Politicians in Norway have decided on so-called Norway prices. This after a politically loud debate about high electricity prices. From 1 October, Norwegians who want to sign an agreement on a fixed electricity price of 40 öre/kWh can do so. Then the price signals will partially disappear on the Norwegian electricity market. This means that Norwegian households can use electricity without having to take the consequence of a potentially strained situation with a shortage of electricity.
The incentive to save or shift their consumption to other hours, it disappears completely, says Johan Sigvardsson, electricity analyst at Bixia.
Mainly southern Sweden
Then the consumption will be higher than it would otherwise be, which will spill over to higher prices in surrounding areas because the electricity grid is connected across national borders, according to Sigvardsson. Mainly, it will be southern Sweden, electricity area 3 and 4, that will be affected, where prices are often already higher than in, for example, Norrland.
Electricity analyst Mats Nilsson, associate professor at Södertörn University, adds:
"It sounds like a dream for Norwegians but the consequence is that they no longer react to price signals. When consumption does not decrease at high prices, demand increases instead and the entire Nordic market is pushed up", he writes in a comment to TT.
The effect is greater in winter
The price impact may not be huge, normally. But during the colder season when consumption is higher, the effect can be greater.
Yes, especially during the winter when consumption is generally high, says Johan Sigvardsson.
Here, something similar was discussed, so-called Sweden prices, when the electricity price debate was at its hottest a few years ago. It was not at all the same variant as Norway is now introducing. The Norwegian state treasury, well-filled with oil money, has plenty of resources to pay Norwegian electricity consumers, which Sweden does not have in the same way.
What Sweden did instead was to pay out electricity price support afterwards, 50-60 billion kronor in total, which was based on the fact that households would be compensated for a price that exceeded 75 öre/kWh.
