Even higher costs predicted as Norway sets new record for electricity prices

Tuesday saw the cost of electricity reach a record high in parts of southern Norway, but prices are expected to rise further.

Electricity is more expensive than ever in Norway. Illustration photo by Nikola Johnny Mirkovic on Unsplash

The price of electricity in parts of southern Norway including Oslo, Kristiansand and Bergen reached 10 kroner per kilowatt hour (including tax) on Tuesday morning, broadcaster NRK reports.

Although those prices are reported to be unprecedented, they are also likely to increase further according to the report. Dry weather in Norway and high gas and oil prices internationally are contributors to this.

“It is incredibly expensive, we’ve never seen prices this high before,” Gert Ove Mollestad, editor of energy publication Montel Energy News, said in comments to NRK.

“The weather (is) very dry so we are not getting as much rainfall. There is reason to believe that prices in South Norway will climb further. It’s difficult to say how much but it will be terribly expensive,” he said.

Steps taken by Europe and the United States to ban oil or gas imports could have a knock on effect in Norway.

According to NRK, the current cost of a barrel of North Sea oil of 130 dollars is the highest since during the Global Financial Crisis in 2008.

Once oil and gas prices increase internationally, the cost of electricity for consumers follows.

A government energy subsidy, which can cover up to 80 percent of electricity bills if certain conditions are met, was originally introduced in December in response to the price crisis.

The original package saw the government pick up 55 percent of the bill when the spot price, the cost of raw energy firms pay, rises above 70 øre per kilowatt hour.

The government later said it will cover 80 percent of electricity bills after  opposition and critics said that the scheme wasn’t enough.

Politicians are now calling for an extension of the scheme, which is scheduled to expire this month.

“We envisage a more accurate and fair scheme, but what’s most important is that we now extend the electricity subsidy and give people better electricity schemes than the one we have now,” Lars Haltbrekken of the Socialist Left party told NRK.

The new minister for oil and energy, Terje Lien Aasland, told NRK that “for as long as energy prices are high, then we will contribute” and that the scheme would continue.

READ ALSO: Norwegian government to increase energy bills subsidy to 80 percent

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Norwegian gas plant back in service after fire

Norway is Europe's second-biggest supplier of natural gas behind Russia and key to ensuring energetic autonomy for the continent. Its sole liquefied natural gas plant is operating once again after being ravaged by a fire in 2020.

Norwegian gas plant back in service after fire

Norway’s sole liquefied natural gas (LNG) unit has been restarted after a 2020 fire and will soon begin production, energy company Equinor said Friday, a move expected to help increase exports to Europe.

Norway is Europe’s second-biggest supplier of natural gas behind Russia.

Production at Equinor’s plant in Hammerfest in northern Norway, which makes it possible to deliver gas by ship in liquid form, is to help Europe cut its dependency on Russian gas after its invasion of Ukraine.

“We have completed the repair work on the plant, we have completed the testing… and we have now started the cool-down process,” Equinor spokesman Gisle Ledel Johannessen told AFP.

“It will take some time to finalise the cool-down process. The next step is to get the liquefied natural gas on the tanks”, he said.

Johannessen would not specify when that could happen, but said it was “a short time frame”.

The site, damaged in a September 2020 fire, produces almost 4.65 million tonnes of LNG per year, according to Equinor.

Norway announced steps in March to keep its gas production at maximum levels to help Europe reduce its Russian dependency.

Among other things, the Norwegian Petroleum and Energy Ministry agreed to adjust the production licences of three offshore fields so that they can prioritise gas production over oil.

But its exports have been squeezed by production capacities, already churning at maximum levels, and the distribution system via pipelines.

It is hoped the Hammerfest unit will make it possible to increase export volumes.

Norway covers between 20 and 25 percent of the European Union’s and Britain’s gas needs, while Russia currently supplies around 40 percent.