High energy prices in Norway to continue into summer

High electricity prices in Norway are likely to continue throughout the spring and summer, with experts predicting seasonal price records during the year's warmest months. 

A dam in Norway.
High prices could be caused by reservoirs not being sufficiently replenished by melted snow. Pictured is a stock photo of a dam. Photo by Bjørn Kamfjord on Unsplash

Residents in southern Norway can expect to pay record energy prices this summer, electricity price analyst Tor Reier Lilleholt has said. 

“It is estimated to be the highest you have seen. A price of between 1.5 and 2 kroner per kWh, without taxes, is expected in southern Norway this summer,” Lilleholt told business and financial site E24

However, Lilleholt added that bills were still expected to be lower overall as consumption would also dip during the summer.  

Energy prices are typically lower during the year’s warmer months as the snow melts during the spring, replenishing reservoirs. Most of Norway’s energy needs are provided by hydroelectricity.  

However, as there has been little snowfall this year, it is expected that the melted snow won’t refill reservoirs to the same extent. High gas and coal prices, triggered by the war in Ukraine, are also likely to contribute to high prices throughout the summer. 

Aslak Øverås, information manager at Energi Norge, the organisation representing companies that produce, transport and deliver electricity, said that firms would need to plan ahead this summer. 

“The power producers will arrange the water in the reservoirs so that it will last throughout the year. They will also need to consider that there is abnormally little snow in the mountains and that there is less precipitation in the spring. The alternative to keeping prices high now is that the magazines can run low, and we get even higher prices when autumn comes around,” Øverås said. 

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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.