New EU Measure in the Power System Risks Sharply Increased Electricity Prices

Despite harsh criticism and clear warning signals from several heavyweight stakeholders, Sweden is now being pushed towards connecting to the EU’s common balancing platform MARI. The Swedish Energy Markets Inspectorate requires Sweden to join no later than September 1, 2026—or face a fine—while Svenska kraftnät warns that joining too quickly risks repeating the electricity chaos that has already hit southern Sweden.

The conflict concerns when Sweden should join MARI, the EU’s platform for trading the balancing service mFRR EAM, which is used to balance the power system during electricity shortages or surpluses. The system is intended to handle increasingly weather-dependent electricity production, but experiences from previous reforms have been anything but positive, reports Tidningen Näringslivet.

When the Nordics introduced flow-based capacity calculation together with mFRR EAM last year, it led to sharply increased imbalance prices, significant cost increases, and unpredictable electricity prices—particularly in southern Sweden. Svenska kraftnät’s own analyses point to shortcomings in how the algorithms functioned, with activation of resources in wrong areas and price spirals that did not reflect actual needs in the system.

“Increased by several hundred percent”

At the same time, balancing costs in certain electricity areas have increased by several hundred percent since the spring. Although these costs are formally charged to balance responsible parties, they are quickly passed on to consumers and industry through higher prices and increased risk premiums.

This development has also attracted new participants to the balancing market—but not necessarily those who strengthen the stability of the power system. According to energy traders, the number of actors has more than doubled in a short period, with many trying to profit from price volatility rather than providing actual flexibility.

Particularly problematic for the Nordics is that large parts of the regulating resources are in the form of hydropower in the north, while imbalances often occur in the south. When the algorithms do not take enough account of these structural differences, price movements can become extreme—something that already happened during the spring and early summer of 2025.

Svenska kraftnät has made adjustments to the Nordic system to mitigate the problems but fears these improvements will be lost with connection to MARI. The authority therefore wants to postpone entry until at least the first quarter of 2027 to ensure operational security.

– The risk is that we return to a setup that caused so many problems, said Anna Jäderström, head of the balancing markets section at Svenska kraftnät, to TN.

Warnings of High Costs

Industry shares the concern. Electricity-intensive companies in SE3 and SE4 warn that already high costs and uncertainty risk getting even worse. TN reports that the industry is calling for either Nordic exemptions, deferral, or a more fundamental review of the electricity area division, which today creates artificial price differences and benefits arbitrage rather than societal benefit.

Despite this, the Energy Markets Inspectorate stands by its demands. The agency argues that Svenska kraftnät has had ample time to prepare and that technical delays do not absolve them of the obligation to join as soon as possible. A fine of 500,000 kronor per week awaits if the timetable is not followed.

In a written response, the supervisory authority emphasizes that ultimate responsibility lies with Svenska kraftnät:

– In the end, however, it is Svenska kraftnät that decides when they will connect, writes the Energy Markets Inspectorate in its comment.

Meanwhile, decisions about MARI continue to be made at the EU level, where Swedish and Nordic particularities risk being overlooked. The result could be that Sweden, despite repeated warnings, is pushed into yet another market system that drives up costs—with electricity customers and industry as the ultimate losers.