The price of electricity for households, including grid rent and taxes and a deduction for electricity support, was on average 113.9 øre/kWh in the third quarter of 2023, according to new figures from the electricity price statistics. This is about 20 per cent lower compared to the previous quarter, and quite a bit lower than the record high level in the fourth quarter of 2021 and 2022, when the price totaled 164.8 and 162.2 øre/kWh respectively.
– After a period of very low electricity prices in 2020, Norwegian consumers saw a sharp increase in the cost of electricity during 2021 and especially in 2022. So far in 2023 there has been a reduction in prices, and in the electricity price in third quarter was the lowest measured since fourth quarter 2020, says senior advisor Thomas Aanensen
The total price of electricity for households was about 4.1 percent below the average third-quarter price for the last five years.
The prices referenced above are based on average values for the entire country. There are still significant price variations between the different price areas of Norway, particular between the price area in South-West Norway and the rest of southern Norway in third quarter.
Lower electricity prices in the Nordic spot market are related to developments on the European continent. Gas prices in Europe have dropped significantly in 2023, and the risk for severe energy shortage is reduced compared to last year. Also, EU has reaches maximum gas storage ahead of winter.
Record high hydro electricity production
In third quarter a lot of rain and high filling level in the water reservoirs in the south of Norway resulted in record high electricity production for that quarter. Much of the electricity production and water could not be regulated and kept in the water reservoirs. This contributed to pushing the price of electricity down in Norway. Especially in September the spot price of electricity was very low in many parts of southern Norway.
Electricity support close to zero in third quarter
The average price of electricity for households, excluding taxes, grid rent and electricity support, was on average 42.2 øre/kWh in the third quarter. This is 80 per cent lower than in the third quarter of 2022, when the electricity prices in Norway was at a record high level and the energy crisis in Europe resulted in exceptionally high prices on electricity, gas and coal.
On average grid rent and taxes amounted to 35.7 øre/kWh and 37.1 øre/kWh in third quarter.
The average level for electricity support deduction for households was only 1 øre/kWh in third quarter, down from 16,5 øre/kWh in the previous quarter. The highest level of electricity support was paid out to households in third quarter 2021, when the average support totaled 176.1 øre/kWh. The steep decline in electricity support so far in 2023 was caused by the electricity market price falling significantly, dropping below 70 øre/kWh in all price areas except South-West Norway in third quarter. When the monthly market price falls below the 70 øre/kWh threshold, the electricity deduction is set to 0.
Variable price contracts still the most expensive choice
The most expensive electricity contracts for households in the thrid quarter were the so-called For contracts of this type the electric utility companies are under obligation to notify the consumer of any price changes at least a fortnight ahead of the actual price change. This means that the price is locked for a period of at least fourteen days.. Households with these contracts paid on average 109.8 øre per kWh consumed, excluding taxes and grid rent. This is almost three times as much as the average price for spot price contracts. Variable price contracts constituted about 4.2 percent of the total household consumption.
The spot market price is derived from the Nordic power exchange (Nord Pool AS) from the participants’ combined demand and supply for electricity the next day. The price and volume are determined for each hour of the day. The spot price can vary between the different bidding areas depending on market conditions. Norway is normally divided into five price areas (NO1-NO5). are by far the most common contract type for households. In the third quarter these contracts cost on average 39.2 øre/kWh.
The price for different types of fixed price contracts for households were as follows:
- New fixed-price contracts, lasting 1 year or less: 36.9 øre/kWh
- New fixed-price contracts, lasting more than 1 year: 48.2 øre/kWh
- Older fixed-price contracts: 51.6 øre/kWh
Many electricity suppliers have recently stopped offering new fixed-price contracts because of the uncertainty regarding future electricity prices. The price on the fixed-price contracts still available to households depends on the spot price area that the households belong to, and there are significant differences in price between price areas in southern and northern Norway.
The average price of electricity for the services and industry other than power-intensive industry was 37.7 and 35.8 øre/kWh, respectively, excluding grid rent and taxes. Compared to the quarter of 2022 this constitutes a drop in prices of about 83 per cent for each category.
For power-intensive industries the price of electricity was on average 41.1 øre/kWh in third quarter of 2023, a drop of about 33.8 per cent from the same quarter in 2022. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.