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How Norway’s energy support scheme is changing from September

Changes will be made to Norway's energy subsidy scheme, which aims to give more support to eligible households and make it easier to calculate bills.

Published: 31 August 2023 15:05 CEST

Pictured are powerlines.

Norway's energy scheme will change from September 1st. Pictured are powerlines. Photo by Rodion Kutsaiev on Unsplash

From Friday, September 1st, a new energy support scheme will be in place. The Norwegian government will still pay 90 percent of the excess when the price rises above 70 øre per kilowatt hour.

However, the scheme will change so that support will be applied on an hourly basis rather than a monthly average.

This means that many will receive more support when prices peak rather than receiving support based on the monthly average.

In that sense, households will be better protected against extreme fluctuations in price. However, analysts say that those who adjust their habits to use more energy when prices are lower will lose out.

“The change was sold by the government as a major improvement, but our own calculations show that the change has a marginal impact on people’s electricity bills,” Linda Ørstavik Öberg, energy policy adviser at the consumer organisation the Homeowners, told Norwegian newspaper VG.

Consultant and social economist at Vista Analysis, Andreas Hoel-Holt Stranden, said that the new support scheme could lead to people becoming more wasteful.

“The reason why the price of electricity is sometimes very high is that there is a shortage of electricity. The high prices can cause people to change their habits or invest in technical solutions that shift electricity consumption to other times of the day. But when the state covers most of the price spikes, we may want to continue using electricity when there is actually too little of it,” he told VG.

While the scheme first enters effect in September, it will not be noticeable until October’s bill. The bill you receive in September will be based on the old support scheme.

Marius Holm Rennesund, partner at the Norwegian energy consultancy, Thema recently told The Local that energy prices between 65 and 90 øre per kilowatt hour could be expected in southern Norway this autumn and winter.

READ MORE: Will power prices in Norway be as high this winter as they were last year?

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Why your latest energy bill in Norway was so expensive

The average energy bill for November is expected to exceed 2,000 kroner, according to an energy price index from the energy organisation Fornybar Norge.

Energy prices in Norway were high across the country, and the average price was high enough in all five energy price regions to trigger government support. The state in Norway covers 90 percent of the energy price that exceeds 70 øre per kilowatt hour.

The reason for the spike in prices was a colder than typical November, which saw several records broken. Last month was the coldest November for 13 years.

READ ALSO: Could a heat pump be a cheap alternative for keeping your home warm in Norway?

The lower temperatures meant more and more cranked up the heating to keep warm. Energy consumption increased by a third during November compared to the same month a year ago.

“The reason for the high electricity bills is that winter came early this year. It was bitterly cold for large parts of November, and this has meant that people have used much more electricity to heat their houses. This has led to increased demand for electricity, which in turn has caused electricity prices to rise,” deputy director Bård Standal of Fornybar Norge said.

Due to the prices triggering support, Fornybar Norge estimated that households in southern Norway received around 640-700 kroner in energy support. Those in central and northern Norway may have received around 300 kroner in support.

“The electricity subsidy scheme reduces the price consumers pay for electricity and probably also leads to somewhat higher electricity consumption,” Fornybar Norge said.

Norway is reliant on hydropower to meet the majority of its energy needs. Low precipitation levels also mean that the occupancy rate in hydroelectric reservoirs is lower than the median in recent years.

“In November, there were several weeks of low temperatures and less precipitation than average. The low temperatures contributed to a large part of the precipitation settling as snow and giving little inflow to the water reservoirs,” the Norwegian Water Resources and Energy Directorate (NVE) said.

In the winter, energy prices in Norway are likely to fluctuate, according to the NVE.

“NVE assesses the power situation on an ongoing basis, and at the start of winter the power situation is good. We still expect periods of higher power prices than what we have been used to historically. What the prices will actually be during the winter depends on many factors such as the weather and the gas price,” the NVE said in a report.

Another factor that affects energy prices in Norway is the export cables that transfer power from Norway to the continent. This also means that when energy prices are high across Europe, they will also be high in Norway.

Gas prices also affect energy prices in Norway due to the presence of cables. While gas prices are lower than last year, they are still high compared to other years.

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