COMMENTS
The price of electricity is record high. Then there is not only a danger that Norwegians will shiver in the cold homes – then political Norway will also tremble. The future of the Norwegian economy is at stake, writes Geir Ramnefjell.
EXTERNAL POINTS: Whoever wins the story of the record-high electricity prices can decide the direction of Norway’s economic development. Labor leader Jonas Gahr Støre and Social Democrat leader Trygve Slagsvold Vedum may rule together, but are extremes in this dispute. Photo: Terje Pedersen / NTB
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Internal comments: This is a comment. The commentary expresses the writer’s attitude.
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The price of electricity is not no longer just an acute political problem when it rises to verse. The battle for the electricity price is now about far more than the electricity taxes in the coming months. The perspective extends several decades ahead in time.
The opportunities for the new, green industries – our future industrial development, new economic pillars when oil and gas disappear – lie in the pot when popular dissatisfaction rises in line with electricity prices.
The key word is energy cooperation with the EU. The electricity price ignites one of the most toxic political issues in Norwegian politics – Norway’s relations with Europe, and the balance between autonomy and the benefits of European cooperation.
In the coming weeks and months, politicians will fight over the price of electricity. In fact, they are fighting over relations with Europe and the future of Norwegian industry and business.
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But first, what is what happens to the price of electricity in Norway? It has been rising for a long time, and the average price last week was one kroner and 23 øre per kilowatt hour. In comparison, it was 12 øre at the same time last year, and 23 øre in 2019. The explanation is high gas prices, low wind production, decommissioning of non-renewable energy and nuclear energy in Europe, rising quota prices for CO2 and a very dry year here. at home.
Have Norwegian power companies shuddered at rising prices? No, despite a favorable market, power exports from Norway have not been higher this year than in previous years, according to figures obtained by E24.no from the network operator Statnett. Exports have actually been slightly lower than the average for the last ten years.
The reasons behind The price increases can be as complicated, situational and transient as they want. When the price of electricity goes to heaven, everything from the Red to the Center Party and the Green Party will still point out how this is concrete proof that things are going wrong when Europe gets too close. Several of them have already, on completely wrong grounds, blamed the EU energy agency Acer. Rather, they have pointed out that more power cables lead to somewhat higher prices.
The challenge for those who want to paint the situation black is just this: In the power market, we are already very close to Europe, with 17, soon to be 18 foreign cables importing and exporting electricity. Publicly owned Norwegian electricity companies make good money from this. Consumers have also benefited from them. In the winter of 2019, Norwegian electricity prices would have been two, maybe three times as high without imports, a simulation from NVE has shown.
Hydropower also gives Norway a favorable starting point. We want the opportunity to buy cheap power when the wind blows speed in the turbines in our neighboring countries. Our own hydropower will be extra valuable because it is more predictable. Power cables are thus not just a polite gesture towards Europe, and a soft-hearted contribution to the energy transition. We have our own interests in this, both economic and trade policy.
The price of electricity in Norway is as much about industry and jobs as it is about consumers. This will intensify. It is not just the existing, power-intensive industry that makes access to cheap electricity important. Several knock now on the door. According to Statnett’s analyzes, a decisive reason why electricity prices are expected to rise in Norway in the future is the ever-increasing demand from new industry in Norway. Because even though electricity prices are rising in Norway, it is low compared to our competitors. Not least, electricity production is almost 100 percent renewable. Many companies are looking for this both to be able to sell green products, but also because renewable and cheap electricity will increasingly be two sides of the same coin when the quota price of CO 2 in the EU is expected to increase.
In order to realize all the new industrial projects, more renewable power development is still needed in Norway. Not primarily to supply Europe, but also to maintain cheap electricity and favorable framework conditions that can provide industrial growth and jobs in Norway.
Here it begins to lace up. These new industries depend on more good framework conditions than just cheap Norwegian power. They also need to be able to sell the goods on the European market. Earlier this year, we got an example of why keeping an arm’s distance from the EU can present problems. After Brexit, cars with batteries produced in Norway received 10 per cent extra customs duties on imports to the United Kingdom.
To avoid more such disadvantages for Norwegian business and industry in the future, we depend on closer contact with the EU to adapt and update regulations. Ultimately, negotiations on this type of framework condition will be decided by political considerations. A Norway that makes itself impossible and is not interested in seeking solutions that can benefit more than ourselves, will risk getting the same treatment back.
Another example is offshore wind. According to the companies competing for the licenses issued in the south of the North Sea, the projects will not be profitable without cables to both Norway and Europe. In that case, our own good relationship with electricity will sink one of the largest industrial projects in Norway even before it has been launched.
Similar to a political forced marriage
So when we reach this fall and winter argues about the current, we actually also argue about something completely different. When the Labor Party already announces measures to assist with electricity bills in the coming months, it is not just to help those with very real needs in the face of galloping electricity costs. It is also to save popular support for a fragile and complex energy and trade policy.
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