Sweden and Norway have introduced grid fees with a localisation component. At the TSO (Transmission System Operator) level, these fees include energy and capacity components. Generators and consumers pay higher fees if their location increases the need of transmission. The figure shows the loss factors per TSO substation, which are used to calculate the energy fee. Generators in northern regions pay a percentage (the loss factor) of the spot price, while those in the south receive reductions. Thus, incentivising localizing generation in the south, where there is an energy deficit, and encouraging demand in the energy surplus area of the north. A similar localisation component exists in the capacity fee.
In the last years, the spot price has been much higher in the southern bidding zones than in the northern bidding zone. Thus there are plenty of price incentives for generators to locate in the south and for demand to be concentrated in the north. However, it is often not possible for existing customers to do anything about their localisation. It could be argued that the signal would be both stronger and have a larger practical impact if only directed at those considering connecting new generators or demand, Denmark for example applies this approach through connection fees. Finland also considering introducing such a location component in the grid connection fee.
