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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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.