In the autumn of 2025, Oslo rolled out a politically-charged gift to Norwegian households: the Norgespris – a state-guaranteed fixed price of 0.40 SEK/kWh that customers can lock in for the coming year.
On the same day the scheme went public, Swedish electricity analysts issued an equally blunt warning: “When Norwegians pay less, Swedes will pay more.”
Below is the story of why a subsidy that never appears on a Swedish invoice still manages to inflate the amount you see on it.
One copper cable – one price (almost)
Norway and Sweden share the same wholesale market, Nord Pool.
Within the market, power can flow freely between the two countries until the interconnecting cables hit their physical limit.
Because of this, the spot price in the last bidding zone that is needed to cover total demand sets the price for all zones that are not congested.
In practice:
- Hour with plenty of water in Norwegian reservoirs → cheap Norwegian hydro sets the price for large parts of Sweden.
- Hour with dry reservoirs and Swedish nuclear outages → expensive Swedish or continental generation sets the price for southern Norway.
So, when consumption or production changes on one side of the border, the curve on the other side moves as well.
What “fixed 0.40 SEK” really means
The government does not order power exchanges to clear at 0.40 SEK.
Instead, Statnett (the Norwegian TSO) lets the spot price float freely and then channels the difference to customers through a hedging fund:
- If the market price is 0.70 SEK → the state pays the 0.30 SEK difference.
- If the market price is 0.25 SEK → the customer still pays 0.40 SEK and the surplus is parked in the fund.
Households therefore never see a bill above 0.40 SEK, no matter how scarce electricity becomes.
Why behaviour changes – and why it matters
Electricity demand is elastic – not zero, but larger than most politicians assume.
When price signals are removed:
- Electric heaters stay on during peak hours.
- EVs charge immediately after work instead of waiting until 02:00.
- Weekend cottages are kept at 22 °C all winter.
Model runs carried out by the Norwegian foundation ZERO show that in a dry year (when Norway is a net importer) the subsidy can add 3.4 TWh of extra Norwegian demand – roughly the annual use of the entire Swedish steel industry.
That incremental demand has to be covered by the marginal plant in the Nordic area, which is almost always a coal- or gas-fired unit in Germany, Denmark or southern Sweden.
More expensive marginal generation → higher spot price for everyone who is not protected by a Norwegian contract.
Where the pain lands in Sweden
Because Norwegian hydro is located in bidding zones NO1–NO5, while the shortage normally occurs in the south, the price spill-over is funnelled through the cables to:
- SE3 (Stockholm–Gothenburg corridoor)
- SE4 (Skåne & Blekinge)
These zones already suffer from the largest congestion rent in the Nordics; they import during almost every peak hour.
Analysts at Bixia estimate that the extra Norwegian load could lift the hourly price in SE4 by 5–15 öre/kWh on 50–80 winter hours – enough to raise the annual average that Swedish households pay by roughly 2–3 %, and industrial customers by even more because they buy a larger share on the spot market.
Who pockets the money – and who doesn’t
The price hike is not a transfer to Norway; it is a transfer from Swedish consumers to whoever owns the marginal power plant.
In a dry year that is often a German gas turbine or a Danish CHP unit.
Thus, Sweden ends up subsidising continental generators while Norwegian voters enjoy cheap, flat-rate kilowatt-hours financed by Oslo’s oil fund.
Could Sweden copy the model?
Technically yes, but fiscally it is a different world.
A Swedish “Sverige-pris” set at, say, 0.50 SEK/kWh would cost the treasury 50–60 billion SEK over a high-price winter – roughly what Sweden already spent on ex-post electricity subsidies during the 2022 crisis.
Unlike Norway, Sweden cannot tap a 1.7 trillion USD oil fund; the money would have to come from higher taxes or cuts elsewhere, and Brussels would demand state-aid approval.
The long-term irony
By shielding households from price spikes, Norway risks locking in peak-load consumption just as the Nordic grid is being rebuilt for flexibility.
More Norwegian kilowatt-hours at 03:00 would be welcome; more at 17:30 is not.
If the scheme becomes permanent, analysts fear a vicious circle: higher Swedish prices → louder calls for Swedish subsidies → even less price-sensitive demand → still higher prices, until the only winners are owners of fossil peaking plants the region wants to phase out.
Key take-away
Electricity is a joint product of the Nordic market.
When one country neutralises the price signal for 5 million households, the remaining 12 million – including all of Sweden – must live with a steeper, spikier curve.
In short, “Norway pays its consumers, Sweden pays the market.”