Balancing Markets

Because the Electric Power Transmission system has no significant energy buffer, frequency must be held at 50 Hz through continuous balancing — the physical constraint that makes these markets necessary at all. See Swedish Balancing Market Prices and Volumes for current volumes, prices, and supply-side concentration.

Activation order during an imbalance

Nordic balancing products

The Nordic synchronous area (Sweden, Norway, Finland, eastern Denmark) uses a hierarchy of balancing products, each covering different timescales:

These products are procured by Svenska kraftnät (in Sweden) and the other Nordic TSOs through competitive auctions. Traditionally provided by large hydro and thermal generators, these markets are increasingly open to Demand Response, Energy Storage, and aggregated distributed resources.

AI-driven activation order reversal (since 2025)

The table above describes the traditional aFRR-then-mFRR sequence, but Svk’s actual activation order has reversed since 2025. Historically aFRR activated reactively first to restore frequency after FCR, with mFRR called in afterward to relieve aFRR on longer imbalances. Now mFRR activates first and proactively: multiple forecasting tools (AI-based and traditional) continuously generate 5-minute-resolution frequency-error predictions, these are scored in real time against realised outcomes, and the best-performing forecast determines mFRR activation on a 15-minute bid cycle; aFRR then only regulates whatever residual difference remains. Reasons given: alignment with the EU cross-border balancing platforms Sweden joins in 2027 (MARI for mFRR, PICASSO for aFRR), and that mFRR bids are structurally cheaper than aFRR bids, so proactive mFRR use lowers activation cost. (Source - Digitala Monster — AI och Svenska Energisystemet (2026))

EU regulatory framework

Electricity Balancing Guideline (EB GL)

The EB GL (Commission Regulation (EU) 2017/2195) is the primary EU regulation governing balancing markets. (Source - EB GL (Regulation 2017-2195))

Key provisions relevant to flexibility:

• Art. 3.1.f — Demand response and aggregated resources must participate in balancing markets on equal terms with generation; aggregators may act independently (without supplier consent) when serving a single consumption facility
• Art. 16 — BSP (Balance Service Provider) role: may submit bids covering units across multiple BRP portfolios
• Art. 17 — BRP (Balance Responsible Party) role: financially responsible for real-time imbalances
• Art. 18 — TSOs must develop national terms for BSPs and BRPs, explicitly including rules for aggregation (Art. 18.5.c). Svenska kraftnät‘s implementation: Source - Svk Artikel 18 Villkor Balansering (2024)
• Art. 53 — Mandatory 15-minute imbalance settlement period for all EU TSOs (deadline November 2020)
• Arts. 19–21 — Three mandatory European balancing platforms for RR, mFRR, and aFRR energy exchange; enables cross-border balancing service trading

EB GL Art. 18.1 required Svk to submit a national-terms proposal for the BSP role within six months of entry into force (~June 2018) — met on time; there is no separate EB GL deadline for the terms’ final approval, so the “December 2020” date sometimes cited in market discussion is not itself an EU deadline. Sweden’s first contractual split arrived only in May 2024, six years after that 2018 proposal, reflecting Ei’s own approval process — see BSP and BRP roles below. The two roles — balansansvarig part (BRP) and leverantör av balanstjänster (BSP) — are now written into Swedish primary law for the first time by the new Elmarknadslagen (Prop. 2025/26:240, adopted by the Riksdag 15 June 2026, in force 1 January 2027), replacing the single “balansansvarig” concept in the 1997 ellag. (Source - Prop. 2025-26-240 Nya lagar om elsystemet (2026))

System Operation Guideline (SO GL)

The SO GL (Regulation 2017/1485) establishes the operational rules for load-frequency control and reserves. Key provisions:

• Reserve definitions include demand units explicitly — a reserve providing unit or group can comprise power generating modules and/or demand units (Art. 3(10-11))
• Three-tier reserve hierarchy: FCR (seconds), FRR (minutes — split into aFRR and mFRR), RR (15+ minutes) (Art. 140–144)
• Prequalification required for all reserve providers, with published processes and 3-month maximum for distribution-connected resources (Art. 155, 159, 162, 182(3))
• Limited energy reservoirs (batteries, demand response): must sustain FCR activation for 15–30 minutes during alert state, with energy reservoir recovery within 2 hours (Art. 156(9-13))
• TSO-DSO cooperation: Art. 182 requires TSOs and DSOs to cooperate on reserve delivery from distribution systems, with DSOs having the right to limit or exclude delivery on technical grounds

Clean Energy Package

The Clean Energy Package sets higher-level market design rules:

• Balance responsibility — all market participants are financially responsible for their imbalances (Regulation Art. 5)
• Open access — balancing markets must allow participation by Demand Response, storage, and Aggregation on equal footing with generation (Regulation Art. 6)
• Market-based balancing — balancing energy must be procured through competitive mechanisms

Network Code on Demand Response

The Network Code on Demand Response will further standardize how demand-side resources prequalify for and participate in balancing products, including through Service Providing Groups (SPGs) that aggregate small resources across multiple connection points. The NC DR builds on the SO GL’s prequalification framework, adding the CU/SP/SPU/SPG structure.

2024 EU short-term market reforms (Regulation 2024/1747)

The Electricity Market Design Reform 2024 (Art. 8 of Regulation 2024/1747) introduced structural changes to EU day-ahead and intraday markets that directly affect balancing market design: (Source - Electricity Market Design Reform Regulation (EU 2024-1747))

The 30-minute gate closure is the most significant change for balancing market participants; the 100 kW minimum bid is a ceiling for day-ahead and intraday markets and does not change the Nordic day-ahead trade lot, which was already 0.1 MW. The Nordic FCR/aFRR/mFRR markets already use D-1 auction windows, so the gate closure reform primarily affects EU intraday markets and cross-border imbalance management rather than the Nordic structure directly.

Volumes, prices, and supply concentration

The empirical detail on Swedish/Nordic reserve volumes, 2030 projections, the periodically-updated price snapshots, and prequalified-provider concentration is maintained in a dedicated tracker: Swedish Balancing Market Prices and Volumes. The monthly prices since January 2023, by product and bidding zone, can be explored in the Swedish Balancing Market Dashboard. Headline points:

• 2026 reserve requirements (Svk): FCR-N 226 MW; FCR-D up/down up to 547/528 MW; aFRR up/down up to 97/124 MW; mFRR up/down up to 1,300/1,155 MW; FFR up to 113 MW. (Source - Svk Behov av Reserver 2026)
• To 2030: largest relative growth in aFRR (150→300 MW, doubling) and mFRR up (800→1,400 MW, +75%); FCR-N/FCR-D stable; FFR grows sharply as inertia declines. (Source - Svk Reserver Framtida Volymbehov (2025))
• Prices: FCR-N ran about 3.7× FCR-D up in February 2026 (about 1.7× in 2023 and 3.9× in 2026 on annual means, per the monthly series) and is the battery operators’ preferred product; FCR prices are falling under heavy BESS supply growth (FCR ~86% of a Swedish BESS aggregator’s gross revenue). aFRR down > up (structural downward need); most of Sweden’s mFRR capacity requirement is met by Swedish resources (~81% up / ~95% down in February 2026), while upward aFRR is almost entirely imported through the Nordic capacity market. (Source - Svk Månadsrapport Balansmarknader Februari 2026, Source - Flower Website (2024-2026))
• Supply concentration: FCR markets have grown rapidly (easy qualification), but aFRR is highly concentrated — only 6 BSPs, none added in 2023–24. New aFRR entry expected at PICASSO (Svk targets Q4 2027). (Source - Svk Balancing Market Outlook 2030 (2024), Source - Svk Balancing Market Outlook 2030 Data Update (2026))
• Operational stress: the March 2025 mFRR EAM / 15-minute transition widened the mFRR-spot spread (a market-participant slide cites an imbalance-vs-spot spread up to 400%; no Svk factor is stated) and produced recurring mispricing; Svk introduced elastisk efterfrågan in the bid selector (22 June 2026) and an imbalance-price reform is on the track for earliest March 2027. The 8 June 2026 bid-stack exhaustion is a worked scarcity case. With supply up and elastic demand live, Svk is ending the weekly manual obalanspris corrections after 28 June 2026 (112 quarters adjusted since 25 April 2025). (Source - Svk Elastisk Efterfrågan mFRR (2026), Source - Svk Driftstörningar 8 Juni 2026, Source - Svk Obalanspris Manuella Justeringar Upphör (2026))

PICASSO and MARI — European platform connections

(Source - Svk Balancing Market Outlook 2030 (2024), Source - Svk BSP BRP Villkor Status (2026))

MARI (mFRR energy activation market):

• MARI (Manually Activated Reserves Initiative) is the EU mFRR energy exchange platform; 12 TSOs from 9 countries connected as of December 2024
• Postponed: Nordic connection was planned for Q1 2027, but Svk and the other Nordic TSOs announced in September 2026 that connection is delayed — a necessary MARI-algorithm fix (to counteract “ologisk prisspridning,” illogical price dispersion) will not be ready in time. New estimate: September–October 2027, exact date not yet set. Svk: it will not connect to a European platform where doing so risks operational security or the well-functioning Nordic market. (Source - Svk Forandrad Tidtabell MARI (2026))
• This is consistent with — though not explicitly linked to — a separate, already-tracked dispute: Ei has issued a formal enforcement order (föreläggande) demanding Svk connect to MARI in Q3 2026, while Svk’s stated position at Elmarknadsrådet on 20 May 2026 was that connection is not possible before the proposed Nordic changes have first been implemented in MARI (see the regulatory timeline’s Q3 2026 entry)
• Nordic mFRR EAM is the technical intermediate step
• A Svk-commissioned simulation study (Artelys, September 2026) finds that Sweden gains far more from the Nordic mFRR EAM (+459 M€ against a stand-alone market, over 65% from scarcity periods) than from MARI on top (+40 M€), with the MARI gain limited by an assumed 400 MW of HVDC capacity for balancing; the largest effects are lower upward prices and fewer scarcity events in SE3 and SE4. Model result under stated assumptions. (Source - Artelys Svk MARI Impact Assessment (2026))
• At connection, the spot-price floor on up-regulation bids and ceiling on down-regulation bids are removed; European bids compete directly with Nordic bids

BSP/BRP condition revisions for MARI (as of May 2026): Svk published a proposal for revised BRP/BSP conditions in spring 2026 (consultation closed). Three areas: imbalance pricing, bidding rules, and balancing energy price settings. Svk is doing further analysis and plans to submit revised conditions to Ei during summer 2026. (Source - Svk BSP BRP Villkor Status (2026))

PICASSO (aFRR energy activation market):

• PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation) is the EU aFRR energy exchange platform; 11 TSOs from 8 countries connected as of November 2024
• Energinet (Denmark) connected October 2024; Fingrid (Finland) March 2025; Svk: Q4 2027 (following MARI; Statnett also Q4 2027) — provisional, per Svk’s own caveat about technical and market-related dependencies (Source - Svk PICASSO Anslutningsdatum (2025)). Since this Q4 2027 date is explicitly sequenced after MARI, and MARI itself has now slipped from Q1 to an estimated Sept–Oct 2027 (see above), the PICASSO date is worth re-checking against a current Svk source rather than assumed unaffected — Svk’s 25 September 2026 notice, issued after the MARI postponement, still says Sweden plans to connect in Q4 2027 and to introduce an aFRR energy activation market then; it is stated as a plan, not a commitment (Source - Svk aFRR Energy Activation Market Implementation Guide (2026))
• At connection, aFRR shifts from pro-rata to merit-order activation; ACE (area control error) per bidding zone replaces system-wide frequency quality as the aFRR trigger — the main driver of the aFRR volume increase; demand expected to step to 120–350 MW (from current 97/124 MW)
• New BSPs will be able to enter the aFRR market at connection; imbalance price will incorporate aFRR energy activations (in addition to mFRR). Svk is also working on a central agent (ombud) solution to let more actors participate in aFRR; no detail is published yet (Source - Svk aFRR Energy Activation Market Implementation Guide (2026))
• How the aFRR EAM works for a BSP (Nordic implementation guide v1.1, 2026): BSPs bid energy (volume and price) in 15-minute validity periods, with bidding opening at D-1 12:00 for Svk; bid gate closure is T-25 minutes and TSO gate closure T-10 minutes; PICASSO optimises every 4 seconds and the TSO sends activation signals each control cycle; a BSP with accepted aFRR capacity bids must place at least a corresponding volume of energy bids; if the PICASSO connection is lost the TSO falls back to local merit-order selection. Eligible bids are 1–9,999 MW in 1 MW steps at ±15,000 EUR/MWh. (Source - Svk aFRR Energy Activation Market Implementation Guide (2026))
• Price spike risk: Italy disconnected from PICASSO in March 2024 due to extreme price spikes; Svk notes measures being implemented (elastic demand, new calculation algorithm)
• PICASSO imbalance pricing consultation planned autumn 2026 (Source - Svk BSP BRP Villkor Status (2026))

Both connections are part of the Nordic Balancing Model‘s EU integration phase.

Bid mechanics change, independent of either connection: from 24 November 2026 (operational 25 November), the Nordic aFRR and mFRR capacity markets remove the separate “Indivisible Bids Allowed” bid attribute — Minimum Quantity becomes mandatory for every bid instead, and all bids are divisible by default. A BSP wanting what was previously an “indivisible” bid now sets Minimum Quantity equal to the full offered quantity. Test environment available from 15 September 2026. (Source - NBM Indivisible Bids Change (2026))

Sweden is structurally a price-taker on the shared Nordic aFRR capacity market today, ahead of its own PICASSO connection: in December 2025, only 7.5% of Sweden’s aFRR-up volume requirement was met by Swedish bids — the rest imported, mainly from more competitively-priced southern Norway and Finland. The figure was ~62% for aFRR-down. Since aFRR is procured on one shared Nordic capacity market, cheaper foreign bids routinely crowd out domestic supply for the up-regulation direction specifically. (Source - Energiindikatorer 2026 (ER 2026-14))

Svk’s aktörsmöte on the balancing markets on 13 October 2026 has imbalance pricing in a European market, Svk’s balancing costs, PICASSO connection experience from Fingrid and Fortum, and aFRR market development on its agenda; the slides are the target for a follow-up ingest (Source - Svk Aktörsmöte Balansmarknader (2026-10-13)).

Cost allocation

Ancillary service costs are allocated across three mechanisms (2025 allocation): (Source - Svk Balancing Market Outlook 2030 (2024))

After PICASSO connection, the imbalance price (balanskraftspris) will be based on both mFRR and aFRR energy activations, replacing the current mFRR-only basis.

Nordic Balancing Model

The Nordic Balancing Model (NBM) is the joint programme by the four Nordic TSOs — Svenska kraftnät, Statnett, Fingrid, and Energinet — to redesign Nordic balancing markets for the energy transition and align with EU frameworks. See Nordic Balancing Model for full detail. (Source - Svk NBM Nordic Balancing Model)

The core architectural shift: from a Nordic-wide frequency trigger with a single activation price, to area-specific imbalance triggers with prices that reflect each bidding area’s supply-demand balance.

Implementation status (as of end 2025)

BSP and BRP roles

The BSP (Balance Service Provider) and BRP (Balance Responsible Party) roles were defined by the EB GL (2017), which required TSOs to submit national-terms proposals for both roles within six months of entry into force (~June 2018) — Svk met that deadline. BSPs submit balancing bids and may aggregate across BRP portfolios; BRPs bear financial responsibility for real-time imbalances. Their separation is the mechanism enabling independent aggregators to access balancing markets without being the electricity supplier.

Sweden’s first contractual split arrived in May 2024 — six years after Svk’s 2018 proposal, reflecting Ei’s own multi-round national approval process rather than a missed EU deadline (the EB GL sets no separate deadline for the terms’ final approval). The 2024 implementation is a “paper construction”: cross-BRP objects are formally permitted, but all units in a bid must share the same BSP, forcing aggregators to run parallel bid processes per BRP. Full cross-BRP bid submission is deferred to 2028. As of March 2026, 28 BSPs are registered, of which 6 are aggregators/flexibility specialists (~21%).

The BSP/BRP implementation story, BRP market structure, the three 2024–2025 reform impacts (flow-based, 15-min settlement, mFRR EAM), imbalance pricing, and emerging bilateral tolling contracts are covered in full at BSP and BRP Roles.

Additional procurement detail: marginal pricing for all products since 1 February 2024. mFRR units ≥50 MW must be separate objects (Art. 11b). (Source - Svk Artikel 18 Villkor Balansering (2024))

Product specifications

BSP contract framework

Svenska kraftnät‘s BSP agreement (Avtal 5937-2, in force 2025-09-03) governs all three reserve products. BSP–BRP link is mandatory; settlement is delegated to eSett. Non-delivery fine: SEK 100,000 for material breach. Amendment: Svk may amend with 2 months’ notice; termination: BSP gives 1 month, Svk gives 3 months. (Source - Svk BSP Avtal 5937-2 (2025))

FCR products

Three FCR products: FCR-N (symmetric, 49.9–50.1 Hz), FCR-D upp/ned (upward/downward, 49.5–49.9 / 50.1–50.5 Hz). Dynamic and Static FCR-D variants exist since 2024 — Static applies a 15-minute grace period before requiring deactivation, making it accessible to certain industrial loads and battery configurations. Nordic TSOs are analysing the maximum allowable static share and will implement a quota; this is a near-term regulatory uncertainty.

Auctions: twice daily (D-1 00:30 and 18:00). Minimum bid 0.1 MW; pay-as-cleared. FCR-N energy is compensated; FCR-D energy is not.

FCR Limited Energy Reserve (LER): finite-energy resources (batteries, controllable loads) must meet minimum endurance — 60 minutes each direction for FCR-N, 20 minutes for FCR-D. This defines the practical minimum battery size: a 1 MW / 1 MWh battery exactly meets FCR-N minimums. LER resources must implement automatic and normal energy management functions (AEM/NEM) to activate as thresholds are approached.

aFRR

Gate close D-1 07:30; minimum bid 1 MW; pay-as-cleared. Full activation within 5 minutes; 30-second reaction time. Access via ombud (proxy) enabled January 2025 — independent aggregators may deliver aFRR through a licensed intermediary without holding a full TSO contract, removing a structural barrier that had locked residential battery aggregators out of aFRR.

mFRR

Dual-market structure: capacity market (D-1 07:30 gate close) and energy activation market (45 min before each delivery quarter). Minimum bid 1 MW; pay-as-cleared per quarter. A price filter rejects up-bids below day-ahead price and down-bids above day-ahead price. Activation via scheduled dispatch (15-min quarters) or direct dispatch (any time within a quarter).

Prequalification

All three products require formal prequalification (5-year validity). Resources must meet applicable grid connection requirements — batteries and inverter-based resources qualify as kraftparksmodul under Generator Connection Requirements.

Type qualification (for units ≤100 kW): one representative unit is tested and certified; all subsequent identical units of the same type are covered. This reduces per-unit prequalification cost to near zero for IoT devices, home batteries, and EV chargers — the primary pathway enabling household battery portfolio aggregation in Sweden.

For detailed technical performance requirements (Nyquist stability criterion, ROCOF trigger, capacity reduction factors, LER SOC thresholds, measurement tolerances, and aggregation pathways), see the joint Nordic TSO standard (Source - ENTSO-E FCR Technical Requirements Nordic (2023)).

Harmonised European prequalification (ACER, September 2026)

ACER Decisions 12 and 13/2026 harmonise the terms for aFRR and mFRR providers across TSOs. Prequalification can follow three routes on equal footing (activation test, ex-post verification, fast-track), with at most 5 months in a clean case and 6 months and 10 working days otherwise; switching a reserve providing unit between BSPs keeps its status and takes 15 working days; re-prequalification is triggered by a capacity change above 10 % or 3 MW (whichever is lower) and at least 0.5 MW, or by other exhaustive grounds. TSOs submit amended national terms within six months, regulators decide within six months and implementation takes up to 24 months after approval (Source - ACER Decisions 12 and 13-2026 FRR Implementation Frameworks Third Amendment (2026)).

Market design considerations

FCR as preferred entry market for distributed flexibility

Both analytical evidence (OIES EL36, 2019) and Swedish practice point to FCR as the best first market for distributed flexibility sources (DFS) such as batteries, EVs, and controllable loads.

For FCR-N specifically: (Source - OIES EL36 Electricity Market Design for Decentralized Flexibility (2019))

1. Low energy imbalance: FCR activations are symmetric and brief — minimal net energy imbalance, limiting the BRP-aggregator settlement conflict
2. Speed matched to batteries: FCR-N requires ≥63% response in 60 seconds — batteries deliver this naturally
3. Symmetric structure: FCR-N is inherently symmetric, so the symmetric bid requirement does not exclude DFS the way a unidirectional product would

For FCR-D relative to mFRR, when choosing a first balancing market: minimum bid 0.1 MW vs 1 MW; 20-minute endurance vs 1 hour; capacity payments provide predictable revenue; FCR activations are rare and brief, barely affecting battery state of charge. (Source - CoordiNet D4.7.2 Swedish Demonstration (2022))

FCR is the market where DFS aggregation (notably home batteries via CheckWatt and similar aggregators) first reached commercial scale in Sweden. The type qualification pathway keeps per-unit prequalification cost near zero.

Value stacking — simultaneous participation in FCR-D and a local flexibility market — was demonstrated in CoordiNet: a 0.48 MW/1 MWh battery in Skåne held FCR-D capacity while participating in the local congestion market. See Flexibility Market for the broader value stacking framework.

FCR-D wear cost escalation

A September 2023 technical requirement change by Svenska kraftnät increased FCR-D activation frequency from approximately 60 activations/year to approximately 3,000 activations/year (50× increase). Two consequences:

• Battery systems: dramatically accelerated cell degradation — FCR-D harder to justify on a lifecycle cost basis, particularly when the battery owner bears the wear while the aggregator earns revenue (see Aggregation › Aggregator–asset owner wear cost conflict)
• Industrial processes: 3,000 activations/year is incompatible with production schedules; many industrial FCR-D participants have reduced or withdrawn

This contributes to FCR-D price erosion and widens the gap between technically available and commercially participating flexibility. (Source - FlexAbility Delrapport 5 (2025))

The missing money problem

As VRE penetration grows, a structural market design failure emerges: wind and solar have zero marginal cost and always clear first, compressing wholesale prices during high-VRE periods. Conventional dispatchable generators cannot cover capital costs at average near-zero prices; capacity exits; adequacy risk rises (Source - VTT-R-04621-16 Electricity Market Designs and Flexibility (2016)). OIES EL36 makes the adequacy point in cost terms: variable renewables raise the demand for backup capacity, one of three components of the profile costs it lists (Source - OIES EL36 Electricity Market Design for Decentralized Flexibility (2019)).

Flexibility Market products that pay for available capacity (LFM-h/p) rather than only energy delivered address part of this problem. The Elmarknadsutredningen (2025) rejected a market-wide capacity mechanism in favour of a strategic reserve.

ERAA 2025 results show Sweden’s LOLE significantly above the 1 h/year adequacy norm for all years through 2035, with SE3 and SE4 most exposed:

Svk’s Kraftbalansen Vår 2026 stresses that the need for demand-side flexibility is rising alongside electricity demand, and warns that flexible resources may not be built out in pace with need. (Source - Svk Kraftbalansen Vår 2026) See Capacity Adequacy and Flexibility as the Missing Reserve › The adequacy gap is real and growing for a chart of this LOLE trajectory against the norm.

For the grid risks of large-scale simultaneous household response to the same price signal, see Demand Response › Grid risks of demand response at scale.

Balancing vs flexibility markets

Balancing markets and Flexibility Markets serve different purposes:

• Balancing markets maintain system-wide frequency (a TSO responsibility)
• Flexibility markets manage local congestion and voltage (a DSO responsibility)

The same resources can potentially serve both. The Network Code on Demand Response‘s TSO-DSO coordination framework addresses how to manage conflicts when both operators need the same resource simultaneously. Value stacking across both market types (via the Table of Equivalences) is a key enabler for the distributed flexibility business case.

mFRR forwarding: DSO-to-TSO cascade

CoordiNet demonstrated a bid forwarding mechanism: unsold bids from the local congestion market that are prequalified for mFRR are forwarded to Svenska kraftnät‘s mFRR market just before gate closure (45 minutes before the delivery quarter). (Source - CoordiNet D4.7.2 Swedish Demonstration (2022))

One operational challenge resolved: CoordiNet bids initially overwrote existing BRP bid lists when submitted to the TSO; Svk created an intermediary function that merges forwarded bids with the existing BRP list before gate closure.

Structural limit: each mFRR bid must be tied to a single BRP — no aggregation of multiple FSPs’ bids for a single mFRR submission. The planned BSP role is expected to address this.

Strategic reserve — first procurement failure, then success (2025–2026)

The strategisk reserv under Lag 2025:50 replaced the old effektreserv (terminated March 2025). The first procurement — for winter 2025/2026 — failed: all submitted bids exceeded the CONE (Cost of New Entry) price cap, so no reserve was contracted.

The CONE reference technology was household demand response — the cheapest new entry option under Swedish methodology. However, all actual bidders were production-side resources with substantially higher true entry costs. No contracts could be signed. Sweden entered winter 2025/2026 without a contracted strategic reserve; Svk assessed the positive market balance (~1,000 MW surplus at normalvinter) meant no immediate adequacy risk. The CONE methodology mismatch is an unresolved policy issue for subsequent procurements. (Source - Svk Kraftbalansen Höst 2025)

The second procurement succeeded. For the period 15 January – 15 March 2026, 350 MW was contracted from Mälarenergi Kraftvärme and Sydkraft Termisk Kraft. The reserve was not activated and maintained 100% availability throughout. Winter 2025/2026 passed with good margins despite being colder than normal, reaching a peak load of 24,800 MWh/h on 12 January 2026 — the highest in years. (Source - Svk Kraftbalansen Vår 2026)

Demand-side resources (EV charging, electrolyzers) are expected to become the primary source of balancing capacity in high-electrification scenarios by 2045 (Source - Svk LMA2024 Långsiktig Marknadsanalys) — Neither LMA2024 nor KMA2025 quantifies a specific aFRR growth multiple (KMA2025 contains no balancing-market content).

The strategic reserve’s role in the broader adequacy picture — including why the failed first procurement (CONE benchmarked to household demand response) is itself a measurement of Sweden’s flexibility shortfall — is analysed in Capacity Adequacy and Flexibility as the Missing Reserve.

Data gaps

• Ei’s formal response to Merlin & Metis Konsultrapport (2026) — whether any recommendations led to regulatory action