Norwegian government to extend energy bill subsidy scheme until next year

The scheme, which sees the state cover 80 percent of electricity bills when the energy price rises above a certain amount, will be continued until March 2023, Norway’s government announced Thursday.

Power pylons.
The governemnt will be extending the scheme until next year. Pictured are power pylons. Photo by American Public Power Association on Unsplash

The state will continue to subsidise energy bills to the tune of 80 percent when the market price exceeds 70 øre per kilowatt-hour.

“We want to reduce costs for households when prices are extremely high. However, we see that there is so much uncertainty now that we want to provide security,” Minister of Petroleum and Energy Terje Aasland told newspaper VG.

The scheme was due to end in April but will continue until March 2023. Over the last ten days, electricity prices have shot up, with parts of Norway paying 10 kroner per kilowatt-hour when taxes and grid rent are included earlier this week.

The proposals for the scheme to continue for another 12 months have been sent for consultation in parliament.

Energy minister Aasland said that the government was also working on a longer-term solution to combat rising energy prices.

READ ALSO: How will the war in Ukraine impact the cost of living in Norway?

“We are working to find lasting solutions that can reduce costs in the future, but we must return to that,” the minister said.

When prices fall below 70 øre per kilowatt-hour, the scheme will not apply. This has made it difficult to predict what the extension would cost the state, according to Finance Minister Trygve Slagsvold Vedum.  

The subsidy scheme was initially introduced in December. The original package saw the government pick up 55 percent of the bill when the spot price, the cost of raw energy power firms pay, rises above 70 øre per kilowatt-hour.

It was later raised to 80 percent following pressure from opposition and critics.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members


Could Norway’s gas supplies become a target for saboteurs?

Security experts have warned that Norway's gas supply could become a strategic target for potential saboteurs following unexplained leaks on the Nord Stream pipelines near a Danish Island on Tuesday. 

Could Norway's gas supplies become a target for saboteurs?

Norway’s gas supplies are perhaps the largest and most strategic target for potential saboteurs in Europe, Lieutenant Colonel Geir Hågen Karlsen a defence researcher from the Norwegian military has claimed. 

“We have a major war in Europe right now. Norwegian gas supply is probably the biggest and most strategically important sabotage target in the whole of Europe right now,” he told public broadcaster NRK on Tuesday evening.

His comments come after the two Nord Stream gas pipelines linking Russia, and Europe were hit with unexplained leaks.

The three gas leaks on the Nord Stream 1 and 2 pipelines were visible Tuesday in waters off Denmark, with vast areas of bubbling spreading from 200 to 1,000 metres in diameter, the Danish military said.

“The biggest leak is causing bubbling over a good kilometre in diameter. The smallest is creating a circle about 200 metres” in diameter, the military wrote in a statement accompanying photographs of the leaks off the Danish island of Bornholm.

The EU said Wednesday that leaks from the two Russia-Germany undersea gas pipelines appeared to be “a deliberate act”. 

READ MORE: Pipeline gas leaks in Baltic Sea due to ‘deliberate acts’, says Nordic leaders

The Norwegian government has decided to beef up security at oil installations following the gas leaks. 

“Following the leak, the Norwegian government has decided to put measures in place to increase security at infrastructure sites, land terminals and platforms on the Norwegian continental shelf,” Norwegian Energy Minister Terje Aasland said in a statement late Tuesday.

Equinor has also said it will raise the security level at its installations across Norway. 

Additionally, Norway’s intelligence and security service, PST, said that it was constantly monitoring the threat to Norwegian oil and gas supplies. 

“PST assesses the situation and any threats on an ongoing basis. We advise bodies that need it (security advice),” senior adviser Martin Bernsen from PST told broadcaster TV 2.

Prime Minister Jonas Gahr Store told Norwegian news agency NTB there was “no specific threat against Norway”.

Why could Norway be a target?

Norwegian gas could make a target for saboteurs as, since Russia’s invasion of Ukraine, Norway has become the leading supplier of natural gas to Europe. 

This has made Norwegian gas more critical as Europe looks to Norway to supply its gas needs even more due to supplies from Russia being cut. 

Concerns over gas supplies this winter has led to prices skyrocketing, and instability in the market has also led to much higher energy prices for consumers. 

Prior to Norway becoming Europe’s leading supplier of gas and maintaining full production throughout the summer, a period which is typically used for maintenance, it accounted for around 25 percent of the EU’s and Britain’s gas needs. 

According to the energy ministry, the country will increase its exports by around eight percent this year. Norway should therefore produce approximately 122 billion cubic metres of gas in 2022, according to previous government estimates. That can be compared to the 150 billion cubic metres of gas per year that Russia supplied to the European Union before the war in Ukraine.

Stretching over thousands of kilometres, sometimes at great depths, the oil and gas pipelines are a weak link in the energy supply chain that is so vital to Europe.

These factors are the reason why security experts in Norway have called the country’s pipelines a major target for sabotage. 

“Norwegian gas is undoubtedly the most important target in Europe right now,” Researcher and naval captain at the Naval Academy, Tor Ivar Strømmen, told the Norwegian newspaper VG