The price of electricity for households, including grid rent and taxes and a deduction for electricity support, was on average 112,3 øre/kWh in the third quarter of 2024, according to new figures from the electricity price statistics. This is 12 per cent lower compared to the previous quarter, and about 18 per cent lower than first quarter of 2024. Last time the price was about the same level was in the third quarter of 2023, and before that time you need to go back almost four years, to the fourth quarter of 2020, to find a lower price for household.
The average electricity deduction for the third quarter was only 0,2 øre/kWh, down from 2,7 øre/kWh in the second quarter of 2024. This is the lowest level of electricity deduction since the electricity support package was introduced back in December 2021.
– So far this year, due to lower electricity prices, the electricity support paid to household is modest compared to the record high levels in 2022. In third quarter of 2022 the electricity support was as high as 176 øre/kWh on average, says senior advisor Thomas Aanensen
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.
The grid rent for households increased 16 per cent from the second to third quarter in 2024, and compared to third quarter in 2023 the grid rent was about 12 per cent higher. Some of the network companies have already increased the grid rent for households this year and additional plan to do so before the end of the year.
Spot price development
It was an overall reduction in the electricity price for all the end user groups in third quarter compared the previous quarter. This can be explained by lower 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). on electricity in all the Norwegian Due to insufficiencies in the 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: South-Norway, NO2: Southwest-Norway, NO3: Mid-Norway, NO4: North-Norway, NO5 West-Norway except the price area for South-Norway (NO2) in third quarter.
Resource situation in third quarter
During third quarter the aggregate Norwegian reservoir level (nve.no) was close to the median level for the last 20 years. However, the situation varied in the different regions in Norway. The south of Norway experienced a lot of rain, and the reservoir level was above to the median level in third quarter, while in the northern part of Norway the conditions were dry, and the reservoir level was well below the median level.
The electricity production in third quarter was 5,3 per cent lower than the record high production in third quarter last year, but still 3 per cent higher than the average production for the third quarter the last five years.
Fall in prices excluding grid rent and taxes
The average price of electricity for households, excluding taxes, grid rents and electricity support deduction was 35,3 øre/kWh in the third quarter of 2024, compared to 55,7 øre/kWh in the previous quarter. This is a 37 per cent reduction in the electricity price.
For the service industry the average price, excluding taxes and grid rent, fell by 36 percent, from 51,9 to 33,1 øre/kWh. There was also a drop in average price levels for industries other than power-intensive industries. Here the price fell from 51,4 to 34,2 øre/kWh. The electricity prices for households, service industry and industry other than power-intensive industry are the lowest prices registered since fourth quarter of 2020.
For power-intensive industries the average price fell by 4,3 percent from the second quarter of 2024. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.
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 89,7 øre per kWh, excluding taxes and grid rent. For the service industry the price went from 71,9 to 52,6 øre/kWh, and for industry other than power-intensive industry from 69,1 to 48,2 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 third quarter of 2024 variable price contracts constituted about 2,2 percent of total household consumption.
Spot price and fixed price contracts
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 94,9 percent of electricity consumption and costs on average 33,7 øre/kWh. This is 38 percent lower than in the previous quarter and 14 percent lower than in the second 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: 30,8 øre/kWh
- New fixed price contracts, lasting more than 1 year: 49,5 øre/kWh
- Older fixed price contracts: 50,3 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 has stabilized at a lower level.
