Norwegian energy agency warns high prices could last until next winter

High energy prices which are driving up living costs in Norwegian homes could persist through next winter, the Norwegian Water Resources and Energy Directorate (NVE) warned on Monday. The government should be prepared to extend economic relief, the agency said.

Lighting and heating homes in Norway could remain costly throughout 2022.
Lighting and heating homes in Norway could remain costly throughout 2022. Photo by Sara Kurfeß on Unsplash

High energy prices in Norway are likely to continue through the end of this year, NVE director for energy and concessions Inga Nordberg said on Monday in an interview with broadcaster NRK.

“What we are seeing is that you should be prepared for high prices at a much higher level than we are used to. Not just this winter but also in the summer and possibly next winter,” Nordberg said.

Although energy prices normally fall in spring and are also expected to do so in 2022, the most likely scenario is that they will remain high throughout the year, the department director said.

Households should be prepared for “close to winter prices in the summer”, she said.

The prognosis for high energy prices in the medium term remains uncertain, however. It is primarily affected by two factors in Norway: gas prices and the level of rain and snowfall.

The current security situation in Ukraine makes the former factor uncertain, while snow levels in the mountains are currently low although that “can change quickly”, Nordberg said.

The government last month said it would further increase a subsidy for energy bills, updating a package brought in December which saw the state pick up 55 percent of household bills when the spot price, the cost of raw energy firms pay, rises above 70 øre per kilowatt hour.

The opposition and critics subsequently said that the scheme wasn’t enough before the government said it would cover 80 percent of electricity bills, subject to a vote in parliament.

The scheme, which began in December 2021 and will run until March of this year.

Asked whether the government should consider extending it, Nordberg told NRK “I think it is natural that is one of the things we should look at in future”.

READ ALSO: What times of day should you avoid using electricity in Norway?

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ENERGY: What Norway’s new grid rent model means for you

A new model for grid rent, the fee you pay the network for powering your home, will be adopted in Norway later this year. So, what will it mean for you, and will it help slash your energy bills? 

ENERGY: What Norway's new grid rent model means for you

Following a six month postponement, a new gird rent system will be adopted nationwide in July, the Norwegian government has announced

Grid rent is the charge consumers pay for receiving electricity into their homes. Under the current model, grid rent is typically anywhere between 20 to 50 øre per kilowatt-hour. Those in rural areas usually pay more, while those in cities pay less.

The new model will have a lower fixed proportion of the fee with a higher part of the charge linked to total consumption, meaning homes that use more power will pay higher grid rent, while those that consume less will have lower bills. 

The new model has been welcomed by the Norwegian Housing Association (NBBL). 

“Now we get a fairer grid rent, where those who load the power grid the most so that the need for development increases, pay somewhat more in fixed terms than those who use little electricity at the same time,” Bård Folke Fredriksen, CEO of the NBBL, told newswire NTB. 

“No one wants to pay for the neighbour to charge two electric cars simultaneously during the day, when it is entirely possible to charge slowly at night when there is good capacity in the power grid,” he added. 

Initially, the model was meant to be adopted in the new year, but a majority in parliament opted to delay the scheme’s introduction. 

“The goal of the new grid rental model is to facilitate the best possible utilisation of the transmission network and a more equitable distribution of costs between customers,” Minister of Petroleum Terje Aasland said in a government statement.

The government has said that, over time, the scheme would lead to lower grid rent for customers. 

“Power-based grid rental will provide incentives for efficient grid utilisation, which will result in lower grid costs for electricity customers, less encroachment on nature and fewer conflicts related to grid development,” Aasland said. 

A transition period of two years will be introduced, and the new consumption charge will only be allowed to account for 50 percent of grid companies’ revenues. The energy ministry will then assess the new model at the end of the transition peroid.