Norway has long taken advantage of low electricity prices, which may have fostered an unchecked rise in consumption. However, energy prices are rapidly changing in many ways, and households are now beginning to use energy more intelligently and avoid peak times – potentially saving both money and stress on the power grid.
Costs
Norway’s electricity prices include several costs that you must consider, such as grid rent, taxes, and energy support. Depending on where you reside, transmission and distribution charges may also apply; due to these extra expenses, it is vital that you shop around to find the lowest electricity rates that meet your individual requirements.
Norwegians have traditionally enjoyed low electricity prices. This can be partly attributed to hydropower being Norway’s primary source of power while wind and thermal plants play a smaller role, coupled with cold weather and traditional methods for heating homes, such as wood-burning stoves or district heating, which results in less demand. Unfortunately, all these factors still contribute to high levels of consumption.
Refrigerators and freezers consume significant energy. But with recent cost increases causing people to take action – some looking for lower electricity rates while others changing their habits to reduce consumption – many are taking steps.
Potentially, the lack of alternative energy sources has also played a factor. Individual consumers cannot shoulder sole responsibility for developing greener sources; collective action must take place. Therefore, before choosing an electricity supplier, it is imperative that consumers compare all available prices before making their choice.
Consumer protection agencies often offer some of the best deals, keeping a list of the cheapest contracts in each state. You should read carefully through each contract to ascertain its terms and conditions before making a final decision. It is also worth bearing in mind that some electricity providers provide additional services like insurance packages and security agreements, which could add extra costs to your bill; be mindful when considering these extra services before making a choice.
Contracts
There are various contracts available to households, with spot contracts being the most popular choice. These contracts fluctuate with market electricity pricing and vary based on region; in the fourth quarter of 202, spot contracts accounted for 87% of household contracts, while fixed-price contracts made up only 13%.
Price fluctuations for electricity are common due to fluctuating supplies based on weather and other factors, including energy taxes and grid rent payments. But it doesn’t have to be dramatic; some areas even enjoy very affordable electric rates.
One possible explanation for this shift lies with Norway’s changing climate, which has resulted in less rain and decreased dam storage levels, leading to less hydropower generation – making more money for hydropower companies; yet many find this practice unethical since some players seem to profit at the expense of the majority population.
Therefore, the government has implemented several initiatives to assist its citizens in finding the best deals. One such scheme (as seen here: https://bestestrøm.no/) is providing price comparison services that make it easy for people to locate competitive energy contracts. Unfortunately, however, these measures alone won’t address this problem fully: more needs to be done in order to make sure that markets provide customers with fair balances between price and quality as well as exceptional services that exceed customers’ expectations.
Variations
Norway has long enjoyed relatively affordable electricity costs due to the abundance of hydropower, with other sources like wind and thermal plants contributing a small fraction. Norwegians generally save energy, contributing further to low prices.
But times are changing rapidly: last year, households without taxes or grid rent had electricity costs that averaged roughly 45 ore per kWh; in 2018, this figure has nearly tripled!
The price rise has had an enormous effect on families, businesses, and the economy alike. Paying bills has become more of a struggle than before for some; some factories may even have had to close due to this increase.
One reason for the dramatic shift is price differences between north and south Norway resulting from insufficient transmission infrastructure, leading to price discrepancies that exacerbate electricity market competition in Norway. A solution would be building new north-south lines; however, until that occurs, the price gap will remain a key element.
Another element is the type of contract chosen by customers. This could either be a fixed-price contract, a spot price agreement, or a hybrid of both. A fixed price contract locks customers into an agreed rate over a 1-3 year term similar to what bank loans require; by comparison, a spot price contract or purchase price agreement (PPA) follows Nord Pool power exchange prices more closely and tends to be cheaper than fixed contracts; or they could choose something in between such as hybrid contracts which offer greater clarity about monthly costs for freelance contracts.
Taxes
In Addition to the 25% sales tax, two other taxes that you pay based on your consumption include a grid fee for power to travel through wires in your house and renewable energy fees, which pay for wind or solar generation of electricity. Though these may seem unnecessary or even redundant fees, they are essential in keeping the grid functioning, especially as more people accessing it simultaneously puts more stress on it than before.
The amount of charges depends on which contract type you select. A fixed price contract guarantees a minimum monthly price throughout its duration; this type is ideal for those wanting certainty in their payments each month. Conversely, variable price contracts fluctuate based on developments in the market and require providers to notify customers 14 days in advance before any price changes take effect.
According to statistics collected by The Local, household electricity prices, including taxes, ranged from 9.2 cents EUR/kWh in Hungary to 49.9 cents EUR/kWh in Malta during the second half of 2021, according to statistics gathered. Taxes and allowances made up a lower share than last year but still made up an important component of overall costs across much of Europe.
Norway stands out among EU average countries as having among the lowest household costs due to our abundant hydropower resources and good infrastructure for harnessing them, along with one of the lowest natural gas and coal prices and an affordable emissions allowances scheme and renewable production price structure.
