The water level has risen in the power reservoirs. But the chance of full water reservoirs next summer is still low.
Very good news though. – A cold and windless winter in Europe will not be what we need this year, says a power analyst.
Today there was apparently good news for those of Norway’s population who are worried about high electricity prices. The water level has risen in the power reservoirs. They stood at 73.4 per cent at the end of week 40.
This is an increase of 4 percentage points from the week before, according to NVE’s magazine statistics. It was the areas in South-West and West Norway that increased the most with 5.9 and 4.9 percentage points respectively.
– An increase of around 4 percentage points for the country as a whole is completely on par. But we have to go back to 2018 and 2010 to see that the filling rate increased by more than 5 percentage points in such a short time in southern Norway, says senior engineer Mette Eltvik Henriksen in NVE to NTB.
Now other factors come into play
The connection between rising water levels and the price of electricity is more complicated than we like to think.
– The probability of full water reservoirs for next summer and autumn in southern Norway is still relatively low, says power analyst Ole Tom Djupskås. But he believes the hydrological situation has greatly improved.
Djupskå’s analyzer power prices for Refinitiv (London Stock Exchange Group). He says that it was high river power production and high wind power production that caused prices to be low last week.
The Norwegian Directorate of Water Resources and Energy (NVE) also points to large amounts of rainfall as the reason for the price drop. The price of electricity in southern Norway fell by more than 60 percent from the previous week.
– The average weekly price was 98 øre per kilowatt hours. This is the lowest weekly price so far this year for southern Norway, says director Inga Nordberg for the energy and licensing department in (NVE) to NTB.
Now other factors come into play. Prices are on the way up again.
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– A big improvement
On Thursday, electricity prices will be NOK 2.7 per kilowatt hour in south-west, south-east and west Norway. This is shown by the latest figures from the power exchange Nord Pool.
– Falling water flow in the rivers and lower wind power production, in addition to lower nuclear power production in Finland and somewhat severe weather prospects, have led to rising prices in recent days, elaborates Djupskås.
Djupskås believes that we are in a much better situation now than just two weeks ago. At that time, the Nordic water situation was 15 TWh (terawatt hours) below normal. At the end of next week, he expects the water situation to be 6 TWh below normal
– It is a big improvement, says Djupskås.
– How good news is this?
– Last week’s rising water level in the water reservoirs in Southern Norway is very good news. We believe that the probability of rationing towards the end of winter is now very low. Price expectations in the market for the 1st quarter of next year have fallen 25% in two weeks.
– Can you say something about the electricity price in southern Norway going forward?
– Our price forecasts are approx. NOK 2.5 without taxes this winter, he says.
In 2020, the average spot price on the power exchange was Nord Pool 11.6 øre per kilowatt hour. By comparison, the average price in 2021 was 63.4 øre per kilowatt hour. It is the highest in history.
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Gas prices in Europe will affect us
He goes on to say that electricity prices in the future will continue to be highly dependent on temperature, rainfall and wind.
– The way it looks now, the weather outlook for the rest of October will be somewhat wetter and milder than normal. This trend seems to break in November and December. Long-term weather forecasts show relatively normal weather for these months, he says.
It’s not just the weather that affects the electricity prices at home for you and me. In any case, Norway will be dependent on the supply of gas and the price of gas in Europe.
Germany is very close to the goal of having its natural gas reserves 95 percent full by the end of October. According to data from the European gas operator Eig, the country’s overall storage level rose by 0.23 percentage points in 24 hours to 94.67 percent sent on Tuesday evening.
– Will this affect prices in Norway?
– The price of gas in Europe will continue to affect power prices here, since power prices on the continent are largely influenced by gas prices. Especially during hours of the day with high electricity consumption. Full German gas stocks are positive, but the weather outlook is also very important for gas consumption. A cold and windless winter in Europe will not be what we need this year.