The European Commission (EC) has approved, under EU State aid rules, a Swedish €300m strategic electricity reserve aimed at safeguarding the security of electricity supply during emergency situations.
This strategic reserve is a capacity mechanism that pays for resources kept outside the market and used only during emergencies, when electricity demand surpasses supply, usually in Sweden’s winter months. The reserve, set to operate until 2035, will be open to all projects capable of contributing to the security of supply objective, including power generation, demand-side response (typically large electricity consumers), and storage solutions.
The EC specifies that projects benefiting from the aid will be selected through a transparent and non-discriminatory bidding process designed to ensure effective competition. Projects will need to comply with the CO2 emission limits set out in the EU Electricity Regulation to be eligible under the strategic reserve. Beneficiaries will compete based on the amount of aid requested per MW of capacity and the speed at which capacity can be made available during a scarcity event. Capacity funded under this measure will be excluded from participation in electricity markets while it remains subject to the strategic reserve.
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