IN Brief:
- Sweden has paused plans for the Konti-Skan Connect power cable to Denmark.
- The decision follows disagreement with the European Commission over the use of congestion charge revenues.
- The pause links interconnector investment, grid funding, export policy, and domestic generation strategy.
Svenska kraftnät is facing a changed political position on new interconnection after Sweden paused plans for the Konti-Skan Connect power cable to Denmark.
The project is intended to replace two ageing power cables between south-western Sweden and Denmark. Sweden’s government has put the scheme on hold during a dispute with the European Commission over how revenues from electricity congestion charges should be used.
Congestion revenues arise when grid constraints prevent electricity from flowing freely from lower-price to higher-price areas. The resulting price differences between bidding zones can generate substantial revenues for transmission system operators. Sweden expects revenues from electricity exports to countries including Denmark, Finland, and Germany to total around SEK130bn over the coming decade.
The Swedish government wants greater freedom to use those revenues to support domestic electricity production capacity. The European Commission favours directing the money toward energy grid investment. Sweden’s energy minister has linked the disagreement to new cable development, leaving Konti-Skan Connect paused.
Cross-border cables support security of supply, improve market coupling, allow surplus generation to move between countries, and reduce price volatility where transfer capacity is available. They can also create domestic tension when low-cost electricity is exported into higher-price markets, increasing exposure to neighbouring price conditions or reducing perceived national control over electricity supply.
Sweden’s power system includes significant nuclear, hydro, and renewable resources. The country is also pursuing new nuclear capacity, with the government seeking funding for four large-scale reactors with around 5,000MW of installed capacity, or an equivalent volume of small modular reactors. Part of that capacity is targeted for operation by 2035.
The interconnector pause places two investment priorities in direct tension. Cross-border grid investment supports regional market integration and allows generation and demand to be balanced across wider areas. Domestic generation investment focuses capital on national adequacy and long-term production capacity. Both require large-scale funding, and both shape electricity prices, system resilience, and industrial competitiveness.
The issue sits alongside other grid constraints in the Nordic region. Denmark has paused new grid connection agreements while Energinet assesses the pressure created by large-scale demand growth. That domestic connection pressure now sits alongside a cross-border dispute over the infrastructure and revenue rules needed to move electricity between markets.
Replacing ageing interconnectors is not only a market decision. Older cables affect system reliability, maintenance risk, available transfer capacity, outage planning, and long-term trading arrangements. Deferring replacement preserves Sweden’s negotiating position over congestion revenue, but it also delays infrastructure that would support future power flows between Sweden and Denmark.
The Nordic region has long relied on high levels of interconnection, hydro flexibility, and cross-border market coordination. Electrification, data centre growth, hydrogen production, and industrial demand are increasing the value of transfer capacity while also increasing political pressure over where electricity is consumed and where infrastructure revenues are spent.
Congestion revenues are becoming more contested as constraints grow. The way those revenues are allocated determines whether money flows into grid reinforcement, generation support, tariff relief, or other national priorities. In a more constrained system, those choices are no longer technical accounting decisions. They influence the pace of grid development and the distribution of costs between countries, networks, generators, and consumers.
Konti-Skan Connect now sits at the centre of that debate. European power systems need stronger interconnection to manage variable generation and uneven demand growth, but the financing rules must satisfy national governments as well as EU market design. Cross-border electricity infrastructure can only advance where engineering need, revenue allocation, and political consent remain aligned.