The extreme prices of electricity have led the state to take a solid part of the electricity bill this winter. The scheme ends after March, when it has been assumed that rising temperatures and snowmelt will normalize prices.
According to a thematic article from the Government they write that they expect the «Nordic system price» for the 2nd and 3rd quarters of 2022 to be 52 and 35 øre / kWh, respectively.
Also read: You can expect as much power support in January – it will be lower than in December
Expect much higher prices in southern Norway
These are figures product manager Karl Einar Svor in Gudbrandsdal Energi thinks is very misleading.
– You can ask the government about who can buy electricity at system price, he says to Nettavisen.
«Systempris»Is a theoretical average price for the whole of the Nordic region, assuming that there had been no restrictions in the power grid. As is well known, there are many such restrictions, and the price differences within the Nordic region are enormous. The current in southern Norway has recently been typically 5-10 times as expensive as in northern Norway. The average is therefore not so relevant.
In southern Norway, the electricity expert expects significantly higher prices:
– A recent price forecast indicates that spot price customers in the southern part of Norway may have to settle for spot prices over 70 øre + VAT throughout the year. We believe that the electricity subsidy from the state should be extended as long as there are such high electricity prices, says Svor.
This means that the price for electricity, including taxes and grid rent, will not fall below around NOK 1.50 per kWh throughout the year.
This is a even slightly higher than what analyst Tor Reier Lilleholt outlined a week ago.
At the same time, prices in the north of the country will remain at a low level.
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– The need will last longer than March
– Our price forecasts indicate an average price that will result in electricity support for both February and March. In fact, the price outlook indicates that the need for electricity support will last longer than March. All monthly prices in the futures market for Eastern, Western and Southern Norway have a price that is above the entry point for the electricity subsidy, says Svor.
A large proportion of electricity consumption in Norway goes to heating, and consumption therefore decreases over the spring and summer.
– However, our price forecasts indicate that even if consumption is reduced, prices in the power market will remain high. This means that we should prepare for higher electricity bills than normal also throughout the spring.
Prices far above normal
The spring and summer months are typically the cheapest months of the year, but this year’s prices are expected to be well above normal.
– We at Gudbrandsdal Energi know that both weather and wind, prices and future prospects are changing rapidly in the power market. This is our best estimate at the moment. With that as a starting point, we estimate that the price level in the future will create a need for an extended power support period, Svor states.
How much do the reservoirs fill up?
There are currently two very large uncertainties for the future electricity price. One is the conflict in Ukraine, which is directly linked to Russian gas imports to Europe. The price of gas in Europe has been the largest driver of electricity prices.
In Norway, there is also the great uncertainty of how much the water reservoirs will fill up during the spring.
The water reservoirs are now at a historically very low level, which is much of the reason for the high prices. This can theoretically change quickly through the melting snow in the spring.
– It is expected that the minimum reservoir filling will occur around mid-April. The previous bottom point in the last 20 years is 5.5% filling level for southern Norway. This year, the level may be lower given the already low starting point, Svor points out.
The challenge is that so far this winter there has been far less snow in the mountains than is normal, especially in the eastern mountains. Little snow, means less melt water that fills the reservoirs.
According to Statkraft, another snow-poor winter can propagate throughout the summer and autumn, and further into the next winter season.
Also read: Now hydropower producers are holding back on the water – and it may be necessary
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