Sweden rejects power interconnector to Germany where 'market doesn’t function efficiently'

Sweden’s government has decided not to continue with a project for a 700MW power interconnector under the Baltic Sea to Germany, citing an ‘inefficient’ electricity market in Europe’s largest economy.

German transmission system operator 50Hertz, which had pursued the 300-kilometre-long Hansa PowerBridge project together with its Swedish peer Svenska Kraftnät since 2018, regretted the decision.

“This means that an opportunity has been missed to strengthen the European internal electricity market and thus jointly achieve the European climate protection goals,” 50Hertz said.

On the German side, all requirements for the planning and technical implementation of the cross-border project have been met, most recently with the granting of the planning approval for the land route and coastal sea by the state of Mecklenburg-Western Pomerania, the TSO added. The €600m ($644m) Hansa PowerBridge was meant to stabilise German electricity prices.

Sweden’s energy minister Ebba Busch, by contrast, last Friday in a statement said her government had turned down an application to build the subsea power link, fearing that Sweden might import high electricity prices from Germany if the interconnector were built.

"We can't connect southern Sweden, which has a large deficit in electricity production, with Germany, where the electricity market today does not function efficiently," Busch said in a statement, according to the Reuters news agency.

"That would risk leading to higher prices and a more unstable electricity market in Sweden.”

Soaring power prices in Germany in the wake of the energy crisis triggered by Russia’s invasion of Ukraine indeed had reached Scandinavia via interconnectors with Denmark.

Unlike Sweden, which has four electricity pricing zones, Germany has only one. As a consequence, power prices can spike in the entire country due to lacking generation capacity in southern Germany, which is lagging behind in the energy transition, while surplus wind power from northern German coastal regions and offshore cannot be transported South due to still lacking North-South high voltage direct current (HVDC) power lines.

Attempts to divide Germany into different power zones – which most likely would make electricity cheaper in the North and thus also facilitate interconnection with Scandinavia – have so far failed due to fierce opposition from southern German states, particularly Bavaria (which also delayed the HVDC links and for a long time obstructed the wind power expansion).