The price of electricity, including grid rent, taxes and a deduction for electricity support, was on average 127,6 øre/kWh in the second quarter of 2024, according to new figures from the electricity price statistics.
The average electricity deduction for the second quarter was 2,7 øre/kWh, down from 11,1 øre/kWh in the first quarter of 2024. A year ago, the average deduction was 16,5 øre/kWh. The highest levels for hourly deduction rates were registered during the month of April and early May. Since then, the number of hours with electricity prices levels sufficiently high to trigger electricity deduction support has dwindled.
– The month of April this year was notably colder than Normal: Mean temperature for a given month in the period from 1991-2020., especially in the Northern part of the country. In late April there were therefore significant price peaks, with corresponding higher levels of electricity support deductions, says Statistics Norway advisor Ståle Skrede.
The electricity support deduction was implemented in December 2021. With this support households get a part of their electricity costs reimbursed. Until September 2023 this reimbursement was based on the monthly average electricity price, but as from September 1st, 2023, it is based on the hourly electricity price.
Spot price development
The reduction in electricity deduction support is directly attributable to the decrease in electricity prices in the Nordic spot market. The Spot price: 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). dropped by 30 to 40 percent in all Norwegian Price area: Due to insufficiencies in grid transmission capacity it is not always possible to balance production and consumption of electricity across the entire country. Therefore, the Norwegian power system is divided into five price areas: NO1: Southeast-Norway, NO2: Southwest-Norway, NO3: Mid-Norway, NO4: North-Norway, NO5: West-Norway.. When the spot electricity price falls below the threshold of 73 øre/kWh, the hourly electricity deduction is set to 0 øre/kWh.
Through most of the second quarter of 2024 the electricity spot price has been lower in North-Norway than in the rest of the country, with smaller differences during April than during June. From mid-May onwards there were also notable price differences between price areas in South-Norway.
Resource situation
There was a substantial rise in hydropower production in the second quarter, a 3,5 percent increase from the same period last year. This increase in production was first and foremost located in Western- and Southwestern-Norway. In other parts of the country the hydropower production levels were markedly lower, due to a weaker Hydrological balance: Describes the total amount of stored energy in the energy system and whether this amount is higher or lower than average for a given period. It is equal to the sum of deviations from the historical average in reservoir filling and deviations from the historical average in snow reservoirs, soil, and groundwater. and large import levels of cheap wind power from Sweden.
At the start of the second quarter the aggregate Norwegian reservoir level (nve.no) was well below the Median: Median value for aggregate reservoir levels, based on the last 20 years of reservoir levels for a given point in time. value. A period of rapid snow melts and high levels of precipitation brought the reservoirs up to and above the median value at the end of the second quarter, however.
Prices for gas and coal were stable and roughly at about the same level as last year. German electricity prices rose slightly from the first to the second quarter of this year, but were lower than in the second quarter of 2023, partly because of a high number of hours with negative prices. Lower electricity prices on the continent influence the Nordic price level through the transnational interconnectors that operate between the Nordic countries and the rest of Europe.
Fall in prices excluding grid rent and taxes
The average price of electricity for households, excluding taxes, grid rents and electricity support deduction was 55,7 øre/kWh in the second quarter of 2024, compared to 78,9 øre/kWh in the previous quarter. For the service industry the average price, excluding taxes and grid rent, fell by 32 percent, from 76,2 to 51,9 øre/kWh. There was also a drop in average price levels for industries other than power-intensive industries. Here the price fell from 73,4 to 51,0 øre/kWh. The electricity prices for households, service industry and industry other than power-intensive industry are the lowest prices registered for the second quarter since 2021.
For power-intensive industries the average price fell by 7 percent from the first quarter of 2024. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.
Variable price contracts have become cheaper
The price of so-called Variable price contracts: For contracts of this kind 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 in for a period of at least fourteen days. fell for alle categories of electricity end-users in the second quarter of 2024. For households the price of such contracts went down from 131,7 øre/kWh in the previous quarter to 109,2 øre/kWh in this quarter. For the service industry the price went from 112,7 to 71,9 øre/kWh, and for industry other than power-intensive industry from 98,0 to 69,1 øre/kWh. For all categories of end-users, a variable price contract is still the most expensive alternative.
At the same time the share of electricity consumption covered by such contracts has been falling since 2021. In the second quarter of 2024 variable price contracts constituted about 3,4 percent of total household consumption, down from 3,5 percent in the previous quarter.
Spot price and fixed price contracts
Spot price contracts are by far the most common contract type for all categories of end-users, except for power-intensive industries, for which fixed price contracts are more common. For households spot price contracts covered 93,4 percent of electricity consumption and cost on average 54,0 øre/kWh. This is 31 percent lower than in the previous quarter and 36 percent lower than in the second quarter of last year.
Fixed price contracts also cost less in the second quarter than in the first. For example, the price of new fixed price contracts lasting 1 year or less fell from 44,1 to 35,0 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: 35,0 øre/kWh
- New fixed price contracts, lasting more than 1 year: 53,2 øre/kWh
- Older fixed price contracts: 50,1 øre/kWh
The share of electricity consumption covered by fixed price contracts has been gently declining for the last couple of years, as electricity suppliers have been more reluctant to issue new fixed price contracts because of the uncertainty regarding future electricity supplies. With figures from the first half of 2024, however, it seems that the share of electricity consumption covered by such contracts is slightly increasing again.
