Svenska kraftnät and Litgrid begin introducing financial risk management instruments between SE4 and Lithuania
In 2026, the Swedish and Lithuanian TSOs will start implementing long-term risk management instruments between SE4 and Lithuania, contributing to increased market liquidity in the Nordic-Baltic region. According to the decision, EPAD contracts will be offered to the market, providing wholesale electricity market participants with the opportunity to hedge against volatile prices.
Implementation began on November 20, 2025, following the approval of the proposal prepared by Svenska kraftnät and Litgrid by Ei and NERC (the Lithuanian regulatory authority). Under the proposal, Svenska kraftnät and Litgrid must make at least 10% of the NordBalt interconnector’s capacity (~70 MW) available annually for cross-border price hedging. This decision by the regulators reflects previous conclusions from regional authorities that risk management opportunities in SE4 and Lithuania are limited and that market participants lack effective tools for price hedging.
The TSOs’ commitment will enable market participants to manage portfolio risks arising from price volatility more effectively and strengthen regional market integration by ensuring more reliable and efficient risk management opportunities. The new project will be the first cross-border EPAD solution of its kind in Europe. Until now, similar practices have only been applied in the domestic markets of Sweden and Norway.
Contact
If you have any questions, please contact forhandsmarknad@svk.se