January 30, 2023

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Electricity in the North was sold to record-fixed price contracts

Electricity in the North was sold to record-fixed price contracts

Sold: Fixed-price deals in the North have been brisk this year.

Electricity prices in the north will be at an all-time high this week. For those looking to get the region’s cheapest fixed price, the window closes at eight this morning.

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Norvik-based power company Polar Craft has been offering customers in northern Norway a fixed-price contract of 54.90 øre per kilowatt hour for three years for the past two weeks.

But not anymore.

– We bought a block of concrete at a fixed price on Power Exchange. If we sell out, we have nothing to sell, Polar Craft’s sales manager Frank Sundermeier tells VG.

On Monday morning at 08-09, the spot price in price zone NO4 (Northern Norway) was 417 øre per kWh. In the past two weeks, prices in the north have risen unusually.

– The current week is very close to “all time”. The average price can quickly reach over two kroner, which is a record for the region, says Sundermeyer.

In northern Norway, a new record will be set on Tuesday The average price for electricity (kWh) was NOK 3.22 per kilowatt hour and the highest price was NOK 5.33, which is also a new record.

No production: Ringhalls nuclear power plant in Sweden.

Northern Norway has so far been spared from extreme electricity prices, as the region’s power generation typically exceeds consumption by eight terawatt hours.

But with two nuclear plants not in production, Sweden is off balance. There is little wind, and the winter cold has tightened its grip. Then the price will rise sharply in the north as well.

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– We already see that the price will increase further on Wednesday and may become the high of the week, says Sundermayer.

There are no fixed price contracts in southern Norway. For power producers, the risk has become very high due to high prices and large fluctuations in the power market.

– Now it has become very difficult for us in the north to buy electricity at a fixed price from the power transmission. Sundermayer says producers need to focus.

– To confirm

He still believes Polar Craft can secure new fixed-price contracts before the start of the year.

– For us, it is disappointing that we can no longer offer fixed prices in the North. Many in northern Norway want to protect themselves from what happened in eastern Norway.

– But can you guarantee that, for example, 54.90 øre is a good price?

– No I can’t. But if you’re afraid of the exorbitant price tag, Sundermeier says you should think about what you feel is right to live in your own home.

Director of Bodø Energi Kraftsalg Ole Angelsen insists that a fixed price for electricity is an insurance policy, not a way to make money.

Bodø Energi’s offer of a fixed price of 65 øre per kWh for three years also ended on Monday. Angelsen says demand for such an expensive contract is low.

– Limited gain

– When the electricity subsidy starts at 70 øre, the profit is low. Consumers will take the risk of the spot contract, says the e-sales director.

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From September 1, the government introduced an electricity subsidy scheme that covers 90 percent of prices above 70 øre per kWh, and is calculated from the average electricity price per month for each area. Support is deducted from the invoice for online rentals.

Sales Manager at Polar Craft, Frank Sundermeyer.

As a result of low power generation, power imports and higher than normal rainfall, the amount of recharge in southern Norway has increased strongly.

The Norwegian Directorate of Water Resources and Energy (NVE) believes that even if the winter is cold, the supply of electricity in the spring is not out of the question.

Even more expensive

But as long as gas prices remain high, NVE expects even higher price levels.

In the autumn season with very high electricity prices in southern Norway, electricity consumption decreased significantly compared to last year and adjusted for temperature variations.

Households in southern Norway cut electricity use by 17 percent in September and 14 percent in October.

– That did not happen in the North. We live in our own bubble. But I think we in the North are now learning that the cheapest electricity is the electricity you don’t use, says Frank Sundermeier at Polar Craft.

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