The Swedish regulation on designing network tariffs for an efficient utilization of the power grid

The Swedish power system is undergoing a significant transformation due to the energy transition, where increasing renewable energy production as well as increasing electricity use in transports and industry places major challenges on the power syste m. Thus, the need for grid capacity is increasing. Efficient grid utilization is a prerequisite for a cost -efficient energy transition. Further, measures that increases the flexibility may postpone or even avoid some grid investments. Network tariff design is one of several tools of the system operator (SO) to promote efficient grid utilization. In 2022, the national regulatory authority (NRA) for energy in Sweden, the Swedish Energy Markets Inspectorate (Ei), issued a regulation on network tariff design. The regulation is a result of thorough analyses and concludes that costs should be allocated to four cost components, of which one shall be based on power usage. The power fee component aims to signal to customers what costs their grid use entails, to incentivize them to adapt their consumption and thus reduce, or postpone, the need for grid investments. The regulation must be applied by all SOs in Sweden no later than January 1st 2027. This paper describes the analyses leading to the resulting regulation.