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ENERGY

EXPLAINED: Why are energy costs soaring in southern Norway? 

Electricity bills for customers in southern Norway are shooting up due to record-high energy prices, leaving a big dent in people's pockets. Here's why. 

EXPLAINED: Why are energy costs soaring in southern Norway? 
Vemork, a hydroelectric plan. Photo by Mark König on Unsplash

The price of electricity in southern Norway has reached the record high level of more than 115 øre per kilowatt-hour

This is more than double the cost of electricity in central and northern Norway, and the rising prices mean that energy bills for consumers in the south could increase by as much as 2,000 kroner per month more compared to last year, according to energy price analyst from Volue Insight, Tor Reier Lilleholt . 

The massive price differences between the north and the south are down to a few factors. Firstly water reservoirs in southern Norway are incredibly low due to a small amount of rainfall over the summer. 

“In the northern and in central Norway, we have water in our reservoirs, while southern parts of the Nordics have very little water,” Trygve Sørås, head of power management at NTE Energy, told public broadcaster NRK

In addition to the lack of rainfall, southern Norway has also exported large amounts of energy to the continent, meaning supply has struggled to meet up with demand.

“The continent is also seeing very high power prices, so some energy has been exported there. Therefore in the south, reserves aren’t as fully stacked,” Sørås said. 

Norway sold a record 5 billion kroner worth of energy to other countries in the first half of 2021, a record for power exports in the country.  

Things are looking much rosier for consumers in central and northern Norway, though. central Norway is benefiting from increased wind and hydro production. This output is expected to continue for the foreseeable future keeping energy prices low throughout the winter in central Norway. 

“If the weather is normal for the time of year, the prices in central Norway will be at this level throughout the winter,” Sørås explained. 

Frustratingly, the south can’t buy any of the surplus power from northern and central Norway. 

“There is little transmission capacity from the north to the south, which means a price bottleneck between the north and south,” energy price analyst from Volue Insight, Tor Reier Lilleholt, explained to the public broadcaster. 

This means southern Norway is forced to buy much more expensive energy from the continent through subterranean cables. 

READ MORE: Norway and UK complete world’s longest underwater sea cable

Lilleholt believes this will exacerbate the issue even further for those in the South, leading to consistently high prices throughout winter. 

“We will also connect to Britain and British prices with a new cable in southern Norway during the autumn. Prices are even higher there than in Germany and the Netherlands, and the UK needs even more power than those countries. This together with a dry autumn could trigger high prices this winter,” he told NRK. 

How to get the best deal

With prices in southern Norway only expected to rise during the winter, getting the best deal possible has never been more important to stop you from feeling the pinch. 

Shopping around isn’t the only tip for getting the best bang for your buck, but also making sure you choose the type of energy agreement that works best for you. 

If you want to find out more, check out our guide to getting the best deal here

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EUROPEAN UNION

Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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