Long-Term Market Analysis

Långsiktig marknadsanalys (LMA) is Svenska kraftnät‘s recurring scenario analysis of the Swedish and Northern European electricity system to a long horizon (currently 2050). It is the principal evidence base for long-term transmission grid planning and for Svk’s view of the future Nordic system. LMA is paired with the kortsiktig marknadsanalys (KMA), which covers the near term (~5 years). Svk has produced the LMA series since 2016; the fifth edition, LMA2026, was published 17 June 2026. (Source - Svk LMA2026 Långsiktig Marknadsanalys)

Purpose and method

The LMA is not a forecast but a set of scenarios — internally consistent development paths chosen to span a broad outcome space, used to identify future needs and challenges in the transmission grid and the synchronous Nordic system so that Svk can act proactively. Scenarios are built by identifying trends and drivers, quantifying them into assumptions on electricity demand and on build-out potentials and costs per technology, then running:

• Investment optimisation — production capacity is partly exogenous input and partly determined endogenously, where the model builds out generation to meet demand at least cost.
• Electricity market simulation — using Afry’s BID3 model (which replaced EMPS from LMA2024), over 44 weather years, producing energy balances, flows, prices, balancing needs, rotational energy, resource adequacy, and flexibility behaviour.

A key methodological choice: transmission capacity is held constant across scenarios (only reinforcements with adopted inriktningsbeslut are included). The aim is to reveal the need for future reinforcement in each scenario rather than to model a system where they are already built — which means transfer capacity may be understated, especially toward 2050. (Source - Svk LMA2026 Långsiktig Marknadsanalys)

LMA2026 scenarios

Four scenarios, named so the first word denotes electrification pace and the second the direction of new production (from a Swedish perspective):

The scenarios map roughly onto LMA2024’s: SF→LF, FM→MM, EP→HP, EF→HF. (Source - Svk LMA2024 Långsiktig Marknadsanalys)

Demand revised down. The 2050 Swedish range of 192–333 TWh is lower than LMA2024’s 209–365 TWh. The reduction is driven mainly by profitability problems in several green-industry projects (high capex, rising interest rates, electricity-price uncertainty, international competition), partly offset by new projects and higher maturity in existing initiatives. A large share of expected demand growth — especially fossil-free steel and sponge iron in SE1 — is concentrated in a few projects and actors, so the outcome is highly sensitive to a handful of investment decisions. Faster data-centre growth is named as an upside risk.

Nuclear lifetime extension is now assumed in all scenarios (three of six existing reactors in LF/HF, all six in MM/HP) — a shift from LMA2024, where reactors were retired after 60 years.

Key findings (LMA2026)

• North–south price gradient flattens. Heavy new demand in northern Sweden (hydrogen-based steel) erodes the historical low-north/high-south spread; in the highest-demand scenarios SE1 becomes the highest-priced zone. See Bidding Areas.
• Transmission reinforcement stays valuable. +500 MW on internal snitt generally shows high welfare benefit to 2050. Snitt 1 (SE1–SE2) benefit rises over the period, especially in HP/HF; Snitt 2 benefit falls relative to 2026 because the NordSyd program already adds capacity. Increasing capacity on existing cables to the continent remains valuable even as annual-average prices converge.
• Reserve needs and balancing costs rise in all scenarios as variable wind/solar grows; differences between scenarios are small relative to total production cost. A deep-dive estimates FFR (fast frequency reserve) and FRR costs; today’s FFR is cost-effective at low rotational energy.
• Flexibility is decisive for resource adequacy in high-demand scenarios — removing price-responsive demand for hydrogen/e-fuels produces a significant number of shortage hours (see below).
• Lower rotational energy, more converter-connected production → greater need for grid-forming converters, synthetic inertia, and synchronous condensers; the challenge is largest where nuclear is retired.
• Sensitivity — no renewal of HVDC cables to Poland, Germany, Finland, Denmark raises the need for dispatchable thermal capacity in the connected countries and worsens conditions for Swedish wind relative to solar by 2050.

Flexibility in LMA2026

Flexibility is modelled as partly-flexible electricity use (EVs and hydrogen, limited by built-in storage), plus förbrukningsreduktion (demand reduction at given price levels) from large heat pumps, hydrogen-for-e-fuels, and general industry. Indicative Swedish flexibility potentials (GW, if full demand is shifted from a peak hour):

• EV charging: half of EVs assumed to charge flexibly; 2050 HP/HF EV battery capacity ≈ 324 GWh, of which 162 GWh flexible; ~2.7–3.1 GW shiftable.
• Hydrogen storage: up to ~4.4 GW (HP/HF 2050).
• Demand reduction: ~2.8–3.4 GW (2050).
• Batteries (large + small) and pumped resources add further shifting capacity (~7.5+ GW large-scale by 2040).

The central adequacy result: in high-demand scenarios, if price-responsive hydrogen/e-fuel demand is not assumed, a substantial number of shortage hours appears — underscoring the need to develop incentives for flexible electricity use. This continues the LMA2024 finding that demand flexibility is essential for adequacy under high electrification. See Flexibility, Demand Response, Capacity Adequacy and Flexibility as the Missing Reserve.

Planeringsscenario — Svk’s expanded planning mandate

Under Svk’s new instruction (in force 1 August 2025; Source - Svk Strategi mot 2030 (2026)), the agency has an expanded responsibility for coordinated long-term planning of the national electricity system. As part of this, Svk will introduce a formal planeringsscenario (planning scenario) — a single scenario consistent with the riksdag’s energy-policy goals, complemented by alternative development paths for risk and uncertainty. LMA2026 was not built around a planeringsscenario, but Medel mixat (MM) is judged closest. Work on a full planeringsscenario is planned to begin in autumn 2026.

Note the gap to the planeringsmål: the riksdag’s goal is that the system be planned to meet ≥300 TWh by 2045, which sits above LMA2026’s projected demand (MM ≈ 263 TWh in 2050). The goal is a planning premise (to enable the green transition), not a demand forecast; reaching it would require much of the electrification to land in the later part of the period, possibly needing complementary measures beyond market drivers. See Svenska kraftnät › Strategy 2030.

Relationship to KMA and other analyses

LMA2024/KMA2024 data fed Svk’s national input to ERAA 2025, which underpins the system-level component of the Flexibility Need Assessment and the capacity adequacy analysis. The LMA scenarios also inform the bidding-zone review and the localisation principles behind the Anvisningssystem. (Source - Svk KMA2025 Kortsiktig Marknadsanalys)

Data gaps

• Content of the forthcoming planeringsscenario (work begins autumn 2026) — which assumptions it fixes and how it diverges from MM
• Whether LMA2026’s downward demand revision changes Svk’s snitt capacity targets (Snitt 1 7,500 MW / Snitt 4 3,600 MW by 2045) set in Planering för ökad elanvändning

Cross-references

• Svenska kraftnät — author; expanded planning mandate; investment program
• NordSyd — the reinforcement program whose value LMA2026 quantifies (Snitt 1/2 welfare benefit)
• Bidding Areas — price-gradient flattening; SE1 becoming highest-priced
• Flexibility / Demand Response — flexibility as decisive for adequacy
• Grid-Forming Inverters — low-rotational-energy challenge
• Balancing Markets — rising reserve needs and balancing costs (FFR/FRR)
• Capacity Adequacy and Flexibility as the Missing Reserve — shortage-hour finding