The price of electricity, including grid rent, taxes and a deduction for electricity support, was on average 137,5 øre/kWh in the 1st quarter of 2024, according to new figures from the electricity price statistics.
The average electricity deduction for the first quarter was 11,1 øre/kWh, down from 26,6 øre/kWh in the last quarter of 2023. A year ago, the average deduction was 38,6 øre/kWh. The highest levels for hourly deduction rates were registered during the first half of January. Since February the number of hours with electricity prices levels sufficiently high to trigger electricity deduction support has dwindled.
– During the first quarter of this year the electricity support deduction was highest in Southern Norway, especially in January, when the Mean temperature for a given month in the period from 1991 to 2020. in that part of the country was well below average, 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.
Resource situation
The reduction in electricity deduction support is directly attributable to the slight decrease in electricity prices in the Nordic spot market. When the spot electricity price falls below the threshold of 73 øre/kWh, the hourly electricity deduction is set to 0 øre/kWh.
During the first quarter of 2024 there was a high level of both electricity production and consumption in Norway, with a corresponding significant reduction in overall reservoir levels (nve.no). At the same time prices for gas and coal were relatively stable and significantly lower than in 2022. Lower prices for gas and coal influences the Nordic price level through the transnational interconnectors that operate between the Nordic countries and the rest of Europe.
Slight fall in prices excluding grid rent and taxes
The average price of electricity for households, excluding taxes, grid rent and electricity support deduction was 78,9 øre/kWh in the first quarter of 2024, compared to 84,6 øre/kWh in the previous quarter. This is somewhat higher than the five-year historical average of 72,6 øre/kWh for the first quarter.
For the service industry the average price, excluding taxes and grid rent, fell by 5,6 percent, from 80,7 to 76,2 øre/kWh. There was also a drop in average price levels for industries other than power-intensive industries. Here the price (excluding taxes and grid rent) fell from 79,1 to 73,4 øre/kWh.
For power-intensive industries the average price fell by 4,3 percent from the 4th quarter of last year. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.
Variable price contracts more expensive
The price of so-called 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. increased for alle categories of electricity end-users in the 1st quarter of 2024. For households the price of such contracts went up from 101,8 øre/kWh in the previous quarter to 131,7 øre/kWh in this quarter. 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 first quarter of 2024 variable price contracts constituted about 3,5 percent of total household consumption, down from 3,7 percent in the previous quarter.
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 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 77,8 øre/kWh. This is 8,5 percent lower than in the previous quarter and 28,3 percent lower than in the 1st quarter of last year.
The price for different types of fixed price contracts for households were as follows:
- New fixed price contracts, lasting 1 year or less: 44,1 øre/kWh
- New fixed price contracts, lasting more than 1 year: 58,1 øre/kWh
- Older fixed price contracts: 53,4 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 1st quarter of 2024, however, it seems that the share of electricity consumption covered by such contracts is slightly increasing again.
