The Nordic region had the most expensive electricity in 20 years in 2021, but it was even more expensive on the continent. The northerners had Europe’s cheapest electricity, according to an overview from Energi Norge.
The energy crisis year 2021 ended with staggering electricity prices in virtually all of Europe.
But the continent’s cheapest electricity in the difficult year: Northern Norway
It shows an overview that Kinect Energy has made for the power industry’s organization Energi Norge.
Northern Norway (price area NO4) ended with an average price of 35 øre per kilowatt hour last year, excluding grid rent and fees.
In comparison, southern Norway had an average price of 76 øre per kilowatt hour (about NOK 1.52 with grid rent and fees).
– Northern Norway last year had the cheapest electricity in Europe. The reason is that you have good water and wind conditions there, but can not transport the power out. This results in significantly lower prices than in southern Norway, says project manager Lars Ragnar Solberg in Energi Norge to E24.
– Southern Norway is more closely connected to Europe than the north. This is also related to the fact that the reservoir filling in the south has been lower than in the north, says Solberg.
The price of electricity in the southernmost price areas in Norway was not only significantly higher than in northern Norway last year. It was also higher than in Finland, the Baltic countries and three of the four Swedish price areas.
Solberg points out that the price differences between Norway and continental Europe last year were greater than ever.
– For a few hours we have equally high or higher prices than Europe, but the average over the year is completely different prices than down in Europe, even if it is meager comfort, says Solberg.
The exceptional electricity year 2021: – Now the market has gone completely bananas
Most expensive electricity in 20 years
Last year, the Nordic countries had an average price of 63.15 øre per kilowatt hour for electricity, Energi Norge states.
– It is the most expensive power we have had in the last 20 years, says Solberg.
– Most other countries in Europe have also experienced historically high prices, he says.
The average price was sky-high in several European countries, including NOK 1.38 per kilowatt hour in the United Kingdom, NOK 1.04 in the Netherlands and NOK 0.98 in Germany.
If you look at the prices of the last 20 years, you see how different last year has been.
In the last 20 years, the average price in the Nordic region is less than 30 øre, while the United Kingdom has had an average electricity price of 47 øre, the Netherlands 40 øre and Germany 35 øre, according to the survey.
Comparing the electricity price alone does not give a completely correct picture of the different countries’ energy bills. Every Norwegian uses far more electricity than, for example, a Dutchman or German, who also fires with gas. In addition, there are differences in grid rent and fees, which also affect your bill.
Norway did not have the cheapest electricity
The average price for all of Norway’s five price areas was just over 60 øre per kilowatt hour last year. This means that Norway was not the cheapest in Europe.
– The average price for all price areas in Norway is a little over 60 øre per kilowatt hour. It is cheaper than the rest of Europe and cheaper than Sweden, but Finland and the Baltics have slightly lower electricity prices, says Solberg.
Finland and the Baltic countries had an average electricity price of 43 øre per kilowatt hour in 2021.
The high prices have led to a new discussion about Norway’s foreign cables. Norway received a new cable to Germany in 2020 and a new cable to the United Kingdom in 2021.
– One can suspect that they are responsible for the prices being so high. But even without the new cables, one would have had very high prices in 2021. We have had cooperation and cables for very many years, and in 2020 we had very low prices even though we had almost as many connections as we had in 2021, says Solberg .
– The prices are too high
– Norwegians have received an electric shock this winter. Are such prices positive for the power industry?
– No, we think that the prices are too high. For this level we are at now will be unfortunate for the shift we will go through, when we will electrify society, says Solberg.
– We have been clear that it is completely right of the state to compensate electricity customers. It is a good scheme they have come up with, because it ensures that the price signal still reaches the customers, he says.
– How will prices develop when the power surplus according to Statnett and NVE falls in the next few years? Is there a danger of permanently higher prices?
– It is not something we predict. But it goes without saying that if new production does not come into place, increasing consumption could contribute to higher prices over time, says Solberg.
Norwegian consumers have been accustomed to very low prices in recent decades, often around 30-40 øre per kilowatt hour on an annual average. However, more expensive electricity is not exclusively negative, Solberg points out.
– High prices can also have some positive consequences, such as energy efficiency, solar cells on the roof and investments in new renewable energy becoming more profitable. But in isolation, this level is far too high, he says.
Sees a need for increased power production
The network operator Statnett summed up this week the power year 2021, and refers to it as «extraordinary».
– While 2020 was a year with a lot of precipitation, overflowing water reservoirs and very low electricity prices, 2021 was in many ways the opposite, says Executive Vice President for Power System and Market Gunnar Løvås in Statnett.
Last year, Norway had a record high power consumption of 139.7 terawatt hours (TWh). Production was also record high, at 157.1 TWh, of which 12 TWh came from wind power. The net export of power was 17.3 TWh, according to Statnett.
The company says it is concerned about the abnormally high electricity prices that characterized the latter half of 2021. Statnett believes that power production must be increased if low prices are to be ensured and Norway’s competitiveness is maintained.
– The experiences from the past year, both with increased consumption and high prices, underline the need for more new power production domestically if Norway is to continue to be an attractive country for new electrified value creation. We receive more and more inquiries from new industry who want to connect to our electricity grid, says Løvås.
Statnett has previously estimated that electricity prices will decline in the next few years, but believes they will remain high in the short term.
“Unfortunately, we must still expect high prices over the winter,” says Løvås.
Despite the most expensive electricity in eight years in 2018: Norway has Europe’s lowest electricity prices