The price of electricity soars – E24

The price of electricity continues to rise, with an average daily price of 48 øre per kilowatt hour in southern Norway.

Between 5 pm and 6 pm, the price is up to 68 øre per kilowatt hour, according to figures from the Nord Pool power plant.

You have to go back at the end of 2019 to find a single day more expensive for the price of electricity. Last year’s highest daily price for electricity was 42.7 øre per kilowatt hour on December 10.

Part of the reason for the price increase is colder weather and low wind energy production.

It is customers in the price zones around Molde and Trondheim who pay the most for electricity on Tuesday, with a price of 49 øre per kilowatt hour. This is on par with the prices of neighboring Sweden and Denmark.

Customers in northern Norway pay less than half of this, with an average electricity price of 21 øre per kilowatt hour on Tuesday.

P.S! These figures only apply to the price of energy itself. There are additional fees and network rental on the electricity bill.

– More normal energy balance

The price increase in early 2021 comes after a very abnormal year in 2020, where there was a large surplus of hydroelectric power in Norway and hot weather. Now it is colder and there is not so much rain.

– We are moving towards a much more normal balance of power. The pressure on hydropower producers to produce will ease, says sales manager Tom Eirik Olsen at energy supplier Ishavskraft to E24.

– When consumption also increases, prices will go up. Then we will get closer to the level of neighboring countries and we can export more, he says.

Ishavskraft believes that the average price of electricity in southern Norway will be around 30 øre per kilowatt hour this year. This is a relatively normal level compared to prices at the beginning of this century.

Last year’s average price was at an all-time low of 10 øre, which was also a very abnormal year for the energy industry. By comparison, electricity cost an average of around 40 øre in both 2018 and 2019.

Expect 4,000 crowns of more expensive electricity

“There is no reason to worry about the electricity prices approaching, but they will be considerably higher than what we experience in 2020,” writes Olsen in a comment.

This means that an ordinary household in southern Norway will likely have to pay NOK 4,000 more for electricity in 2021 than in 2020, according to Ishavskraft estimates.

Olsen believes the bill for a typical home in southern Norway will be around 19,000 kroner this year, including electricity, network rent and taxes. The calculation is based on an annual consumption of 20,000 kilowatt hours.

2020 was “very abnormal”

However, the electricity bills of Norwegians are still lower than before the abnormal year 2020, emphasizes the business manager.

– It is not a high price that we see in 2021, they are quite normal levels. This is happening after a very abnormal year in 2020 with the lowest prices ever. We have to go back to the year 2000 to see something close, says Olsen.

– A spot price of around 10 øre that we saw in 2020 is extreme. It’s also not a desirable level over time, because you get little new energy production in such an image, he says.

In 2019, an average customer in southern Norway paid around NOK 23,000 for electricity, network rent, and fees. Last year, this bill was reduced to 15,000 crowns, that is, a saving of around 8,000 crowns, according to Ishavskraft.

It has been more than 50 years since global electricity consumption has fallen as much as last year, according to a report the IEA released ahead of the New Year. Electricity prices have fallen, especially in the Nordic countries and Norway.

Depending on the weather

Olsen at Ishavskraft notes that the price of energy has risen significantly in recent weeks due to expectations of colder weather. This can change quickly if the weather becomes warmer.

Arctic Power expects the average price of electricity to be 30 øre per kilowatt hour in southern Norway this year. Central Norway will likely fetch a price a couple øre lower, and northern Norway will likely pay 25 øre per kilowatt hour on average this year, the company believes.

“Looking ahead to the outlook, we expect a year of electricity prices in 2021 that is relatively normal from a historical perspective,” writes Olsen.

“There is reason to emphasize that Norwegian electricity prices are largely driven by the weather we have over time. The record low prices we experienced in 2020 were due to a completely abnormal weather picture that persisted with a humid and temperate climate with a lot of wind, “he writes.

With a cold and dry climate ahead, the energy surplus in Norway may decrease.

“Then the huge disadvantage of Norwegian energy prices will be removed and, to a greater extent, we will raise prices compared to our neighboring countries to which we export.” Therefore, we will expect individual hours around and above 60 and 70 øre per kilowatt hour, “writes Olsen.

Negative electricity prices

The price of energy fell to an average of 10 øre per kilowatt hour in 2020. In addition, Norway experienced two periods of negative electricity prices. It has never happened before.

“Energy prices had a very unusual year, but this is largely due to the weather and not the current corona epidemic,” Olsen writes in his comment.

“2020 was the warmest year in Norway, which affected electricity demand more than the effect of the closure. Also, we had record energy production due to a very wet and windy year, ”he writes.

2021 will also start with closings and home offices for many Norwegians, but unlike last year, energy prices will go up.

“The high spot prices are due to the fact that populated areas in Norway and the Nordic countries experience colder weather than normal, in addition to low wind energy production,” writes Olsen.

“As the outlook is now, this climate is expected to continue for the next two weeks and therefore prices will remain around 40 øre per kilowatt hour.” In other words, the energy market looks relatively normal for the season despite
ongoing epidemic, “he writes.