Why it is becoming harder to get a good deal on energy prices in Norway 

Fewer Norwegian energy firms are offering fixed-price agreements to customers, making it harder for consumers to secure a good deal in light of rising electricity prices. 

Pictured are powerlines.
Less energy firms are offering fixed price deals, making it harder to secure a good deal. Pictured are powerlines. Photo by Fré Sonneveld on Unsplash

Several electricity firms in Norway have dropped fixed-price agreements, while others are pricing deals well above the market value to prevent being caught out by rising energy prices, financial publication Dagens Næringsliv (DN) reports. 

Most energy generated and consumed in Norway is hydroelectric and low reservoir levels, and an uncertain energy picture in Europe as a result of the war in Ukraine means there will likely be very high prices for power in the autumn and winter.

“It is becoming increasingly difficult to secure fixed-price agreements for end-users,” CEO of Rauma Energi, Alf Vee Midtun, told DN. 

Customers in south and south-west Norway are the least likely to be able to secure a fixed-price agreement due to substantial price differences for energy in southern and northern Norway. 

“There have been extraordinarily high prices and extreme volatility in the market recently. This means that we do not recommend our customers to enter into a fixed-price agreement right now,” Kristian Helland, product and business development director at Lyse Energi, said to DN. 

High price volatility can make it harder for energy firms to hedge their bets, as if the cost of energy is considerably below the fixed term agreement, customers can trigger a “get out” clause, but if the cost of energy is higher than the fixed-price, firms have to absorb the costs. 

“Yes. When prices fluctuate as much as they do now, we have great challenges in securing prices. And the customer is always right. If a customer has entered into a fixed-price agreement with us, and the price falls significantly in a short time, the customer has a 14-day right of withdrawal and can withdraw from the agreement. But we can not wait for 14 days to secure ourselves. It will be completely unsustainable,” Midtun from Rauma Energi explained. 

With a lack of competitive fixed-price deals, consumers, therefore, have to opt for spot agreements where they pay the raw cost of energy that the supplier pays, but with grid rent, tax, and other fees applied. 

Energy price analyst Tor Reier Lilleholt from Volue Insight has said that it wouldn’t make much financial sense to enter into a fixed-price agreement. 

“Yes (my own fixed-price deal is expiring soon), and I have followed closely to see how fixed prices have developed. They are now extremely high. We are talking 30-40 øre above market price. This means that the players do not take any risks and make a lot of money. It is not relevant for me to enter into an agreement at these levels,” he told DN. 

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TELL US: What are your tips for saving on energy in Norway?

Norwegian homes are set to see energy costs go up this winter. We want to know your tips and plans for limiting the price of bills.

TELL US: What are your tips for saving on energy in Norway?

Energy prices in southern Norway have soared due to low hydroelectric reservoir filling levels, the war in Ukraine, and high gas prices. 

Many households in the country are bracing themselves for a tough winter, despite the government’s subsidised bill scheme.

High energy bills have consumers in Norway most worried, according to a survey by Sparebank 1. Norwegian newswire NTB reports that 54 percent of those who responded to the survey are concerned by high electricity prices.

Analysts in Norway have warned that prices in southern Norway could rise as high as 20 kroner per kWh.

We want to know you what your plans are for tackling the energy crisis this winter – if any – and what tips you have.

Have a look at the form below and lets us know, and we’ll share the best advice in a future article.