Short range marginal costs in the Swedish electric energy system

The Swedish electric energy system consists of power plants characterized by gradually increasing production costs, i.e. plants based on hydro power, nuclear power, coal based back pressure power, oil based back pressure power, oil condense and gas turbines. Consequently, the short range marginal costs (SRMC) for electricity production will vary over the day and the year. Existing electricity tariffs are based on the SRMC for electricity production but not to that extent that they can serve as cost-effective incentives for an increased efficient use of the society´s scarse resources. The time differentiation of the electric energy prices is too small in existing tariffs. Here, the authors describe an analysis method for evaluating the SRMC for the electricity producer and for the electricity distributor