The price jump gives the most expensive electricity of the year – E24

While Norway this year has experienced its first hours of negative electricity prices, consumers are now experiencing hours of sky-high electricity prices.

On Thursday, the hourly price of electricity in southern Norway ranged from 20 øre per kilowatt hour to one krone per kilowatt hour, excluding grid rental and tariffs.

Consumers in western Norway and northern Norway have avoided paying significantly less, with an hourly rate of between 14 øre and 30 øre per kilowatt hour.

The price jump means that the average price of electricity in southern Norway on Thursday is 42.7 øre per kilowatt hour, according to the Nord Pool energy exchange.

– This is the absolute highest electricity price we have seen in Norway this year, says energy analyst Tor Reier Lilleholt in Wattsight to E24.

– But we have seen equally high prices in Sweden and Denmark. Only Norway hasn’t seen such volatility in the market so far this year, but neighboring countries have had it for so long, he says.

The price of electricity in Norway has been unusually low this year. The price of electricity in the second and third quarters was at an all-time low, and one has to go back to 2000 to find quarters with similarly low energy prices for Norwegian households, according to Statistics Norway.

New German cable

E24 mentioned earlier this week that prices rose after the market gained access to export electricity via the new power cable to Germany, Nordlink, at 700 megawatts.

But this is only one of the reasons why the price went up. Norway also exports a lot of electricity to Sweden, which has phased out a lot of nuclear power and therefore has less capacity than before. Norway also exports to Denmark and the Netherlands.

Additionally, wind power production has been low to medium these days, leading to higher energy demand in Germany, among other places.

– It is not only Germany to blame. Now we see that Sweden has phased out a lot of nuclear power in recent years, and then there is not enough capacity in the Nordic system to cover the need on cold days, says Lilleholt.

For a few hours on Thursday, Norway has connected to the German price, he says. Right now, German prices are high, but cable will sometimes give Norway access to cheap electricity.

– We can get low prices in periods when they have high wind energy production, says Lilleholt.

Price drop on Friday

According to Montel, electricity exports to Germany will fall on Friday, after two days of large exports. According to the trade magazine, it appears that new import restrictions have been introduced from the German side.

The price of electricity in southern Norway falls significantly on Friday and remains below 30 øre per kilowatt hour throughout the day. The median price on Friday is just under 24 øre per kilowatt hour, according to Nord Pool.

Statnett has previously stated that there will be restrictions on German imports via Nordlink cable in the coming years. The reason is that the electricity grid in Germany is not developed enough to get all the energy to where it is needed.

– It has been very volatile

Thema Consulting partner Marius Holm Rennesund says electricity prices have fluctuated a lot lately, but today’s price stands out.

– It is an unusually high price of electricity. Insurance. Perhaps especially now that we have such a good supply of hydropower in the system, Rennesund tells E24.

– Electricity prices have been very volatile recently, from zero to around 30 øre per kilowatt hour. We have such a high tank fill that changes in the weather affect the price very quickly, especially downward, he says.

The tanks are full. According to Rennesund, growers can quickly feel like they lose some control if a lot of rain is announced. They will then produce the water quickly, to make room for the new water to come in.

– If there are multiple rainy days, producers think they just have to produce, because we have magazine fill that we have never seen before at about 94-95 percent, says Rennesund.

– If there is a slightly drier weather forecast and they take control, prices go up again. Especially when it’s a little colder and demand increases. In this market, we have big price swings in small changes in the weather, he says.

Believe that interchangeability is important

According to Lilleholt, there may also be days when Norway needs electricity from neighboring countries, be it from cables to Germany, Denmark and the Netherlands or from power lines to Sweden.

– The day we need power from others, we will be happy to have the capacity for exchange. Europe needs to generate more renewable energy and eliminate dirty energy, and so this kind of exchange is the best solution, says Lilleholt.

He notes that Norway still has the cheapest energy in Europe, although prices may become somewhat more volatile in the future.

Five most expensive electricity crowns

Despite the sharp rise in the daily price of electricity on Thursday, people’s electricity bills today will not increase by more than a little more than five, according to the Wattsight analyst.

– I have long said that with a cold winter there will be a shortage of resources, and then we can get these high prices. We have a surplus of wind and water that gives us low prices on average, says Lilleholt.

– These hours are equivalent to five extra crowns on the electricity bill in one day. And I don’t expect this to happen every day. There will be individual episodes with very high prices and individual episodes with very low prices, he says.

Unusually low prices in 2020

Between eight and nine o’clock in the morning on Thursday, the price of electricity in southern Norway was 99 øre per kilowatt hour excluding network rental and tariffs, and the price is more than 88 øre until 2 p.m., according to Nord Pool.

Outside these hours, the price of electricity has remained at a more normal level until 2020, between 20 and 30 øre per kilowatt hour.

The price of electricity in 2020 has ranged mainly between zero and 30 øre per kilowatt hour, which is unusually low. On two occasions, the price has also fallen below zero, something that has never happened before in Norway.

Last year the average price in southern Norway was 40 øre per kilowatt hour, and the previous year it was 43 øre. So far this year, the price of electricity is around nine øre per kilowatt hour on average, according to figures E24 has obtained from Nord Pool.