Jul 31, 2025
Commission endorses a €300 million Swedish strategic reserve to ensure electricity supply security.
The European Commission has approved a €300 million strategic electricity reserve in Sweden to ensure electricity supply security during emergencies, in line with EU State aid regulations.
This reserve acts as a capacity mechanism that compensates resources outside the market, activated during peak demand situations, particularly in Sweden's winter months.
Set to operate until 2035, the reserve will support various projects contributing to supply security, including electricity generation, demand-side response, and storage. Generators and storage facilities will offer their readiness to provide electricity, while demand-response units will reduce consumption when necessary. Eligible projects must meet the CO2 emission limits specified in the EU Electricity Regulation.
Beneficiaries will be selected through a transparent bidding process that fosters competition, focusing on aid per MW of capacity and the timeframe to deliver capacity during shortages.
Capacity funded by this measure will not participate in electricity markets while under reserve status, minimizing market distortion.
In its assessment, the Commission evaluated the measure under Article 107(3)(c) of the TFEU, which allows state support for specific economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection, and energy.
The Commission found that:
Sweden justified the necessity and appropriateness of the measure per the Electricity Regulation.
The measure encourages beneficiaries to operate or invest in power units to a greater extent due to the public support.
The aid minimally impacts EU competition and trade, being proportionate to actual financing needs. Measures to limit the aid, such as a competitive bidding process and verification of funding gaps for businesses with market power, are in place. Distortions in energy markets are minimized since the funded capacity will not participate in electricity markets.
The measure produces positive effects that outweigh potential competition and trade distortions in the EU.
The aid adheres to the relevant guidelines on capacity mechanisms and strategic reserves in the Electricity Regulation.
Consequently, the Commission approved the Swedish measure under EU State aid rules.
This reserve acts as a capacity mechanism that compensates resources outside the market, activated during peak demand situations, particularly in Sweden's winter months.
Set to operate until 2035, the reserve will support various projects contributing to supply security, including electricity generation, demand-side response, and storage. Generators and storage facilities will offer their readiness to provide electricity, while demand-response units will reduce consumption when necessary. Eligible projects must meet the CO2 emission limits specified in the EU Electricity Regulation.
Beneficiaries will be selected through a transparent bidding process that fosters competition, focusing on aid per MW of capacity and the timeframe to deliver capacity during shortages.
Capacity funded by this measure will not participate in electricity markets while under reserve status, minimizing market distortion.
In its assessment, the Commission evaluated the measure under Article 107(3)(c) of the TFEU, which allows state support for specific economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection, and energy.
The Commission found that:
Sweden justified the necessity and appropriateness of the measure per the Electricity Regulation.
The measure encourages beneficiaries to operate or invest in power units to a greater extent due to the public support.
The aid minimally impacts EU competition and trade, being proportionate to actual financing needs. Measures to limit the aid, such as a competitive bidding process and verification of funding gaps for businesses with market power, are in place. Distortions in energy markets are minimized since the funded capacity will not participate in electricity markets.
The measure produces positive effects that outweigh potential competition and trade distortions in the EU.
The aid adheres to the relevant guidelines on capacity mechanisms and strategic reserves in the Electricity Regulation.
Consequently, the Commission approved the Swedish measure under EU State aid rules.