewable energy profitability issues have fuelled an interest in the work of the Energy Commission. The Energy Commission was established in March 2015 as a cross-party initiative to aid the development of energy policies for 2025 and beyond. The commission is formally a government commission, but it has representatives from all political parties in Parliament. The aim is to reach a cross-party long-term policy agreement on energy.
The Energy Commission's work has been divided into three phases:
- gathering information on the likely scenarios for energy supply up to 2050;
- proposing legislative changes based on its conclusions; and
- agreeing the main components of the cross-party energy policy agreement.
The final outcome of the work will be presented no later than January 1 2017.
In March 2016, as part of the initial work phase, the Energy Commission reported on the present energy production conditions. In the report, the commission compared actual and forecasted energy production income with the production costs for various forms of energy.
The commission reported that the low energy prices (below Skr30 per kilowatt hour (kWh)) are expected to continue until the mid-to-late 2020s. After this, additional renewable energy initiatives and the decommissioning of nuclear plants is expected to have a greater influence on pricing.
The report concluded that – in line with market observations – profitability is a major issue for energy production in Sweden. This is especially the case for wind and solar power, for which the commission estimated production costs to be Skr0.65 and Skr1.70 per kWh. With regard to the influence of electricity certificates, the report concluded that previous overestimates of energy production have led to a surplus of electricity certificates and consequently lower production subsidies. While the price of electricity certificates was expected to rise as energy prices fell and producers sought to recover costs, the opposite has occurred. With decreased production costs, the price of electricity certificates has fallen further and the efficiency of the system has been questioned.
While the report clearly identified the present difficulties for renewable energy production, no solutions have been suggested. In addition, there is uncertainty in the market around the political landscape beyond 2020 – especially in regard to development aims and renewable energy subsidies. In its 2015 budget bill, the government set clear aims up to 2020, with a target of at least 50% renewable energy production. While the market is requesting clear post-2020 policies, Parliament is largely awaiting the Energy Commission's results. Individual bills on energy policies are being rejected pending the commission's findings, leading to a temporary stagnation of political initiative.
However, on March 27 2016 the government issued a statement on its overarching long-term energy goals and declared its aim of achieving 100% renewable energy production within 20 years. In line with this, the government declared a focus on renewable energy and a natural phasing out of nuclear power plants. The declaration builds on agreements made by the former government in an aim to garner wide-ranging support. The Energy Commission – which is politically controlled – will likely be heavily influenced by the declaration. While the commission's final suggestions are yet unknown, a focus on the development of renewable energy production is expected.
For further information on this topic please contact Peter Högström, Jörgen Möller or Philip Tonkin at Advokatfirman Lindahl KB by telephone (+46 8 527 70 800) or email ([email protected], [email protected] or [email protected]). The Advokatfirman Lindahl KB website can be accessed at www.lindahl.se.