Do you think the price of electricity is high now? Well, the market expects prices in southern Norway to rise by around 25 percent in January, but this depends on weather and temperature.
The January price in the future contracts for electricity is 220 øre per kWh on Wednesday. In comparison, the average price for Oslo so far in December has been 173 øre. This is only the pure electricity price.
– Swings enormously
– Prices fluctuate somewhat enormously. Yesterday, futures contracts in France were traded at 7.5 kroner per kilowatt hour on average for delivery in January, while in February it was up to 10 kroner. Today it has fallen back and is somewhere between seven and 10 kroner, says Siri Line Hove Ås, power analyst at Trønder Energi.
She adds that France usually has a lot of surplus power, but that many shut down nuclear power plants mean that they have to import more.
– In Germany, prices are lower than in France, where they are at 400 øre per kWh in January and 460 in February. But there are sky-high prices there as well, says Ås.
Olav Vilnes, editor of the news agency Montel, says that fixed prices are more common in France than in Norway, something many people are probably happy about now.
– Yesterday, February contracts were traded at NOK 10 per kWh in France. In Norway, very many are at spot prices, so the debate is stronger here, says Vilnes.
The big joker going forward is the weather gods.
For the next 15–16 days, abnormally cold winter weather has been reported during the Christmas and New Year weekend. But we know from experience that a lot can happen with the weather forecast in a week or two. If it continues to get cold, prices can be very high in southern Norway. If it gets mild over time and we get precipitation, we can get lower prices, says Ås.
–330 øre before power support
Tor Reier Lilleholt, head of analysis at Volue Insight, tells VG that average prices in southern Norway can reach 330 øre per kWh for the month of January, all fees and grid rent included, if market expectations materialize.
– But it depends a bit on the company’s mark-up and which network company you are affiliated with. And then in this calculation you get electricity support from the state of 104 øre. If the cold we see now persists into January, it will be dramatic. But we know that the weather changes quickly and it can be milder. Then prices will also fall dramatically. But in the last week, the market has risen enormously and spot prices show that it is actually going as high as feared, says Lilleholt.
Vilnes in Montel says that electricity customers in Oslo, Bergen and Kristiansand can expect about the same high electricity price in January.
– There will be a new record and December is already at a record high. Tromsø, Trondheim and Ålesund are significantly lower. We are talking about just under the krone per kWh. They get half the price of what southern Norway gets in January, he says.
Falling towards summer
From the summer onwards, it fortunately looks brighter.
– From July onwards, prices are now below 50 øre per kWh, says Lilleholt, who advises people who are considering a fixed price to wait to commit to the summer. Alternatively, only commit for a maximum of six months now if you know that you are unable to handle today’s record high prices and want insurance against further price increases.
– If the market does not change for southern Norway, there will be room to get one-, two- or three-year contracts for between 60 and 70 øre by the summer, says Lilleholt. He himself tied the electricity price of 34 øre in August.
Less water
The filling rate in the reservoirs fell by 1.2 percentage points last week to 60.7 percent, according to recent figures from NVE.
The median filling in the same week in the period 2001–2020 is 73.5 per cent.
Power analyst Ås in Trønder Energi explains the sluggish water reservoirs in southern Norway by saying that we received unusually little precipitation this summer.
– We had quite a few terrawatt hours less rainfall in weeks 30 to 38 than we usually get. We should be careful to say that the low filling rate is only due to exports, it is not. We have less water than we usually do and Norway is now linked to a market that is abnormally high priced, says Ås.
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