This is according to new figures from the electricity price statistics.
The price of electricity for households, including grid rent and taxes and a deduction for electricity support, was on average 143,5 øre/kWh in the second quarter of 2023, down from 143,8 øre/kWh in the previous quarter. Of this the price of electricity amounted to 84,7 øre/kWh, while grid rent and taxes amounted to 30,3 and 45,1 øre/kWh. On average the deduction for electricity support was 16,5 øre/kWh.
- Even though the total price of electricity for households has fallen by about 11% since the last quarter of 2022, the cost of electricity is still 30,7 percent higher than the average second-quarter price for the last five years, says advisor Ståle Skrede.
After a period of very low energy prices in 2020, Norwegian consumers saw a sharp increase in the cost of electricity during 2021 and 2022, with peak price levels of 164,8 and 162,2 øre/kWh in the fourth quarters of 2021 and 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, and in particular between price areas in southern and northern Norway.
Electricity support for households was introduced in December 2021. It furnishes a deduction on monthly household electricity bills, if the average monthly market price for electricity exceeds 70 øre/kWh.
Reduction in electricity price before electricity support is deducted
The average price of electricity for households, excluding taxes and grid rent, was on average 84,7 øre/kWh in the second quarter. This is 23,3 per cent lower than in the first quarter of the year.
- For the last five years the average price of electricity in the second quarter, excluding taxes and rent, was about 56 øre/kWh. The price for this quarter is still way above this level, says Skrede.
The average level for electricity support deduction was 16,5 øre/kWh, down from 38,6 øre/kWh in the first quarter. This relatively steep decline in electricity support was caused by the electricity market price falling to levels around 70 øre/kWh in the price areas NO1 and NO5 in southern Norway. If the monthly market price falls below the 70 øre/kWh threshold, the electricity deduction is set to 0.
For comparison, for the third quarter of 2022 the electricity deduction was on average 176,1 øre/kWh.
Lower electricity prices in the Nordic spot market are related to developments on the European continent. Gas prices have dropped significantly, and the continent has experienced long periods of high solar and wind power output, putting further pressure on electricity prices. A snowy winter in southern Norway contributed to a marked improvement in aggregate reservoir levels, a stark contrast to the situation last year.
Variable price contracts still the most expensive choice
The most expensive electricity contracts for households in the second quarter were the so-called For contracts of this type the electric utility companies are under obligation to report any price changes to the consumer 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 120,4 øre per kWh consumed, excluding taxes and grid rent. Contracts of this type 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 second quarter spot price contracts cost on average 84,4 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: 43,8 øre/kWh
- New fixed-price contracts, lasting more than 1 year: 66,1 øre/kWh
- Older fixed-price contracts: 52,5 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.
Service industry and manufacturing
The average price of electricity for the service industry and industry other than power-intensive industry was 80,8 and 76,4 øre/kWh, respectively, excluding grid rent and taxes. Compared to the first quarter of 2023 this constitutes a drop in prices of about 26 per cent for each category.
For power-intensive industries the price of electricity was on average 46,8 øre/kWh in second quarter of 2023, a drop from 49,7 øre/kWh in the first quarter. A lot of the power consumed in power-intensive industries is purchased through long-term fixed-price contracts.