The electricity market · KNOWLEDGE GUIDE

This is how the electricity market works - from power plants to your home

Follow the path of electricity, understand why the price moves and separate the price on the electricity exchange from the cost on your bill.

Green Hero editorial · 3 min reading
Updated October 26, 2026

THE MOST IMPORTANT THING IN ONE MINUTE

The electricity price is affected by supply, demand and how much electricity the grid can transfer.
The electricity trade applies to your purchase of electricity. The electricity network applies to the transport to your home.
A low spot price is only part of your total electricity cost.

Two flows that belong together

When you light a lamp, you become part of a physical electrical system. At the same time, you have an agreement on how the electricity you use should be priced. The electricity trading company and the network company fill in different information, even when their costs appear on the same invoice.

Therefore, start by separating the transport from the purchase. A change of electricity supplier changes your electricity contract, but does not change the lines or the grid company where you live. That difference makes both price comparisons and contacts with customer service easier.

Source material: Energy Market Agency: the electricity grid agreement ↗ · Energy Market Agency: the electricity bill ↗

Why does the electricity price change?

The weather affects both how much electricity is needed and how much certain types of power can produce. Cold, wind, water conditions and available power plants are examples of conditions that change. The transmission capacity and location in our neighboring countries also play a role.

The price is therefore not a judgment about an individual facility. It reflects the market conditions for a certain location and delivery period. A windless morning and a windy weekend can result in completely different situations without your electricity contract having changed.

Source material: Swedish power grid: the electricity market ↗

Same country, different power areas

Sweden has four electricity areas: SE1, SE2, SE3 and SE4. When the transfer between areas is sufficient, the prices may become equal. When the capacity of the network limits the flow, they can differ.

Annual production for the whole of Sweden therefore does not say what price your particular home will get for a certain quarter. Time, area and available transfer need to be read together. Select your own electricity range when looking at a price graph, and compare the same range.

Source material: Swedish power grid: questions about electricity areas ↗ · Ei: the electricity market ↗

Why do we trade with other countries?

Connections to other countries make it possible to both sell and buy electricity. Imports may be needed when the available production is not enough for the moment, even if Sweden exports more than we import over a whole year.

Think of a year as many different moments of delivery. A national surplus over the year does not mean that every area has a surplus in every hour. Trade and network capacity help manage those differences.

Source material: Swedish power grid: export and import ↗

From spot price to your cost

Spotpriset visar marknadspriset för elen. Din faktura beror också på avtalets beräkning, avgifter, nätkostnader och skatter. Med kvartspris spelar din användning i varje kvart roll; med månadspris räknas priset på ett annat sätt.

As your own calculation example: if you move 10 kWh from a price of SEK 1.50 to SEK 0.50/kWh, the price difference will be SEK 10 for that quantity. It does not say anything about fixed fees or whether the move changes a possible impact fee.

Always read a price graph with three questions: which electricity area, which period and which cost components are included?

Source material: Ei: electricity contracts with quarter-hour pricing ↗ · Energy Market Agency: the electricity bill ↗

TRY YOURSELF · CALCULUS EXAMPLE

What does a price difference mean to you?

Change the amount of electricity and two example prices. See how the connection works.

Immerse Yourself

FAQ.

Is electricity always cheapest at night?

Nope. The pattern may vary with weather, demand and production. Look at the prices for the current period and your area instead of assuming a fixed time.

Does a negative spot price mean that the entire electricity bill will be negative?

Nope. The spot price is part of the cost. Surcharges, fixed charges, electricity and taxes still need to be factored in according to your terms.

FROM KNOWLEDGE TO EVERYDAY

Your next step.

Find your electricity area on the contract or invoice.
Find out whether you have quarter-hour pricing, monthly pricing, a fixed price or another model.
Compare electricity trade and electricity network separately before summing up.

Checklist not saved. Use it as support when you go through your home and your contracts.

Sources and further reading.

The material was checked on 26 October 2026. Follow the links for current terms and conditions.

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