During the last few years, there has been a lot of debate regarding the price of
electricity on the Swedish market. According to a recent survey from Sifo, a
non-bias governmental institute for consumer research and testing, the price
of electricity is what worries Swedish households the most. An investigation
of the eciency of the Nordic power grids inuence on the Swedish spot
price is therefore both relevant and valuable. Three quarters of all electricity
produced in the Nordic region is traded at the Nord Pool Spot power market.
This survey examines how much of the variation of the swedish spot price
can be descried by the variation of the nordic system price and how much is
caused because of ineciencies in the power grid. Primarily, linear regression
with adjustments for endogeneity and heteroskedasticity has been used in order
to analyze data obtained mainly from Nord Pool Spot and Vattenfall AB.
The results show that the variation of the system price can account for all but
about 40% of the variation in the Swedish spot price. Thus, it is reasonable to
believe that these 40% are caused by limitations and local imbalance between
production and consumption in the Nordic price areas. Our conclusion from
the results is that it is in place with improvements of the Nordic power grid.
The alternative would be to reallocate the power production to match the
consumption. However, the latter is neither economically nor environmentally
2012. , 31 p.