After two consecutive years of contraction, Sweden’s solar sector is showing early signs of stabilization, while a healthy pipeline of utility-scale projects is starting to reshape the country’s long-term generation mix.

Speaking to pv magazine, Ludwig Bydén from Swedish solar association Svensk Solenergi said the market appears to be recovering from a cyclical bottom, with early indicators such as pre-registrations and customer inquiries pointing to a gradual recovery.

“We are starting to see renewed activity across segments. It feels like the market has bottomed out and is slowly turning,” Bydén said.

Market consolidation

The downturn has led to significant restructuring across the Swedish solar industry, particularly in the residential and commercial segments. Bydén said several major installers exited the market over the past two years, resulting in a wave of consolidation.

According to Bydén, the remaining players are generally those with stronger financial foundations and a greater focus on installation quality and long-term service models.

“The consolidation has left a more stable competitive environment, albeit with reduced overall market activity during the adjustment phase,” Bydén noted.

Policy changes and price volatility

The contraction in residential solar activity has been influenced by a series of policy changes, including the removal of the 60-öre ($0.06) micro-production tax credit, which previously compensated surplus electricity exported to the grid. Reductions to Sweden’s Grön Teknik tax deduction for residential PV installations have also contributed to weaker investment conditions.

“Despite reduced direct incentives, demand is beginning to recover, driven primarily by electricity price volatility rather than subsidies. Intraday spot price swings have increased significantly, changing how households and businesses assess the value of self-generation and storage,” Bydén said. “Today, the key driver is no longer subsidies, but resilience against highly volatile electricity prices.”

Storage-first model emerging

One of the most notable shifts in the Swedish market is the rapid rise of battery storage, which is increasingly deployed as a standalone investment or installed ahead of solar generation.

The market is evolving toward what the industry is considering as a storage-first model, where batteries are installed primarily to capture value from frequency regulation and arbitrage markets before PV systems are added.

Bydén said Sweden’s well-developed ancillary services markets, particularly Frequency Containment Reserve (FCR), are playing a central role in accelerating this trend.

“In the commercial and industrial segment, developers are increasingly prioritizing battery assets first, with solar capacity added later depending on site conditions and grid constraints. In the utility segment as well, new projects are rarely developed without integrated storage components,” Bydén explained.

Grid constraints

Despite growing storage deployment, grid connection constraints remain a limiting factor for both PV and battery projects. Connection costs vary significantly by region in Sweden and are often difficult for developers to predict.

To address this issue, Svensk Solenergi has published a new handbook for flexible grid connections, aimed at improving transparency and encouraging the use of modern grid management tools.

The guidance promotes alternatives to traditional reinforcement-led approaches, including local flexibility markets and conditional connection agreements. Where such tools are applied, developers report significantly faster connection timelines.

Utility-scale pipeline strengthens outlook

Sweden’s utility-scale segment is showing momentum. Installed capacity in this segment increased by roughly 60% year-on-year, driven largely by projects that have progressed from long development pipelines. These projects include large solar parks and hybrid renewable developments combining wind and solar generation.

Bydén said earlier resistance from land-use and agricultural authorities is easing as regional governments face increasing pressure to meet energy security and decarbonization targets. This shift is improving permitting conditions for ground-mounted solar projects.

Looking ahead, Svensk Solenergi expects Sweden to maintain a stable deployment trajectory supported by three parallel drivers: utility-scale expansion, commercial and industrial solar mandates and a rapidly growing storage sector. Combined, these segments could support annual additions of around 1 GW in the coming years, Bydén suggested.