In southern Sweden, the October electricity price has so far averaged around SEK 1.45/kWh, according to the electricity exchange Nord Pool, excluding VAT and other fees. This is significantly higher than in January and February. The increase is smaller in the rest of Sweden.
Forecasts based on contracts for future electricity purchases currently point to a very expensive winter. It is not expected to be as bad as the crisis winter of 2022/2023, but it may come close.
The reason is expensive gas, which is widely used to generate electricity in countries such as Germany. Lower water levels in reservoirs are another factor.
Too late?
Some electricity customers may think it would be a good idea to lock in a fixed-price contract. And companies are happy to offer fixed contracts these days, at an extra premium.
But it may be too late, and electricity price analysts do not recommend it unless you want to guard against a real crisis.
A one-year fixed-term contract currently costs around 30 percent more - or up to SEK 10,000 more per year - for a homeowner with one of the larger electricity companies than paying the variable monthly price, based on current forecasts.
"Our experience is that people like to compare a fixed-price agreement with a historically expensive month for electricity prices. As consumers, they do not see how the agreement affects the cost over the entire period for which they have locked in their electricity price," says Maria Erdmann, CEO of God El, in an email response.
“Do not recommend”
A shorter winter contract could be an option. A fixed contract from December to April now costs between SEK 1.81 and SEK 2.17/kWh, including VAT, from electricity company Bixia. The highest price is in electricity area 4. This can be compared with the current winter forecast of around SEK 1.80/kWh, including VAT, in southern Sweden.
“In my opinion, I don’t recommend it,” says Bixia electricity analyst Johan Sigvardsson.
These are also the kinds of price levels that have prompted politicians, regardless of political affiliation, to promise electricity price support, he notes.
"It's like always with human psychology, mortgage rates or electricity prices: people start thinking about locking in after prices have already risen a lot," says Sigvardsson.
Electricity company Tibber, which makes its living selling variable-price contracts, has calculated how fixed and variable electricity prices would have compared in hindsight. Since 2020, locking in a price has paid off on only a few occasions, particularly in 2021, before Russia’s full-scale invasion of Ukraine.
"Fixed prices can be a fantastic deal. But then you need to commit before the market has already priced in the risk of higher electricity prices," says Tibber founder Daniel Lindén.