Electricity is an essential commodity that affects the way of life of people and communities. It makes life quite easy and also contributes to the development and urbanization of rural areas. Through the years, the cost of this commodity keeps increasing with inflation.
While everyone knows that the price of electricity is always on the rise, some do not know how frequentlyit rises. If you live in Norway, you know there are different power regions and that these regions have different power costs.
Many factors affectthis disparity in price, and they include the water level of the power reservoir in the region, electricity prices in Europe, and bottlenecks in the grid system. Click here for more information about bottlenecks in grid systems.
Thepurpose of this article is not only to help you understand the reasons why electricity prices change on a daily basis but also to help you know how to keep up with the changing prices and get the best deal on time.
So stay with us as we explore the factors that affect the daily price of electricity and how you can stay abreast of these changing prices.
General Information about Electricity Prices in Norway
The electricity price all over the world is market-driven and is affected by the forces of demand and supply. When demand is higher than supply, the price rises and when supply is more than demand, the price reduces. An example of demand and supply is during winter when every household needs electrical energy to keep their homes heated.
Some commodities can be stored for as long as you need them but that is not the case with electricity. It is referred to as a fresh product that is not meant to be stored; it should be used as soon as it is generated.
Countries in the Nordic region trade electrical power on the Power Exchange Nord Pool. The supply chain here is from the power-generating companies to the suppliers and then to consumers. This power exchange pool does not service only countries in the Nordic regions, but also a number of countries in Northern Europe.
The price of electricity for the next day is usually published by the Nord pool every day at 1 p.m. The flow of information comes from the power generating companies and suppliers to the electricity exchange.
Statnett is the agency that is responsible for the coordination of Norway’s power system operation. This agency is owned by the Ministry of Petroleum and Energy and they are also in charge of building and maintaining the country’s power system.
Factors that Affect the Daily Price of Electricity in Norway
There are many factors that the price of energy in the country and we will discuss them below:-
Demand and Supply
One of the most important factors that affect the price of power is demand; as we mentioned earlier, if demand is higher than supply, the price of the commodity will increase but when supply is higher, prices will decrease. This changes by the hour based on how demand changes in the day.
Usually, prices are highest in the morning from 7 am to about 10 am, and in the evening between 5 pm and 8 pm. This is because these are the peak periods when demand is highest in the country. The off-peak periods are between 2 a.m. and 5 a.m.
These off periods are recommended for high energy-consuming tasks such as charging electric cars and laundry.
The Season of the Year
Seasons determine the balance of demand and supply and power prices. For example, during the summer months, the electricity demand is low therefore energy tariffs fall. However, prices rise in autumn and winter because people need energy to heat their homes, and as such the demand rises.
It is often easier to conserve energy in summer months than during winter because of the inevitability of the need for heat in every home. However, there are still some measures that can be taken to conserve energy, and they include (a) turning off appliances in rooms that are not in use (b) reducing the temperature in the house at night, and (c) investing in a heat pump.
Weather Conditions
Electricity in Norway is mainly generated with hydropower. This therefore means that any day that the water level in the reservoir is low and demand is high, the price of electricity will be high. Conversely, when snowmelt and rainfall are abundant and the reservoir fills up and can adequately generate energy to meet consumer demand, the prices go down.
In the past few years, the Eastern and Southern power regions have experienced unusually drier summer months and this has contributed to the price hike in energy tariffs because of the low water levels in the reservoirs.
The wind is another weather element that affects the cost of electricity every day. This is because some power-generatingcompanies use wind to generate electricity. As of 2022, there were about 22 power plants that produced about 8% of the electricity generated in the country. This therefore means that windless days amount to low or no production of energy and this in turn leads to a hike in energy prices.
The International Electricity Market
We mentioned in the general information segment that Norway trades on the Power Exchange Nord Pool. This therefore means that market conditions internationally will affect the price in the country.
The cost of gas and coal in Europe also affectsthe cost of electricity in Norway. This is because these commodities are used to generate power in the exchange pool and the higher the cost of these raw materials, the lower the overall production. And based on the law of demand and supply, prices inevitably rise.
Factors such as war also affect the international market. The ongoing Ukraine war is a typical example. Due to sanctions from the West, Russia’s gas export to a good number of European countries has reduced drastically and this has contributed to the significant increase in the price of gas and inevitably electricity.
Power Regions
The following are the power regions as they are listed on the Nord Pool:-
- NO-1 Eastern Norway: Oslo
- NO – 2 Southwest Norway: Kristiansand
- NO-3 Central Norway: Trondheim
- NO-4 Northern Norway: Tromsø
- NO-5 Western Norway: Bergen
The Northern region usually has the lowest energy tariffs amongst all the regions in the country while the Southwest and the Eastern regions have the highest tariffs.
These regions are divided based on their production capacity and the demand from consumers and these vary across all the regions. The regions that have higher production and transmission capacity usually have lower energy costs while those with lower production and transmission capacity have higher energy costs.
Your Electricity Supplier
Since electricity prices are mostly left at the behest of the supplier, the supplier you use can also greatly affect your energy bill. Although every electricity supplier buys power from the exchange at the same spot price, they do not all sell at the same price.
A good number of these suppliers add a surcharge to the total cost of their customers’ bills. This is a mark-up on the original cost of power in the region which increases the final bill. Due to the fact that this markup differs from one supplier to the other, you need to take time to search and look out for the supplier that has the lowest markup and also great terms and conditions.
Tips for Getting the Cheapest Electricity Tariff Possible
Having established different factors that affect the daily price of electricity, you can see that there are some factors that we can do nothing about. However, there are 2 factors that you have some control over and that is the region you choose to live in and the supplier you subscribe to. You can get the best deal for strømpris i dag (electricity price today). All you need to do is pay attention to the tips we will share below:-
- Understand your electricity tariff – If you have a good understanding of how your supplier charges and how your tariff is collated, you will know how to both pan your usage and energy expenditure.
- Always check out a different provider – From all that we have discussed above, you can see that energy cost fluctuates. That is why you cannot just stick with one provider without checking out others from time to time. If you stay with one provider you may end up missing out on a cheaper contract.
- Upgrade your appliances to more energy-efficient ones.
- Consider alternative power sources
- Be mindful of peak hours- This is why understanding your tariff is important. If you know when the reading spikes and when it reduces, you can schedule high energy-consuming tasks and chores for those times.
Conclusion
We have shared some basic but highly important information on electricity pricing and the factors that affect it. The key takeaway from these pieces of info is that you have to learn how to position to maximize these price fluctuations. You can either change location if you live in a region with high electricity costs or change supplier if your current one has a higher markup than others.
