Sweden Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Sweden Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Sweden solar energy market is expected to have an installed capacity of 2,178 MW by the end of this year and is expected to register a CAGR of more than 23.3% during the forecast period.

The COVID-19 pandemic caused a short-term delay in projects due to a slowdown in the supply of materials and demand caused by the lockdown imposed to contain the virus. However, the sector is likely to undergo a quick recovery in the medium- to long-term. Additionally, factors such as the declining cost of solar PV technology and abundant sunshine in the southern part of Sweden for electricity generation are likely to drive Sweden's solar energy market.

Key Highlights

• Over the short term, due to the disruptive effect of the Russia-Ukraine conflict on the European energy market, rising electricity and natural gas prices are expected to incentivise consumers to install solar PV panels for self-consumption, which is expected to be a significant factor driving the market
• However, rising investments in alternative renewable energy sources such as offshore wind energy and hydropower, are expected to restrain the growth of the Swedish solar energy market during the forecast period.
• Nevertheless, Sweden's target of achieving 100% renewable energy generation by 2040 is expected to create several opportunities for the Swedish solar energy market in the future.

Key Market TrendsSoaring Electricity Prices to incentivize the installation of Solar PV systems for self-consumption

• In the past couple of years, there has been a significant rise in electricity demand from the residential and industrial sectors. According to the Swedish Energy Agency, the total energy consumption in Sweden is expected to increase by 5% to 523 TWh between 2020 and 2024. Further, the industrial sector is expected to witness a surge in electricity demand; energy use should increase by 5.1% to 143 TWh in 2024. Energy demand in the residential sector is anticipated to rise by 3.6% to 145 TWh during 2020-2024.
• Additionally, since the start of the Russia-Ukraine conflict, energy prices in Europe have skyrocketed. Sweden alreay has one of the highest electricity prices in Europe. As of August 2022, average monthly electricity wholesale price were EUR 190.12/MWh, up by nearly 350% from EUR 54.34/MWh in January 2019.
• The country largely depends on hydropower and nuclear power for its electricity generation. According to the government of Sweden, as of August 2022, in the total energy generation mix, hydropower contributes more than 38%, and nuclear power provides more than 29%.
• Since 2012, there have been more than 17% decline in the electricity generated from nuclear power as the country started phasing out nuclear power and in 2020, the government in Sweden shut down two nuclear power reactors, Barsebäck 1 and 2. Furthermore, In 2020 Ringhals2 and 2021, Ringhals 1 nuclear power plant was permanently shut down after 44 years of operation.
• Moreover, Vattenfall AB, a leading nuclear power company, has five operational nuclear power plants in the country. However, due to a lack of government policies for storing nuclear waste, the company would have to halt the operations in four nuclear power plants in the country till 2025, which is likely to result in significantly higher electricity prices in the near future.
• Hence, due to falling nuclear generation and rising gas prices across the continent caused by the geopolitical effects of the Russia-Ukraine conflict, the price of electricity in Sweden is expected to increase significantly, incentivising the installation of solar panels for self-consumption, driving the demand for solar energy during the forecast period.

Ground-mounted segment to grow significantly during the forecast period

• As of 2022, the Swedish Solar energy is dominated by the rooftop segment, with the ground-mounted segment accounting for a minor share of the market.
• However, the interest and activity in this market segment has increased significantly since 2020, and the number and sizes of ground-mounted solar PV parks are expected to increase during the forecast period.​
• As of 2021, Sweden total installed capacity of solar PV systems with sizes greater than 1 MW was 129 MW, greater than twice the installed capacity in 2020 (53 MW). However, growing private investment and declining cost of PV systems are expected to drive the market in the upcoming years.
• Ground-mounted installations ranging from 800 kW to 7 MW are being developed by local municipality-owned utilities, including Kalmar, Luleå, Falu, Trollhättan, and Lidkoping.
• Several large utility-scale projects are also being developed by private players. For instance, in March 2022, Swedish renewable developer Recap Energy and Finnish investment company Korkia have signed a joint venture (JV) to develop more than 200MWp of ground-mounted solar PV projects in Sweden over the next four years. The newly formed JV will aim to sell shovel-ready projects that are backed either through the signing of corporate power purchase agreements (PPAs) or merchant-based revenue schemes.
• Moreover, in 2022, Helios Nordic Energy AB has entered into agreement with Nordic Solar to acquire four ground mounted projects in Helios project pipeline in the south of Sweden of which three are in SE3 and one in SE4. They have a total combined capacity of approximately 220 MWp.
• Therefore, with decreasing costs and increasing investments by municipalities and private players, the ground-mounted segment growth is expected to be the fastest-growing segment during the forecast period.

Competitive Landscape

The Swedish solar energy market is moderately fragmented. Some of the major players in the market (in no particular order) include HPSolartech AB, ABB Ltd, Exeger Sweden AB, InnoVentum AB, and Vattenfall AB.

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• The market estimate (ME) sheet in Excel format
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