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(Nettavisen) Extreme cold was forecast in large parts of the country for the first week of the year. On Thursday and Friday, temperatures in eastern Norway are expected to drop to minus 22 degrees and in parts of Finnmark to minus 35 degrees.
Then electricity consumption skyrockets, which drives up prices:
– It is consumption that is increasing. “We have about 10,000 megawatts more consumption than normal, which has a very big impact on the price,” says Benjamin Thomassen, energy analyst at Volue Insight.
He estimates that the kilowatt-hour price could reach NOK 1.50, perhaps even up to NOK 2, depending on how prices are set in other Nordic countries.
Saved by the cables
It is often the controversial foreign cables that are blamed for high electricity prices. But this time it is precisely the cables that are preventing even higher prices, the analyst emphasizes:
– Without imports, prices would have become significantly worse. The Netherlands, Germany and perhaps Great Britain will help us with this.
Milder than normal weather and normally good wind conditions were forecast for the continent. Then we can import power via the cables. Lower prices in the countries we import from even offset higher Nordic prices.
– The more it blows in Europe, the better for us. In Norway and the other Nordic countries, the cold can drop almost 15 to 20 degrees below normal. At the same time, the temperature on the continent is expected to be 5 degrees higher than normal. So what dampens the price is Europe. If they had also had cold weather and little wind, it would have been rock’n’roll, says Thomassen.
Same prices throughout Norway
Due to the extended cold, electricity prices will also be high in northern Norway when the cold really sets in, the analyst emphasizes.
The price will remain the same because consumption will be extremely high. This applies to the entire Nordic region
– We are curious to see how manufacturers in the Nordic countries solve this problem. It also gets very cold in Finland and the Baltics, and depending on how the price is set there, in the middle of the day it can cost us a maximum of 2 NOK, but at night the prices are lower.
When electricity price records were set in December 2022, the biggest impact came when a nuclear power plant in Finland was forced to shut down. If something similar happens now, at the same time as the cold hits Europe, there could be completely different and much higher prices than NOK 1.50-2 per kilowatt hour.
Changed energy support
Electricity prices are more moderate towards the New Year’s weekend. On Friday they are between 43 and 76 öre.
And in any case, electricity subsidies protect the bill from extreme impacts when prices rise. As you know, the electricity subsidy will change from the new year. The “floor limit” of the plan will be raised, as Nettavisen recently mentioned.
Since the introduction of the electricity subsidy in December 2021, it has covered parts of the electricity price from 87.5 öre (70 öre plus VAT). From the new year, the lower limit of the electricity subsidy will be increased to 91.25 öre (73 öre plus VAT) – or an “adjustment due to price increases”, as the government calls it.
This means that 90 percent of the bill for any additional pure electricity consumption is paid by the state. For example, if the price of electricity rises to NOK 2, the actual price for the consumer including VAT is NOK 1.07.
More expensive online rental
In addition, there is the network rent that we pay to have the electricity “delivered” to our homes. And if consumption is high, the costs for online rental increase sharply because these costs are not covered by the electricity subsidy.
Elvia, the country’s largest online rental company, has published prices for 2024. Your customers now pay 39.6 öre per kWh during the day. This is the so-called energy coupling, the price for electricity consumption.
So, even taking the electricity subsidy into account, the actual price of electricity quickly rises to around NOK 1.50 when the kWh price approaches NOK 2.
In addition, there is a fixed connection that is linked to consumption. This is calculated from the average of the three hours per month in which you used the most electricity. For Elvia customers, this fee is between NOK 120 and NOK 535 per month for the vast majority of households.
During extremely low temperatures, there is an increased risk that you will pay a more expensive “fixed tariff” as heating accounts for a large proportion of Norwegians’ electricity consumption.
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