Infrastructure is not keeping up

The clean energy transition requires very large investments in infrastructure, with estimates up to 600 billion euros/year in EU in this decade only (according to EEA).

Successful infrastructure investments require international cooperation on Nordic and European level.

The clean transition sets significant needs particularly on electricity, hydrogen, and CO2 infrastructures. The electricity grid requires investments and improvements, but the CO2 and hydrogen infrastructures need complete refurbishment.

Investments are progressing, but there has been some delays due to recent economic uncertainty, a period with higher interest rates, and social acceptance of construction projects.

Estimated value of electricity trade

The estimated value* of Nordic electricity exports was just under 1000 million euro per year from 2015 to 2020. High market prices in 2021 and 2022 increased the estimated revenues significantly.

The year 2023 and the first 9 months of 2024 had export values of 5000 million euros and 2500 million euros, respectively.

New interconnectors have increased the volume and value of trade. In addition, the European power systems face regular high prices increasing the value of Nordic exports.

Figure 11.1: Estimated value* of the electricity trade. Data source: ENTSO-E transparency platform.

* Estimated value = scheduled transfers between market regions * area prices of exporting regions.

Annual electricity trade among the Nordics

The Nordic countries have significantly increased their net electricity exports to Central Europe, rising from 12 TWh/year between 2015-2019 to an impressive 40 TWh/year from 2020-2023.

Leading the charge, Sweden has emerged as the largest net exporter, contributing around 30 TWh/year. Meanwhile, Finland has significantly reduced its imports, dropping from 15 TWh/year (2015-2022) to just 3 TWh in 2023, thanks to the expansion of its nuclear and wind power capacities.

The share of net exports outside Nordic countries have increased when new interconnectors to Central Europe and the United Kingdom have been completed. Most notably, Norway's net exports are redirected from other Nordic countries to the United Kingdom and Central Europe.

Figure 11.2: Nordic countries’ annual electricity trade. Imports is indicated by positive numbers, and export is indicated by negative numbers. Data source: ENTSO-E transparency platform.

Estimated bottleneck revenues

Transmission companies collect bottleneck revenues when the connection between two countries is too weak, causing price differences.

The estimated bottleneck revenues* were 12500 million euros in 2022 and 4500 million euros in 2023.

Bottleneck revenues should be primarily used to make grid investments, but also to maintaining network security, reducing congestion costs, and offsetting tariffs for network users.

Figure 11.3: Estimated bottleneck revenues*. Data source: ENTSO-E transparency platform

*Estimated bottleneck revenue = scheduled transfers between market regions * difference in area prices

In the spotlight:
Svenska kraftnät’s Region Nord programme

Region Nord, formerly known as Fossil-Free Upper Norrland, is the name of the investment program created by Svenska kraftnät to enable the industrial energy transition in northern Sweden.

The program is also a pilot for Svenska kraftnät's new working approach, which aims to halve lead times so that a power line can be operational seven years after the start of the process, instead of the usual 14 years.

To succeed in the energy transition, new power lines and substations are needed to connect both industries and new wind power facilities on land and at sea.T he primary driver of the program is the industry's transition to fossil-free operations, but geographically adjacent investment projects are also included.

The program currently encompasses a total of 20 projects, divided into three main projects: Norrland Coast, Malmfälten, and Aurora Line.

Sources: Green Power Denmark, link 1 and link 2

Nordic cooperation on CO2 infrastructure

In the Nordic Clean Energy Scenarios study, carbon capture and storage (CCS) was expected to take off around 2030, and the total volume of the CO2 captured and stored was 8 MtCO2/year in the Nordics in 2030.

Norwegian Northern Lights completed the first CO2 receiving station in 2024. The first phase is aiming for 1.5 MtCO2/year and the second phase to 5 MtCO2/year

Four Nordic countries (Norway, Denmark, Finland, and Sweden) have agreed to collaborate on cross-border transportation and storage of CO2.

The Northern Light's facility will receive part of the CO2 from Nordics.

Stockholm Exergi is converting a biomass-fired power and heat plant to be able to capture CO2 with estimated volume of 0.8 MtcCO2/year.
Fortum Oslo Varme is planning to convert a waste incinerator plant to be able to capture CO2 with estimated volume of 0.4 MtCO2/year.

The CO2 infrastructure is taking crucial technological and legislative steps, but the pace seems to be slightly slower than in the modelled scenarios.