The Reality of the Crisis in Sweden

The energy crisis accelerated in May as the Hormuz blockade cut off 20 percent of the world’s oil supply, leading to two million cancelled airline seats across Europe. The aviation industry is struggling with diesel shortages and astronomical prices, while farmers are warning of bankruptcy risks as fertilizer and tractor fuel costs spiral out of reach.

The Swedish government’s crisis package, approved by the EU, lowers taxes on fuels and includes SEK 4.7 billion in support introduced earlier this year. But experts are calling for longer-term measures such as electrification, digitalization, and data-driven optimization of energy usage. The issue is not only about building new nuclear reactors or adding more wind power — it is about managing the energy we already have far more intelligently.

AI Software Breakthroughs in the Crisis

AI tools are already taking the lead in energy optimization.

Predictive analytics is being used in power grids to balance production and consumption in real time, reduce waste, and forecast demand with extremely high accuracy. In Ukraine, some models have reportedly reached up to 98 percent accuracy under highly stressed conditions.

For aviation, AI-based route planning and fuel optimization enable algorithms to reduce fuel consumption by up to 25 percent by continuously accounting for weather conditions, air corridors, cargo load, and airport capacity in real time. The most advanced solutions also integrate maintenance data, reducing the risk of unexpected operational disruptions.

In agriculture, precision farming — powered by drones, sensors, and autonomous software-controlled machinery — has reduced diesel and fertilizer usage by around 30 percent in Nordic pilot projects while maintaining or even improving crop yields. AI models combine satellite data, soil moisture levels, weather forecasts, and historical harvest data to determine exactly where and when interventions are needed.

Swedish innovations such as digital grid planning, smart management of industrial electricity consumption, and AI-optimized heat pumps demonstrate how software can become just as important an energy asset as new physical infrastructure. At its core, this shift is about moving intelligence from steel and diesel into code and data.

From Balancing Markets to Crisis Management: Lessons from the Energy System

Right now, the energy crisis is most visible at the fuel pump, at airports, and on farms. But it starts much higher up in the system: in how effectively we balance the power grid, manage resources, and price scarcity.

That transition is already underway in Sweden. When a Swedish transmission system operator introduced more automated balancing in the national balancing market during 2025, the result was initially large price fluctuations and periods of extreme imbalance costs — the same type of volatility now threatening both industry and households.

Together with HiQ, targeted measures were implemented to make the market more stable, transparent, and predictable. A key initiative involved adjusting the national bid-selection logic by introducing a tolerance band that allowed larger and more cost-efficient balancing bids to be selected, even if they were not perfectly optimal according to the previous algorithm. The goal was to create more robust activation processes and reduce the risk of extreme price spikes.

At the same time, temporary pricing adjustments and systematic analysis of pricing and activation patterns were introduced. The energy company and HiQ jointly monitored how the market responded, enabling rapid identification of deviations and improvement opportunities. Results were continuously communicated to market participants to build transparency and trust.

Over time, these measures contributed to a more stable balancing market with better conditions for handling fluctuations in the power system. During the year, the supply of balancing resources also increased significantly, particularly in southern Sweden where upward regulation capacity grew by more than 40 percent. This created entirely new opportunities to manage periods of high demand and major production variability without prices spiraling out of control.

The lesson is highly relevant in today’s energy crisis: as systems become more volatile — from wind and solar variability to geopolitical shocks — it becomes critical to have software, data, and algorithms capable of:

• balancing quickly and accurately,
• dampening the worst price fluctuations,
• building trust through transparency toward market participants.

This is exactly the type of work HiQ does within the energy sector: translating complex market models, regulations, and technical requirements into real, operational software close to the business.

HiQ’s Perspective: The Energy Sector as a Platform for AI Solutions

When we talk about AI as a “savior” for aviation and agriculture, it is easy to think about standalone apps or individual startups. But much of the real impact happens when the entire energy system becomes smarter – from balancing markets to local grids and energy-intensive facilities.

At HiQ, we work with solutions for automated balancing and smarter control of electricity markets. This includes developing algorithms and software capable of activating the right resources at the right time, whether that means hydropower, flexible industrial demand, batteries, or future hydrogen systems. A critical part of the work is also ensuring that complex control logic and AI-driven decisions remain understandable, traceable, and manageable over time.

What makes this particularly interesting is that the same principles can be applied far beyond the energy sector itself. Data-driven control, predictive analytics, and capacity optimization quickly become relevant for aviation, agriculture, and other energy-intensive industries as well.

For aviation, this could mean planning routes and fuel usage based on real-time conditions in the energy system and fuel markets instead of optimizing in isolation. In agriculture, precision farming and energy management can be aligned with periods when electricity is cheaper and more available, while simultaneously reducing diesel and fertilizer consumption. Industry, meanwhile, can adapt production rates and energy loads in real time based on pricing and capacity conditions instead of simply reacting when the electricity bill arrives.

For us, this is a natural extension of the work already being done in balancing markets and energy infrastructure. The underlying principles remain the same – only the application areas change.

The Sharp Paradox: AI Saves Energy — But Also Consumes It

At the heart of this transition lies an uncomfortable paradox: while AI systems can solve large parts of the energy crisis, training the most advanced models also requires enormous amounts of energy — in extreme cases equivalent to the annual consumption of entire countries.

The answer is not to step away from AI, but to make the technology itself more energy efficient:

• More efficient algorithms and code reduce the amount of computation needed to achieve the same results.
• Reusing the waste heat generated by data centers allows energy to be used twice — first for computation, then for heating.
• Edge computing enables more processing to happen closer to users, vehicles, machinery, and sensors, reducing data traffic to large cloud systems and thereby lowering both latency and energy consumption.
• Smaller, industry-specific AI models trained for clearly defined tasks can replace generic “one-size-fits-all” models that consume unnecessary computational capacity.

In practice, this is the same principle seen in balancing markets: embedding intelligence and efficiency into the infrastructure itself, rather than simply adding another application layer on top.

A Question for the Government: Why Not Subsidize AI Software?

As the Swedish government rolls out emergency support packages for aviation and agriculture, the key question is what happens next. A strategy based solely on subsidized fuel does not solve the structural energy crisis. It merely postpones it.

An investment package focused on Swedish AI and software infrastructure for energy, transportation, and agriculture could:

• mitigate today’s crisis through faster and smarter optimization,
• build a long-term competitive advantage for Swedish industry,
• create export-ready solutions by packaging and scaling lessons learned from the Swedish balancing market.

Sweden has a unique opportunity to combine two strengths: deep expertise in energy systems and advanced AI and cloud platforms – with companies like HiQ bridging regulation, operations, and technology.

Without such investments, we risk becoming trapped in a permanent crisis mode where every new shock is met with temporary subsidies instead of building the smart, self-learning systems that make society more resilient over time.

From Balancing Markets to More Resilient Energy Systems

At HiQ, we work together with energy sector stakeholders to make complex energy systems smarter, more stable, and easier to understand and manage through software, data, and AI.

Together with a Swedish transmission system operator, we have helped develop solutions for the national balancing market during the transition toward more automated balancing. The work has included smarter algorithms, adjustments to bid-handling logic, and continuous data analysis to improve how resources are balanced and activated over time. This has contributed to lower imbalance costs and reduced price volatility while significantly increasing the availability of balancing resources, particularly in southern Sweden.

Our work includes:

• developing market and control systems for electricity and balancing markets,
• analyzing pricing and activation patterns to identify bottlenecks, risks, and improvement opportunities,
• designing architectures where AI and automated control can be introduced in a controlled and transparent way within critical infrastructure,
• building and maintaining systems that must operate reliably 24/7 — even during periods of crisis.

Our experience across energy, industry, and the public sector means we often work at the intersection of technology, operations, and societal resilience. In these environments, success is rarely about building another pilot project — it is about making complex solutions work in practice, over time, and at scale.tt fungera i praktiken – över tid och i stor skala.

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