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ENERGY

Why energy prices in Norway will continue to rise this winter 

Despite government support, Norwegians have been paying more than ever for energy and steep electricity bills will likely be a mainstay in Norway this winter. 

Energy bills in Norway are likely to continue rising in Norway this year.
Energy bills in Norway are likely to continue rising in Norway this year. Pictured are powerlines. Photo by Pok Rie: https://www.pexels.com/photo/electric-posts-409020/

Record energy prices expected to increase

During the first quarter of the year, consumers in Norway paid a record 117.2 øre/kWh for electricity, according to figures from Statistics Norway. This is before fees, taxes and grid rent are included, which increase the overall price households pay significantly. 

This was more than 75 øre/kWh higher than the average for the same period in the last five years – and there are currently no indications that the increasing trend will reverse. 

“We believe electricity prices will remain high in the coming months. Low levels of water reservoirs in Norway combined with less export of Russian gas to Europe implies higher electricity prices,” Dane Cekov, an analyst from bank Nordea, told The Local. 

At the end of May, the state-owned Statnett announced that the supply situation in Norway might be under strain – in some scenarios – all the way up to and through the winter, especially if Southern Norway experiences drier than usual weather in the second part of the year. 

Those in the south the hardest hit

However, not everyone in Norway has been hit by high prices. In the north, prices are much lower due to large hydroelectric reserves and lower demand. 

“As you know, there are five electricity price zones in Norway, and there are extreme price differences between the north and the south. The electricity price in Northern Norway is pretty low, but the transmission capacity isn’t large enough, so all the excess hydropower can’t be sent to the south,” Nathalie Gerl, lead power analyst at Refinitiv, told The Local. 

“Therefore, the prices are a lot higher in the Oslo area, the Bergen area, and the southern market zones. These are connected to the UK and Germany by cables, so we see the influence of European prices feeding into Norwegian prices there.

“Although long-term seasonal forecasts have a low certainty, they can show a general tendency for six months. On the Norwegian side, dry weather is expected in the south. Not super dry, but on the dry side, compared to what should be the norm,” she explained. 

Government support scheme to continue in the winter, but will it be enough? 

Last autumn, high prices led to the government introducing a temporary scheme that covered 55 percent of a consumer’s energy bill that surpassed 70 øre/kWh. Following pressure, the percentage of the bill the state picked up was raised to 80 percent. 

The scheme was extended to cover this winter as well. The scheme is set to cover up to 90 percent of the bill above 70 øre/kWh this winter.  

Cekov expects government support to shield most consumers from the increased prices throughout the winter. 

“Electricity prices will likely rise further towards the winter. The government compensation scheme for households (which now covers 80% of the spot electricity price above 70 øre/kWh and is set to cover 90% during the winter months) will shield households from the high electricity prices in the months to come,” Cekov said. 

However, activists have told The Local that the government’s schemes don’t go far enough. 

“We have some people (in the group) who are now forced to choose between paying for electricity bills and medicines – that’s horrible. 

“Furthermore, many people who live in Norway don’t read or speak Norwegian. Many foreigners don’t know much about the electricity market in Norway, so they get higher prices and bad deals with companies. For example, their landlord tells them to call a certain company and get electricity, and they follow the advice because they don’t know better. 

“In the group, a lot of international citizens ask for help, and we try to help them save money on electricity,” Power expert and founder of Facebook group Prismatch Strøm, Mathias Nilsson, told The Local. 

Lawyer Olav Sylte manages the Facebook group Vi som krever billigere strøm (we who demand cheaper electricity) and believes the current scheme isn’t working. 

“Today, the subsidy covers 80% of expenses over 70 øre/kWh in a month. From August, it will be 90%. However, that doesn’t help at all if the remaining 10% of the price turns out to be ten times more expensive than what people were paying before… We’re talking about extreme increases in prices,” Sylte said. 

“The second problem is that people need to pay these extreme prices first, and then they get refunded. This could become a serious problem in Autumn and Winter.

“The state needs to cover 100% over 70% øre/kWh, and it should do it in a way that people don’t have to wait for ‘refunds.’ Some don’t have the money to pay. Imagine if you used to pay 2,000 kroner, but now you need to pay 20,000 kroner? Subsidies don’t help if people can’t pay,” Sylte said. 

“In my opinion, ending the foreign cables to England and Germany could be part of the solution here. The government should never have done that, and it’s time to stop it. If not, we will have big problems in the winter,” he added.

However, Prime Minister Jonas Gahr Støre has ruled out pulling Norway from the European market. 

“When we have a profit, we can sell abroad. But at regular intervals, there are dry periods or whole dry years. Then we need power from abroad to cover our own shortcomings. This trade is good for us,” the PM told Aftenposten and E24. 

“It is a dangerous thought and will not serve us well. It could give us more expensive power and lack of power in given situations. We will hardly be able to import power when we need it without contributing to other countries when they need it. There is a reciprocity in this,” he added. 

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MONEY

How do food prices in Norway compare to the rest of Europe? 

Known just as much for its high prices as its stunning scenery, Norway doesn't have a reputation as a cheap place to live. But how much does food cost, and how does it compare to the rest of Europe? 

How do food prices in Norway compare to the rest of Europe? 

Famously known for being on the pricey side, Norway has many factors that draw foreign residents, such as the scenery, wages and work-life balance. 

However, one common complaint is the high prices. Is the cost of food and groceries as bad as everyone says? 

Unfortunately, according to the statistics, Norway lives up to its reputation for expensive food and groceries. 

Eurostat, which monitors price levels across the EU, EEA and EU candidate countries, has ranked Norway as the country with the second highest price level index for food and non-alcoholic beverages.

Out of the countries monitored by the stats agency, only Switzerland had a higher price level index. A price level index measures the price levels of a given nation relative to other countries. This means that compared to the rest of the other countries measured, food and non-alcoholic beverages in Norway are the second most expensive overall. 

According to Eurostat’s data and price level index, prices in Norway were 49 percent higher than the EU average in 2021. Norway also had the highest price for fruits, vegetables, potatoes, and ‘other food’ products. ‘Other foods’ consist of chocolates, sugars, jams etc. 

READ ALSO: Why food in Norway is so expensive

In addition, non-alcoholic beverages in Norway were also the most expensive found among 36 European countries. The price of alcoholic drinks in Norway lived up to their reputation for priciness, with the cost of alcoholic beverages being 160 percent higher than the average and the second most expensive after Iceland

Scandinavia as a whole has a reputation for high prices, so how did Norway compare in this regard? 

Finland had the lowest overall food prices out of Scandinavian countries when measured by the price level index for food and non-alcoholic beverages. This was followed by Sweden, which had a score of 117, Denmark with 120 and Iceland with 139. 

This highlights that even among the Nordics, Norway is an expensive country for food. 

One noticeable trend is that the food prices in Norway are becoming less expensive compared to the European average. In 2018, food prices in Norway were 63 percent higher than the European average. Three years on, this had fallen to 49 percent. 

Even though the prices are high, is it really that expensive when considering wages? 

While food is certainly more expensive in Norway than in most countries, wages are also considerably higher. 

For example, the average monthly salary in Norway was 50,790 kroner per month in 2021. This equates to just over 5,000 euros. In 2022, the estimated monthly average wage in the EU was around 2,570 euros. However, it’s worth pointing out that large differences exist between EU countries. For example, the average monthly wage in Bulgaria was estimated to be around 852 euros, while in Denmark, it’s estimated to be about 5,979 euros (44,514 Danish kroner). 

Therefore, a more accurate way of measuring the true cost of food would be to measure how much of a household’s monthly income is spent on food. 

In Romania, food made up more than a quarter of household expenditure, making food more expensive there for households as it eats up a larger chunk of consumers’ budgets, despite lower prices than the EU average. Across 36 countries measured by Eurostat, food and non-alcoholic beverages made up around 13 percent of total consumption expenditure by households. 

In this regard, Norwegians actually spend less money on food than other European households. Food and non-alcoholic beverages accounted for 11.3 percent of households’ total spending in 2022, according to Statistics Norway

Typically, someone aged 31-50 years will spend between 3,100 – 3,660 kroner per month on food, according to the Consumption Research Norway’s (SIFO) Reference Budget for Consumer Expenditures

So even while Norway spends more money on food, it’s less expensive overall as it takes up a lower portion of household expenditure. fra

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