Sweden freezes Denmark power link to pressure EU over energy revenues

The Swedish government has suspended the Konti-Skan Connect project, a critical electricity interconnector with Denmark, to pressure the European Union over grid revenue rules. The move signals a sharp escalation in Stockholm's efforts to secure national control over funds generated by energy bottlenecks.

The suspended project was designed to replace two aging cables, Konti-Skan 1 and 2, which link south-western Sweden to Jutland, Denmark. The decision is a strategic maneuver intended to force a resolution in Brussels regarding the use of "bottleneck revenues," also known as congestion income. These funds are generated when price differences occur between bidding zones and grid capacity limits the flow of power.

The Battle for Bottleneck Funds

Sweden is currently managing a massive surplus of these funds. At the start of the year, the bottleneck account of the national grid operator, Svenska kraftnät, held approximately SEK 85 billion. Projections indicate an additional SEK 130 billion will be generated over the next decade.

While the EU advocates for these revenues to be reinvested into cross-border capacity and common European energy projects to reduce price fragmentation, Sweden is pushing for greater flexibility. Stockholm seeks to divert these funds toward domestic power production, specifically targeting investments in nuclear and hydropower, rather than limiting the spend to grid expansion. This shift in priority reflects a desire to prioritize national energy security over regional integration.

Sovereignty vs. Integration

This dispute underscores a growing tension between the EU’s vision of a highly integrated, single energy market and the desire of member states to maintain national energy sovereignty. By halting a key piece of Nordic infrastructure, Sweden is testing the boundaries of EU grid regulations. The move suggests that national investment priorities—particularly the stability and expansion of domestic generation—may now take precedence over regional interconnection goals.

What's Next

Sweden has effectively tied the renewal of the Konti-Skan link to the outcome of negotiations in Brussels. The industry is now watching to see if the EU will grant concessions on the use of congestion income or if the pause will lead to a prolonged diplomatic standoff. While the political motivation is clear, it remains to be seen how the suspension will impact short-term energy stability between Sweden and Denmark as the existing cables continue to age. The outcome will likely set a precedent for how other EU member states handle congestion income in the future.