The price of electricity in Norway may rise when the Norway-British power cable is put into service within two weeks, analyst Sigbjørn Seland at Storm Geo believes. – It may rise above the German level, he says.
On October 1, Norway will connect to the British energy market through the North Sea Link submarine cable, after a period of trial run.
Then electricity prices in southern Norway could rise more than the already high level.
Electricity prices in the UK are at record high levels today.
Bloomberg energy correspondent Javier Blass reported New record prices On Power in the UK via Twitter.
On Tuesday, he wrote, “Elevil electricity prices,” referring to a price of 424 pounds per megawatt hour on Wednesday. This corresponds to more than five kroner per kilowatt-hour, or more than four times the price of Norwegian electricity on the same day. And the busier hours get more expensive.
On Tuesday, Blass wrote that “British electricity prices between 7 and 8 pm tomorrow night will reach 2,500 pounds per megawatt hour.”
This corresponds to 29 NOK per kilowatt-hour.
Norwegian energy prices are NOK 1.16 per kilowatt-hour on Wednesday, abnormally high levels even under Norwegian conditions. It’s about the price of energy excluding grid rent and electricity companies’ surcharges and charges.
Sending electricity to the British for the first time: a great Norwegian engineering feat
– You will raise prices
Senior Analyst Sigbjørn Seland at Storm Geo believes that when Norwegian-British cable is brought to market, it will be able to increase prices in southern Norway more than already high levels.
– When North Sea Link becomes operational from 1 October and with 700 MW available, as a rule 700 MW will flow from the NO2 price zone in southwest Norway to the UK. It will raise prices across southern Norway even more, Seland says to E24.
– This is the same energy consumption in a company that should suddenly increase by 700 megawatts. It’s important, so you’ll see it right away. Statnett is now running and testing this cable, so there have been some days when up to 1,400 megawatts have arrived via this cable. He says that affected prices a lot.
It is believed that energy prices in southern Norway will be significantly affected by cable to the UK, and could be higher during the fall and winter.
The price in southern Norway is 1.16 NOK per kilowatt-hour on Wednesday, and is likely to rise further during the fall, says Seeland.
Can rise to the German level
Until recently, the cable to the UK was in trial operation. As of October, it will be in normal operation mode.
Primarily, the power industry will be able to use 700 MW out of a total capacity of 1,400 MW. Eventually, the capacity will be increased to 1,400 MW. It is sufficient to replace more than 12 terawatt-hours (TWh) of electricity annually, but in reality the energy flow will vary depending on demand and prices.
In Germany, the price for the fourth quarter is about 1.40 kWh. Seeland says the price in southern Norway can go up to nearly the level of German prices, and I’m not ignoring that.
– Why does the price not rise to the British level?
It may rise above the German level, but will not reach the British price level. When the price level in southern Norway rises above the German level, energy will begin to flow from Germany to the NO2 price zone and to the UK. Seeland says the power flow on the Dutch cable is also being reversed.
– Therefore, the price level is likely to rise slightly above the German level. If it had to rise more, it must have been a dry, cold autumn. But then prices can actually go up, says the analyst.
Highest electricity prices
Norway has 17 international power links, including four foreign cables to Denmark, one to the Netherlands (Norned), one to Germany (Nordlink) and one to the United Kingdom (North Sea Link).
On Earth, the Norwegian Central Grid (the highest level in the power grid) contains one line connecting Norway to Russia, one to Finland, and eight lines to Sweden.
Electricity prices in Europe have risen extraordinarily lately, due to high prices for gas, expensive coal and exorbitant carbon dioxide quotas. The UK also has its own fees which raise prices even more, according to Sealand.
There is a general expectation that UK energy prices will be very high throughout the fall and winter. Electricity prices are high across Europe due to rising coal and gas prices. It is this kind of power, Sealand says, that sets the price in Europe.
In the UK, they have their own CO2 quota system, which means that costs at gas power plants are higher than anywhere else in Europe. He adds that they have the highest energy prices.
However, the agents of British power have price tag, which is operated by Ofgem. This is adjusted twice a year, and can be raised during periods of additional price hikes.
The most expensive electricity of the year: – There are record levels for this season
All arrows point in one direction
Partner and energy analyst Marius Holm Renesund at Thema Consulting agrees with Seland that prices could rise further when the new cable comes into the UK.
-If it’s still dry and a little windy in the Nordic countries, you can quickly get to German prices, he says.
All arrows point in one direction for the price of electricity now. He says that local factors are factors that we see in Europe.
– Is it a problem that the cable can contribute to the increase in prices?
– Okay. It shows that the market is working. When there is a shortage in the North region, electricity prices will rise. What’s special at the moment is that prices are very high in the UK, so you have to be very high on prices in the Nordic countries to get imports from Germany and from here, he says.
Both the energy industry and government have emphasized that Europe’s energy system is highly dependent on weather. It has been dry in the Nordic countries so far this year. Heavy rain will be able to change the picture and bring down prices, but so far it’s too late.
We will depend greatly on the weather in the future, says Renesend.
It could open to profitable offshore winds early: Southern Norway could get expensive electricity
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