The price of electricity for households, including grid rent, taxes and a deduction for electricity support, was on average 136,5 øre/kWh in 2023, according to new figures from the electricity price statistics.
– Without the electricity support deduction, the average electricity price would have increased by about 11,7 percent from last year, 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 (nve.no). 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 average electricity support deduction for 2023 was 24,3 øre/kWh, down from 91,4 øre/kWh in 2022. There was quite a bit of variation in this support level throughout the year, from 38,6 øre/kWh in the first quarter, down to 1,0 øre/kWh in the third quarter and up again to 26,6 øre/kWh in the fourth quarter.
Spot price down since record-year 2022
The decline in electricity support in 2023 was caused by the electricity market price falling significantly, dropping below 70 øre/kWh for long periods of the year, especially in Northern Norway, but also to some extent in the Southern part of the country. When the monthly market price falls below the 70 øre/kWh threshold, the electricity deduction is set to 0.
– 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, says Skrede. In 2023 there was a gradual decrease in price level until the start of the 4th quarter, when prices began rising again, although not to the same levels we saw in the last quarter of 2022.
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, in particular between the price areas in Southern Norway and the rest of Norway. In the third quarter of 2023 there were also significant variations between price areas in Southern Norway.
The average price of electricity for households, excluding taxes, grid rent and electricity support, was on average 86,0 øre/kWh in 2023. This is 42,5 per cent lower than in 2022.
– In the years between 2018 and 2022 the price excluding taxes and grid rent was on average 67,9 øre/kWh. So, even though the price in 2023 was significantly lower than in 2022 it was still well above the average price for the last five years, says Skrede.
A stronger hydrological balance and lower gas prices
Lower electricity prices in the Nordic spot market are related to developments on the European continent. Gas prices in Europe dropped significantly in 2023, and the risk of severe energy shortage was reduced compared to 2022. Developments in the price of gas is a major driver of electricity costs on the European continent. Thus, lower gas prices contributed in 2023 to lower electricity prices. This in turn affected the Nordic electricity markets through the transnational interconnectors that operate between the Nordic countries and the rest of Europe.
The hydrological balance in Norway (nve.no) was strengthened significantly during the summer and early autumn of 2023 through a combination of rainy weather, and large amounts of snow melt from the mountain reservoirs. This in turn increased reservoir levels and led to a record-high production from hydro power plants in the third quarter of the year.
Variable price contracts still the most expensive choice
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. fell from 162,7 øre/kWh in 2022 to 139,2 øre/kWh in 2023, excluding taxes and grid rent. Despite this decline, households with such contracts paid about 64,0 percent more for their electricity supply than households with spot price contracts. Variable price contracts constituted about 3,7 percent of the total household consumption in the last quarter of 2023, down from about 20% at the start of 2021.
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 2023 these contracts cost on average 84,9 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: 50,2 øre/kWh
- New fixed-price contracts, lasting more than 1 year: 51,2 øre/kWh
- Older fixed-price contracts: 52,8 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.
Services and industry
The average price of electricity for the services and industry other than power-intensive industry was 80,0 and 76,5 øre/kWh, respectively, excluding grid rent and taxes. Compared to 2022 this constitutes a drop in prices from 152,1 and 143,1 øre/kWh, respectively.
For power-intensive industries the price of electricity was on average 46,0 øre/kWh in 2023, a drop of about 8,4 per cent from 2022. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.
