The idea of the system of point tariff is that the producers are paying a fee to the grid for each kWh that they pour into the grid and the end users pay a fee for each kWh that they draw off the grid. Moreover, the kilowatt-hour can be traded freely in the whole area withour additional fees.

This means for example, that a retailer in Southern Sweden may buy power from a producer in Northern Sweden. Of course, such a deal does not cause the producer’s power to go all the long way from Northern Sweden to Southern Sweden. The principle is simply that for each hour of operation a producer has to pour an amount of power into the grid that corresponds to the amount that the retailer’s customers have tapped off the grid.

This system is also referred to as a stamp tariff system.