Sweden’s power sector is expected to expand through renewable energy investment and rising electricity demand from industrial electrification, green hydrogen, battery manufacturing and data centres.

However, limited transmission capacity between northern generation hubs and southern demand centres could constrain growth and widen regional electricity-price differences, according to GlobalData.

The company’s latest report, Sweden Power Market Trends and Analysis by Capacity, Generation, Transmission, Distribution, Regulations, Key Players and Forecast to 2035, forecasts that Sweden’s installed power capacity will grow at a compound annual growth rate (CAGR) of 2.9% between 2025 and 2035.

Wind power and solar photovoltaic (PV) are expected to drive renewable expansion, while hydropower and nuclear energy will continue providing low-carbon electricity to support the country’s power system.

Attaurrahman Ojindaram Saibasan, power analyst at GlobalData, said: “Sweden starts from a strong position, with hydro and nuclear power providing a largely fossil-free electricity base and wind power supplying much of the incremental growth. The next phase of the market will be shaped by demand as much as supply. New electricity-intensive industrial projects, including fossil-free steel, battery manufacturing, hydrogen production, and data centers, are increasing the importance of reliable power delivery in the locations where demand is emerging.”

The main challenge is the geographical imbalance between electricity supply and demand. Northern Sweden benefits from substantial hydropower and wind resources, while much of the population, industrial activity and electricity consumption is concentrated in the south. Limited north-to-south transmission capacity can cause congestion, restrict renewable generation and expose southern consumers to higher prices despite a national electricity surplus.

Saibasan added: “Grid investment is a critical enabler of Sweden’s power transition. Without faster delivery of transmission upgrades, northern clean power surpluses may be curtailed or exported while southern industrial users face tighter supply and elevated price volatility. Svenska kraftnät’s transmission expansion plans will therefore be as important as generation investment in determining whether Sweden can convert its resource advantage into dependable, competitively priced electricity.”

Offshore wind presents a significant long-term opportunity, although development depends on maritime planning, defence approvals, environmental assessments, seabed access and grid connections. Onshore wind and solar PV are also expected to expand, subject to connection capacity and viable power purchase agreements.

Sweden’s policy framework supports a fossil-free electricity system and economy-wide net-zero emissions. The planned phase-out of the electricity certificate scheme is changing the support landscape for renewable projects, while the government’s nuclear roadmap signals renewed interest in firm, low-carbon generation.

Saibasan concluded: “Sweden has the generation resources, industrial demand base, and market structure to remain one of Europe’s most important clean power markets. Delivering that opportunity will require aligned decisions on permitting, grid reinforcement, offshore wind development, and the financing framework for new nuclear capacity. The policy test is not simply to add more capacity, but to ensure that clean electricity can reach consumers when and where it is needed.” -OGN/TradeArabia News Service