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Norway likely to avoid extreme energy prices predicted earlier this year

Frazer Norwell
Frazer Norwell - [email protected] • 9 Nov, 2022 Updated Wed 9 Nov 2022 12:50 CEST
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Experts are now confident that Norway won't see extreme prices previously predicted. Pictured is a dam in Norway. Photo by Bjørn Kamfjord on Unsplash

Plenty of rainfall in Norway has analysts predicting that consumers may not be hit with the unprecedented energy prices that experts feared the country could see this winter. 

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Energy prices in Norway have remained extremely high for over a year now. While prices may not be returning to levels seen in more typical years, analysts are hopeful that extreme prices predicted earlier this year might not come to fruition. 

"It looks like we escaped the highest prices we saw headed our way two or three months ago. That we get more pleasant prices and that it lasts through the rest of the winter if we are not unlucky and go on a cold wave," Olav Botnen, a senior analyst at Volue Insight, told public broadcaster NRK

Previously, analysts have predicted that in a worst-case scenario, prices could reach 10 kroner per kilowatt hour (kWh) in Norway.

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The reason experts now expect these prices to no longer be a possibility is due to a large amount of recent rainfall. This autumn has so far been a lot warmer and wetter than is typical for the time of year. 

Due to the rainfall, reservoirs in Norway, which the country relies on for its energy needs, have risen significantly throughout October, leading to lower prices. Similarly, low reservoir filling levels have contributed to high energy prices in southern Norway for over a year. 

Warmer weather than typical has also meant less power has been consumed than typical for the time of year, as fewer people are switching on their heating. 

Replenished reservoirs have already contributed to lower electricity prices for consumers. In Oslo in October, the average spot price for energy was 1.32 kroner per kilowatt hour (kWh), according to figures from the energy exchange Nord Pool

This is down significantly from previous months when the average energy price was 3.55 kroner in September and 3.51 kroner in August in Oslo. A similar effect has been seen in other parts of the country where reservoirs have seen their filling rate increase. 

Last week, Tor Rierer Lilleholt, also an analyst with Volue Insight, said that current prices could continue to the new year, granted the country doesn't see a cold snap, before rising to around 4 kroner. 

READ MORE: How long could the dip in energy prices in Norway last?

However, Botnen has told NRK that if the current trend continues, prices may not even rise as high as 3 kroner. 

"The market expected us to rise to three kroner after the New Year. But it doesn't look like the price level will be that high," he said to NRK. 

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Frazer Norwell 2022/11/09 12:50

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