How Sweden has profited from selling Norwegian energy back to Norway

Sweden has turned a profit buying cheap Norwegian power from the country's north and then exporting it back to southern Norway where prices are higher. 

Pictured are powerlines in Sweden.
Sweden has been making money buying cheap power from north Norway and then exporting it back to the south. Pictured are powerlines in Sweden.Photo by Axel Josefsson on Unsplash

Sweden has profited from a large disparity in energy prices between the south and the north in Norway, Norwegian public broadcaster NRK reports. 

Energy in north Norway is considerably cheaper than in the south, where price records have been broken throughout the summer. Sweden imports cheap energy from north Norway into north Sweden before moving it south and exporting it to south Norway. 

“It is often the case that power is exported from northern Norway to northern Sweden and imported from southern Sweden to southern Norway, and lately it has at least been like that,” Ann Myhrer Østenby from the Norwegian Water Resources and Energy Directorate (NVE) told NRK. 

Around 80 percent of the energy exported from Norway is from the north, according to figures from the NVE. Power is much cheaper in north Norway because more is produced than can be used, while in the south, reservoirs used in hydroelectric production are extremely low.  

“People scream about exports from the south, but it is actually the northern Norwegian power that has been exported,” Tor Reier Lilleholt, energy analysis manager at Volue Insight, told NRK. 

Between January and July of this year, 4.51 Terawatt-hours (TWh), or 4.5 trillion watts, were sent from Norway to Sweden, while Sweden exported 3.67 TWh to Norway. Not all of the energy exported into Norway will have originated in the country’s north, though. 

Energy from the north is exported rather than directly transferred to parts of Norway where energy is the most expensive domestically because Norway does not have the infrastructure or capacity to move large quantities of electricity from north to south. 

Whereas Sweden has a much better energy transmission capacity than Norway, meaning it can import energy from its neighbours, transport it south and then export it back. 

Bank Nordea’s investment director Robert Næss told online publication Nettavisen earlier this year that Sweden has made billions of kroner by importing cheap electricity from north Norway and exporting it to the south.

“I arrive at a gross profit of just under 2.3 billion Norwegian kroner, and then they have to hand over around half a billion kroner of this profit to Statnett,” he estimated in May. 

If Norway were to build power lines to move power from the north to the south, rather than exporting it to Sweden, it could take up to ten years, and it isn’t clear whether it would equalise prices throughout Norway or stop its neighbours from profiting from price disparity anyway. 

“It would probably have a certain effect, but how much depends on many assumptions that are difficult to take into account. It is very complex,” Østenby said. 

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Could sky-high energy prices force some ski resorts in Norway to remain closed?

High electricity prices and the prospect of power rationing could spell big trouble for Norway's smaller ski centres.

Could sky-high energy prices force some ski resorts in Norway to remain closed?

Record high energy prices mean some ski resorts in Norway are facing the prospect of staying shut this winter, business and financial newspaper Dagens Næringsliv reports. 

“We constantly have to make an ongoing assessment of it, but in the worst case, we have to close the slope,” Knut Styrvold, chairman of the Kirkerudbakken ski centre in Bærum municipality, told the paper. 

Industry organisation Norwegian Alpine Resorts and Mountain Destinations sent a letter last week to the Prime Minister, Finance Minister and the Minister of Culture calling for measures from the state to help businesses struggling with energy costs. 

Some of the highest costs for an alpine resort are artificial snow production, which requires large amounts of power. 

“In our area, with the prices that are predicted now, we are looking at a tenfold increase in power costs, perhaps more for the coming winter,” Odd Stensrud, deputy chairman of the industry organisation and general manager of Alpinco, which owns and operates the alpine resorts at Hafjell and Kvitfjell, told the paper. 

Larger resorts and firms should be able to manage as they have agreements where they pre-pay for energy in bulk, meaning they may not necessarily have paid current high prices for the energy they will use in snow production. However, the general manager of Alpinco added that larger resorts could still end up paying double what they paid last year. 

Support for smaller resorts, and the business community in general, have yet to be announced by the government. According to Stensrud, this means many resorts may opt against running the lifts this winter. 

“If the electricity prices that are signalled for the coming winter become a reality, then it is absolutely certain that it will mean the hook on the door for several locations,” he said. 

“It is important to remember that the alpine resorts are often the core business in many mountain destinations and local communities. They keep the other tourism activities going in mountain municipalities in Norway and are crucial to ensure that districts and municipalities are not hit too hard by electricity prices,” Strensud added. 

Earlier this week, Oil and Energy Minister Terje Aasland said that the government and parliamentary leaders were “working closely to find a fair arrangement for business”. 

A plan for businesses is expected to be unveiled during the next month.