On Friday, Norway connected to the British power market through the North Sea Link submarine cable. Analysts believed in advance that the new cable would lead to record high electricity prices in Norway. That’s not how it went.
Lots of rainfall
– There has been a sharp drop in electricity prices this week. Suddenly, very very wet weather came over the country, and the weather forecast for the next few weeks shows that it looks like there will be a lot of precipitation in the Nordic countries. This will change the outcome space in the short term, says chief analyst Sigbjørn Seland in Storm Geo to Dagbladet.
The cable Nordsø Forbindelse was a test operation on Friday that would have an output of 1,400 megawatts (MW), which is more than Norway’s largest hydropower plant. The cable can send up to 12.3 terawatt hours (TWh) of power back and forth between countries per year.
Moderate price range
The test operation started with a maximum capacity of 700 MW. The first auction was held on Thursday at 11 am, and from Friday 9 am it went at full capacity from Kvilldal in Suldal to Blyth in Great Britain.
– We see that on the first day it has had a moderate effect on the price. There are many factors that come into play, such as very low prices in Germany, the Netherlands and Denmark, says Sigbjørn Seland to Dagbladet.
Expert: Can get even worse
Thus, perhaps the biggest power shock has been averted. In the short term.
– Now this hydrological balance has been improved 10 terawatt hours (TWh) in the short term, so it does something with the price. It’s my boyfriend with precipitation, and it probably contains something for the biggest power shock for the winter, says Seland.
As for the rest of the winter, he maintains he had a previous stance.
– The electricity shock has not been averted in my assessment, but it is prone to get the high estimate for the price of electricity for the winter.
– My analysis is still that prices in southern Norway will rise sharply over the autumn and towards the winter. That’s most likely. Even if refills in the magazines, it is still low, but not as low in crisis as it was a few days ago, says Seland.
He believes it seems unlikely that prices should not rise. There is not enough water in the reservoirs to maintain exports in all cables over the winter.
Double electricity price
– If we get a lot of precipitation and a mild harvest that fills the magazines, we can come down to a price of 50 øre. If the opposite were to happen, believe that it could be an economically economic time for many Norwegian households. Then we can get electricity prices at 2 kroner per kilowatt hour, says Selander.
The battle for the power shock
In the UK, the power was sold on Friday at a spot price of £ 162 per tonne. Megawtime.
– It’s very loud. The price there will be sky high throughout the winter, and is priced at 2.70 per kilowatt hour in the first quarter of next year. If the power flow cannot be used for our cables to the UK, Germany, the Netherlands and Denmark, we will have the magazines empty. Then prices also go up sharply, says Sigbjørn Seland in Storm Geo.
Despite the cable, there are large differences between British and Norwegian prices. The price in the UK is NOK 1.92 per kilowatt hour on Friday, while the price in southern Norway is 82 øre, according to the power exchange Nord Pool.
– It will be a price effect over time of 2-3 øre per kwh, it amounts to less than 50 kroner a month for a household, says CEO Hilde Tonne in Statnett to NTB.
Very special situation
It’s increasingly difficult to get the effect you’ll get on any given day, according to Tonne. She points out Nordlink, the power cable that runs between Norway and Germany, which I was down for maintenance last week.
– Then we also saw no effect on the price or the power system of it. It is more difficult to see that one cable in a day, a week or over time in a power system that is now in a very special situation, she says.
CO₂ tax also pushes up prices
Among the reasons for the high electricity prices in Norway is a little water in the water reservoir after and dry summer, in addition to the fact that there is little wind in Europe. More expensive coal and gas with a high CO₂ tax are also pushing up prices sharply.
At the same time in 2020, the gas price was at a low level. Now the level is very high and I have six times bigger even a year ago.
Like the price of gas, the price of coal is also more important for the last year. A tonne costs around $ 180 today, about $ 53 a year ago