Sweden’s government on Wednesday vowed to compensate households and companies for soaring electricity costs in the wake of the Ukraine war, to the tune of up to 60 billion kronor ($5.76 billion).
At least half of the amount was to go to households who could expect to be compensated “this winter”, Prime Minister Magdalena Andersson told reporters.
“We have electricity and gas prices at a level we’ve never seen before”, she said.
On Wednesday, electricity on the Nordpool market hit a record 5.69 kronor per kilowatt hour in southern Sweden. It was expected to fall back slightly to 5.50 kronor on Thursday.
Swedish electricity prices have soared after Russia drastically curtailed gas supplies to Europe following its invasion of Ukraine.
Gas prices have thereby soared, at a time when there is little wind energy being generated in northern Europe due to current weather conditions.
Svenska Kraftnat, the state-owned operator of the national grid, has therefore been raking in soaring so-called capacity fees, which have left it with a surplus despite massive investments in its grid, Andersson said.
That surplus should make its way back to consumers, Andersson said, adding: “The higher the electricity price goes, the higher the amounts we’re talking about”.
Hydropower accounts for about half of the electricity generated in Sweden, which also relies on nuclear and wind power.
It is not yet known what form the compensation would take nor when it would be introduced, but the government said measures could include lower electricity prices as well as direct refunds to households and companies.
The government has tasked Svenska Kraftnat with drawing up a concrete proposal by November 15.
The Social Democratic government’s announcement comes just three weeks ahead of legislative elections, with opinion polls putting the left and right blocs neck-and-neck.