Acquiring Hydropower Assets in Sweden – Key Legal Considerations

Interest in Swedish hydropower is growing, both as an investment and as a source of renewable electricity. For buyers, the permits behind the plant are as important as the plant itself.

Swedish hydropower gives investors access to renewable electricity production from established plants. The ongoing review of permits for modern environmental conditions may, however, affect both output and investment needs. In our experience, the permits and water rights behind a plant often matter as much to its value as the plant itself. This article outlines the key legal issues when acquiring hydropower in Sweden.

(This article is also available in Swedish, access the Swedish version here.)

Investing in Swedish hydropower

Hydropower is an established part of Sweden's electricity system, and its ability to balance a grid with more weather-dependent generation has become increasingly valuable. For buyers, an operating plant offers renewable production at an established site, normally with an existing grid connection and a production history against which to assess future returns. Depending on the asset, refurbishment and operational improvements may also create opportunities to increase generation or extend its useful life.

Acquisitions may involve individual plants or portfolios, structured as a purchase of assets or of the shares in the owning company. In either case, the investment brings together physical installations, rights to land and water, and environmental permits.

The ongoing review of hydropower permits

Virtually all Swedish hydropower plants are to be given modern environmental conditions under the Environmental Code, following the national plan known as NAP. After an extended pause the reviews resumed in 2025 and will continue for many years.

A review may lead to requirements such as minimum flow releases or fish passages, which affect both generation and capital expenditure. In the most serious cases continued operation may be called into question. A buyer should therefore establish whether the plant has been reviewed, when any review is scheduled and how the outcome could affect the acquisition case.

Legal due diligence in hydropower acquisitions

The key question when buying a hydropower plant in Sweden is whether its historic generation is supported by its permits and water rights, and whether it can be sustained under future environmental conditions. Areas to consider include:

• Permits and operating rights. The permits are central to the value of the plant. Their scope, including limits on water use, regulation of water levels and generation, needs to be compared with actual operations, planned improvements and the outcome or timing of any review. For older plants, court judgments and historic rights may also need to be clarified.

• Land and water rights. Ownership of the plant, dams and land is considered together with the right to use the water. Easements and leases need to secure access for operation, maintenance and planned works, particularly where dams, roads or power lines are located on land owned by others.

• Commercial and corporate arrangements. Power purchase, grid connection and maintenance agreements affect returns and operational continuity. Consent requirements, transfer restrictions and dependencies on the seller's group may need to be resolved before completion.

• Environmental obligations and investment needs. Compliance issues, outstanding orders from supervisory authorities and dam safety responsibilities may entail expenditure beyond routine maintenance. These are best assessed together with the plant's technical condition.

• Transaction structure and approvals. Share and asset purchases raise different questions about liabilities and the continuity of rights and contracts. Foreign direct investment screening and other regulatory requirements can affect the timetable and are best considered early.

Reflections

The rules governing Swedish hydropower are in a period of change. As the reviews progress, the position of individual plants becomes clearer, but new environmental conditions can still limit production or require substantial measures. Older permits and historic rights can also be difficult to interpret, and their meaning is not always evident from the documents alone.

In our view, the permits and the review process are the decisive legal factors when a hydropower plant changes hands. A plant awaiting review calls for a different approach than one whose conditions are already settled, and the difference is rarely visible in the production figures. Before committing, a buyer should be able to answer three questions: What do the permits allow today? Has the plant been reviewed and, if not, when will it be? And what measures may be required, and at whose cost? The answers determine what is actually being acquired and on what terms.

Contact us

We regularly advise on water law and have broad expertise in environmental, energy and real estate law. Our clients include operators, companies and investors, and we act as Swedish counsel to international clients and law firms. Contact us for more information.

(This article provides general information only and does not constitute legal advice on any individual matter.)