Norwegian analyst expects high electricity prices all winter long

Electricity power grid linePhoto: Hoang Nguyen / Unsplash

People must prepare for the fact that the high electricity prices will last all winter, power analyst Tor Lilleholt says. New price records could be set already this week. 

“The price to for the end-user, when taxes, VAT, and all this is included, will on average be over NOK 2 kroner per kilowatt-hour throughout the winter,” power analyst Tor Reier Lilleholt told NTB.

Low temperatures, high consumption, and near full utilization of the production capacity at the power stations contribute to the situation that pushes electricity prices ever higher. 

Norway does not produce enough electricity to cover both consumption and exports. And to reduce exports, prices must rise to the same level as in Europe.

“What can help? More wind in Europe and, thus, increased wind power production. Higher wind power production can help significantly, but when it is cold, there is often high pressure and little wind,” he said.

New price records

In Southern Norway, electricity has never been more expensive. The existing record from Sunday – at NOK 1.87 per kilowatt-hour – has already been surpassed on Monday.

The average electricity price throughout the day will be NOK 2.56 per kilowatt-hour, E24 writes. This excludes grid rent, fees, and surcharges from the electricity company.

Electricity is most expensive between 5 PM and 6 PM, at more than NOK 4 per kilowatt-hour.

Lilleholt describes the situation as extreme and emphasizes that we could see new extreme situations during the winter. 

“If it gets colder, we can see new price records in January and February,” he says.

Situation in Europe

Europe, too, is bracing for increasing and lasting high electricity prices as the cold sets in. The situation could provoke protectionist measures in the power market and lead to consumers being asked to save on electricity and prepare for planned power outages as a last resort against high consumption, according to Bloomberg.

The principle of European solidarity – which is intended to prevent EU countries from restricting power exports at the expense of other countries – may face its first real challenge this winter.

“If it gets cold in Europe, there is no easy solution on the supply side; there will be a need for a solution on the demand side,” partner Adam Lewis in the brokerage Hartree Partners stated.

Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance

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