Energy analyst fears more than double electricity bills for the winter

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The monthly average price for electricity has tripled in the southern, western and eastern parts of Norway in the past year and a half. “Electricity price records” have become commonplace this summer. In Northern and Central Norway the increase is more modest: 20 per cent.

– The records we are talking about now concern high daily and weekly prices, says Tor Reier Lilleholt, power analyst at Volue Insight.

The daily price of electricity fell 4 kroner in South-West Norway on 28 July.

But it is the trends over time that are the most important to follow, Lilleholt believes.

– Whether it is one day or one hour when the price is at a record high, that is not what makes the big results. It is the average price over a longer period of time that is important, he says and continues:

– If there is a week, month or winter with an average price that sets records, then you really notice a difference.

Lilleholt still calls the records, which are constantly surpassing each other, “extreme”. The summer months are usually the cheapest due to low demand for electricity, because there is less need for heating and many people go on holiday.

– We have handled cables to foreign countries and almost empty water reservoirs for years, but now there is a power shortage throughout Europe.

Because there are two things in particular that affect the ever-increasing prices in the southern part of the country:

Russia has sharply reduced power exports to Europe. This has sent prices skyrocketing on the Continent. Southern Norway is closely connected to the European power grid and is therefore particularly affected by this. European countries are willing to pay dearly for Norwegian power, and much of the power produced in this country is exported to them.

Hydro and wind power are not stable sources of energy. They depend on water and wind to produce power. Rainfall and low wind times affect how much power it is possible to produce, both in Norway, the Nordic countries and Europe.

More expensive times ahead – but not for everyone

The weather conditions and the war in Ukraine will continue to be decisive factors for how electricity prices will develop in autumn and winter, Lilleholt believes. Neither part seems to be getting better anytime soon. At the same time, electricity consumption, and thus the demand for power, will increase.

– The market expects an average daily price of NOK 3.5 per kilowatt hours in the winter months, from October to March.

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This forecast applies to the south, east and west. In comparison, the electricity price was a maximum of NOK 1.5 per kWh, last winter.

Including online rental and taxes, this can mean a total price of up to NOK 5 in the most expensive periods.

But the state comes to the rescue of private individuals. Electricity customers were covered 55 per cent of costs over 70 øre per kilowatt hours for December, and 80 per cent in January, February and March.

From 1 October, the state will take an even larger part of the bill. The support is increased to 90 per cent when electricity costs more than 70 øre per kilowatt hours in October, November and December.

Including taxes and internet rent, Lilleholt believes that private individuals are thus shielded from paying an electricity price higher than NOK 2 per kW

He advises private individuals to check their electricity consumption during this period last year and multiply this by NOK 2. Then you can predict what the maximum you can end up with on your electricity bill in this period.

The business world and the cottagers get high bills

Lilleholt, on the other hand, has a major concern.

– I cannot warn enough those who do not receive electricity support. The state may have to intervene there to avoid long-term consequences beyond high electricity bills.

Lilleholt is particularly aimed at companies, self-employed people and other parts of the business world. If the market’s forecasts are correct, this could mean more than three times higher electricity bills for businesses this winter.

– The bills will be big. There could be bankruptcies, and unemployment could increase significantly, both in Norway, the Nordic countries and Europe, says Lilleholt.

He also mentions that electricity consumption linked to cabins and holiday homes is not covered by the government’s electricity subsidy. – The cabin people can get hit and have to pay more than three times more for electricity than they do at home.

Does not survive weather and war

Managing director Knut Kroepelien of Energi Norge says that there are two uncertainties that no one can handle:

– The weather, and the war for gas in the extension of the Ukraine conflict. If we get a normal autumn, NVE and Statnett say that we will not go from a “tight” to a “strained” situation. With a dry autumn, cold winter and gas crisis, we will have challenges in connection with the snow melt and the spring crisis, says Kroepelien.

Energi Norge represents the companies that produce, transport and deliver renewable energy.

Right now, according to Kroepelien, there is an “unfortunate situation” with little water in the reservoirs in southern Norway and a very low degree of filling.

– It gives very high prices in southern Norway. While north of Dovre and the Sognefjorden, the magazines are overflowing and prices are very low. We have a clear, two-part power market, he says.

The development in the coming weeks and months will be decisive for the power situation – and prices – in autumn and winter.

– The precipitation, the temperature and the gas situation, which we have no control over, will be decisive. It is a unique coincidence of dry year problems and great unrest in the European market.

– We have lived with this organization of the power market for 30 years and it has served us well without rationing and Europe’s lowest prices. But the system has not taken war into account, he says.

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