NOK 20 per kilowatt-hour is not an unthinkable electricity price in southern Norway in the coming months, according to chief analyst Tor Reier Lilleholt in Volue Insight. – That is the price picture we now see in France, which has Europe’s most expensive electricity. He says there is a short way to go before Southern Norway gets similarly high peaks in the electricity price. For France, it exchanges power with Germany, the Netherlands and England, which, after all, exchange power with Norway. – So the price in Norway can exceed NOK 20 per kilowatt hour? – Yes, but this is a rather extreme scenario. But I have stopped believing that there is a ceiling on the electricity price. A month ago, 5-6 kroner were quite hefty prices, and ten kroner was somehow unthinkable. But now this ceiling has been moved quite high. Chief analyst Tor Reier Lilleholt in Volue Insight. Photo: Asbjørn Odd Berge / news I think the cables give more price increases Recently, there has been an intense public debate about the extent to which all the foreign cables out of Norway are the cause of the sky-high electricity prices. Statnett has said that the cables only make electricity a few cents more expensive in Norway, or only about a 10 per cent price increase. They thought the same when the two newest foreign cables were adopted in the Storting. But Volue has now made a fresh calculation which indicates that current electricity prices in southern Norway would have been a quarter lower if the two cables had not been built. – There have been many questions and opinions in the market and the media, so we have created a full modeling of what would happen if the new cables to England and Germany were “cut”. Some of the power cables between Norway and abroad run on the seabed to Denmark, Germany, the Netherlands and England. Photo: Statnett The analysis concludes that the cables have quite a large effect. – Without these two cables, the electricity price would have been reduced by 25 per cent, says Lilleholt. His point is that the earlier estimates from Statnett are out of date, because they obviously did not take into account the effect of the war in Ukraine and that Europe must manage without Russian gas. – There are a number of prerequisites that have changed in the last year. – When we have to stop exports, we have to export these high prices. Therefore, the cables mean more to electricity prices now than usual. Statnett: – Difficult to be absolutely sure Statnett wrote to news that their main conclusion from 2021 is that Norway would have had very high electricity prices even without the two new cables. – That is probably still the case. At the same time, we also warned then that the effect could be higher in certain scenarios going forward, according to the company. Nevertheless, Statnett admits that their estimates were off even before Russia invaded Ukraine. – Already last year, the new cables had a greater impact on prices than the original model. The NordLink cable was laid in Vollesfjorden in Flekkefjord in 2018. Photo: Statnett/Woldcam Statnett comments on Volue’s analysis as follows: – We can neither confirm nor deny the findings in Volue’s simulation, but there is reason to assume that the effectiveness of the cables is higher now than in 2021. Right now we are probably outside most analytical models, and it is difficult to be absolutely sure of anything. See the full response from Statnett – We did an analysis of the effect the two new cables had on the prices in 2021, and then concluded that the two new cables accounted for around ten percent of the high prices then. The main conclusion is that we would have had very high prices even without the two new cables. That is probably still the case. At the same time, we also announced then that the impact could be higher in certain scenarios going forward. – We have not carried out new analyzes and are unsure how precise it is possible to be on this in the extreme situation we are seeing now, where development is rapid and primarily characterized by uncertainty. Right now we are probably outside most analytical models, and it is difficult to be absolutely sure of anything. – Already last year, the new cables had a greater impact on prices than the original model. No one could have predicted the uncertainty resulting from the war in Ukraine and the extensive energy crisis Europe is facing. We can neither confirm nor deny the findings in Volue’s simulation, but there is reason to assume that the impact of the cables is higher now than in 2021. – There are other factors that are the main reason for the high prices we see now, and that is not unreasonable to say that the external conditions account for somewhere between 75 and 90% of the extreme prices we see now. Volue’s simulation also shows that. – At the same time, the prices here at home are now being affected, in addition to the fact that we have little water in the reservoirs and that the producers are simultaneously pricing the remaining water high in order to save on it. It is important to ensure security of supply through the winter. The winter will be characterized by uncertainty to an even greater extent, and there is little reason to believe that the extreme prices will give way to continued growing uncertainty related to the European gas supply.
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– Southern Norway may receive electricity prices of over NOK 20 this winter – news Vestland
