HiQ and Svenska kraftnät create a more stable balancing market through smarter control

When Svenska kraftnät introduced new automated balancing functions in the Swedish balancing market, new challenges emerged at the same time, with large price variations and periodically extreme imbalance costs. Together with HiQ, several measures were implemented to create a more stable, transparent and predictable market.

Client: Svenska Kraftnät
Industry: Energy
Solution Area: Critical Infrastructure Digitalization

The Challenge

As the energy system changes, with more weather-dependent electricity production and increased requirements for flexibility, the need for fast and accurate balancing is also growing. In the spring of 2025, Svenska kraftnät introduced automated activation of mFRR (manual Frequency Restoration Reserve), which changed how balancing resources are activated and priced in the Swedish balancing market.
The new model in some situations led to large price movements and extreme price outcomes, especially during periods with low availability of balancing resources. For balance responsible parties, this meant increased risks and greater uncertainty around costs, while Svenska kraftnät needed to ensure that the market continued to function efficiently and reflect the actual need for balancing energy.

The Solution

HiQ has been part of the work to develop and support solutions connected to Svenska kraftnät’s balancing market and the changes implemented in automated balancing.
To stabilise price formation, several targeted measures were introduced. One important change was the introduction of a tolerance band in the national bid selector for direct activation. This made it possible to choose larger and cheaper balancing bids even if they were not exactly optimal according to the previous algorithm. The aim was to create more robust activation and reduce the risk of extreme price outcomes. (svk.se)
Svenska kraftnät also introduced manual price adjustments during a transition period while further improvements were developed in the market algorithms. In parallel, ongoing analyses of mFRR prices and activation patterns were carried out to quickly identify deviations and areas for improvement. Results and analyses were communicated continuously to market participants to create transparency and trust.

The Result

The measures gradually contributed to a more stable balancing market with better conditions for handling variations in the Swedish power system.
Over the course of the year, the supply of balancing resources also increased sharply, especially in southern Sweden where up-regulation capacity grew by more than 40 percent. This created better possibilities to balance the system even during periods of high load or large variations in electricity production. (svk.se)
The work is part of Svenska kraftnät’s long-term initiative to modernise and future-proof Sweden’s energy system through new market models, increased automation and major investments in electricity infrastructure – where HiQ contributes technical expertise and development close to the core operations.

Source: https://www.svk.se/press-och-nyheter/nyheter/balansansvar/2025/svenska-kraftnat-infor-flera-nya-atgarder-for-en-mer-stabil-prisbild-pa-balansmarknaden/