The electricity prices in Southern Norway have been high throughout this autumn and into the winter season. There have also been periods of large price differences between the north and south, both in Norway and the Nordic countries. Key explanations for this are very high European electricity prices as a result of high gas and coal prices and higher carbon prices, and at the same time less inflow in hydropower storage reservoirs in the south of Norway as a result of a dry summer and autumn. In addition, there has been a significant reduction in capacity from north to south in the Swedish power grid and limited grid capacity between Sweden and Norway.
- The autumn of 2021 has been very unusual. This is not the new normal in terms of Norwegian power prices. Still, we expect that in the coming years the price may be higher than the average price we have seen in recent past. Power prices will gradually drop to more normal levels in both Norway and Europe, says Gunnar Løvås, Executive Vice President for Power Systems and Markets at Statnett.
The analysis shows that the electricity price we see now will not continue over time and that a significant reduction is expected from the record high price levels this autumn. At the same time, there is an expectation that prices will be higher in the south of Norway than in the north in the years to come. The average price in the northern part of Norway is expected to fall gradually towards 20 - 30 EUR/MWh, while the average price in the south is expected to decrease towards 50 - 60 EUR/MWh by 2026. However, a considerable room for deviation remains when forecasting electricity prices in the coming years.
Increasing consumption and need for more power production
In the analysis for 2021-2026, Statnett assumes that the annual electricity consumption in Norway will increase from 139 TWh to 158 TWh over the next five years. This is the largest growth in electricity consumption among the Nordic countries, and is mainly driven by increased electricity consumption in e.g. transportation, power-intensive industry, electrification in the oil and gas sector and data centers. The growth assumed over the next five years is based on already well-known plans.
At the same time, there are few plans for new power production that is not already under construction. The Norwegian power surplus in a normal year will therefore be reduced from about 15 TWh in 2021 to around 3 TWh in 2026.
- There will be a need for more power production if we are to achieve the targets set for electrification of society and the establishment of new industry in Norway, says EVP Gunnar Løvås.
In the Nordics as a whole, power production capacity will continue to increase. New wind power, particularly in Sweden, helps to keep the Nordic power balance stable, even with a significant power consumption growth of around 40 TWh at the Nordic level. In Sweden, the power surplus will increase significantly from around 25 TWh today to around 40 TWh in 2026, and the surplus in northern Sweden will be as much as 60 TWh. The regional power surplus in the north of the Nordic region will increase over the coming five-year period, with a surplus of up to 60 TWh in the north of Sweden.