How much do foreign power export cables affect energy prices in Norway?
Power cables that export energy from Norway to the UK and Germany have proved controversial recently. But what effect do they have on energy prices?
Electricity prices in southern Norway would be around 25 percent lower than they currently are if two cables that connect the Norwegian energy market to Germany and the UK didn’t exist, an analysis from Volue Insight and reported by the newspaper Dagens Næringsliv (DN) has revealed.
Foreign export cables have been controversial in recent months as the energy price in Norway has soared. Southern Norway, where prices are typically highest, is connected to the European energy market through power transportation cables.
Many have called for exports to the continent to be curbed or cut off completely to try and shield Norway from electricity prices.
Lawyer Olav Sylte manages the large Facebook group Vi som krever billigere strøm (we who demand cheaper electricity) and believes cutting the power cables could help ease soaring prices in Norway.
“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 said to The Local previously.
The analysis from Volue Insight highlighted that the war in Ukraine and low reservoir filling levels meant that the influence of power export cables on energy prices was higher than a previous Statnett estimate from earlier this year, which estimated the presence of the wires affected the price by around ten percent.
“The war in Ukraine, combined with the low water reservoirs, means that the two cables have a much greater influence on the prices,” the head of analysis at Volue Insight, Tor Reier Lilleholt, told DN.
“Then we see that without the two newest cables, the prices would have been 25 per cent lower in southern Norway,” he added.
Statnett has said that its previous estimate was retrospective and looked at 2021. The state-owned firm added that Norway likely would still be experiencing record prices without the cables.
“The main conclusion (from Statnett’s earlier estimation on the effect of power cables) is that we had record prices even without the two new cables. That is probably still the case, and the situation around the European gas supply has only become more uncertain,” Henrik Glette, communications director for Statnett, told DN.
Glette added that the effect of foreign cables on energy prices in southern Norway was likely bigger in 2022 than in 2021.
Lilleholt told DN that without the war in Ukraine, the price of electricity in Norway would be around 50 øre.
On Tuesday, the price of electricity in southeast, southwest, and west Norway was 6.43 kroner per kWh, according to figures from the European energy exchange Nord Pool.