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Four trends within the Swedish energy sector

As we stand on the brink of a sustainable energy revolution, Sweden emerges as a shining exemplar of the potential and proficiency in renewable energy. Sweden was Europe’s largest net exporter of electricity[1] and offers competitive electricity prices (especially in the northern parts of Sweden). Due to this Sweden has a leading position in renewable technology, Sweden is paving the way for a fossil fuel-free future. In 2022, an impressive 69 percent of Sweden's electricity production[2] came from renewable sources, a testament to the nation's dedication to a greener and more sustainable tomorrow.

In many ways, Sweden's renewable energy landscape is flourishing. The nation boasts abundant hydroelectric power, favourable wind conditions, good solar opportunities (in contrast to what many people may think) and advanced technological expertise. Additionally, a well-educated workforce, robust infrastructure, and a business-friendly environment all make Sweden an ideal location for expanding renewable energy.

In the northern parts of Sweden, we will see significant investments the coming years of more than SEK 1,000 billion[3], largely focusing on producing fossil-free steel and electrofuels, manufacturing batteries, infrastructure, and securing sustainable forestry industry. For that, new green energy is required.

Key trends within the Swedish energy sector

MAQS's specialist group Renewables has a leading position within the industry, serving as a full-service legal business partner to its clients. Collaborating with key clients such as SCA, Rabbalshede Kraft, EnBW and Liquid Wind, MAQS has been involved in large investments, key transactions, and regulatory approvals within the realm of renewable energy.

Through our collaborations and projects, we have identified four key trends within the Swedish renewables market:

  1. Onshore wind faces headwinds
    Recent times have brought significant challenges to onshore wind in Sweden. Municipal vetoes persist, and the proposal that municipalities should be unable to change their decisions during the project has yet to pass. This means that the expansion of onshore wind power is not keeping pace with the expected increase in electricity consumption resulting from industrial investments in the north.
  2. Solar power is booming
    In stark contrast to the headwinds facing onshore wind, Sweden's solar power sector is experiencing rapid growth and attracting diverse participants. Sweden’s energy production from solar is still at low levels since solar farms are just starting to be built out on a large scale. Currently Sweden's solar energy is on the verge of a major transformation. Both Swedish firms with experience in wind energy and foreign investors with extensive solar expertise are venturing into this domain. The southern regions of Sweden, blessed with abundant sunlight, are becoming hubs for solar energy. However, long waiting times for grid connections and intense competition for non-agricultural land have turned the solar industry into a veritable gold rush.
  3. Offshore wind's resilience
    Despite the Swedish government's decision to remove subsidies for offshore wind grid connections, interest in offshore wind investments remains strong. Over the past two years, several foreign entities have entered the Swedish offshore wind market. Joint ventures have become the norm due to the substantial development and construction expenses associated with offshore projects. Furthermore, the government has started granting permits for offshore installations. Nevertheless, the sector faces challenges, including rising wind turbine costs and increasing interest rates. It will take several years before these offshore projects in Sweden reach full development and construction.
  4. Repowering for a sustainable future
    Repowering of existing onshore wind turbines is emerging as a significant trend in Sweden's renewable energy landscape. Many of the existing wind turbines in the country are approaching the 20-25-year mark. While the replacement of older turbines with newer, more efficient models remains relatively uncommon in Sweden, an increasing number of stakeholders are considering such investments. The European Union is also advocating for streamlined approval processes to accelerate the transition, reducing the nations’ dependence on external energy sources, particularly Russia.

In summary, these four trends define the current landscape of renewables in Sweden, reflecting both challenges and opportunities. As the country navigates the complexities of onshore wind power, the rise of solar energy, offshore wind's resilience, and the growing interest in repowering, it is evident that Sweden's renewable energy future is dynamic and filled with potential. The remaining question is how your company will contribute to and benefit from these evolving trends in Sweden's renewable energy sector?

Author:

Mikael Kowal
Partner and Head of Renewables, MAQS Advokatbyrå

Footnotes:

[1] EnAppSys: Sweden remains Europe’s largest net power exporter - EnAppSys

[2] SCB: https://www.scb.se/hitta-statistik/sverige-i-siffror/miljo/elektricitet-i-sverige/

[3] EKN: https://www.ekn.se/magasin/bank/har-ar-norrlandsbankernas-glomda-affarsmojlighet/

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