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Price of electricity in Denmark increases by 83 percent

The price of electricity in Denmark has increased by 83 percent in the past year, according to the Danish Utility Regulator.

Published: 9 December 2022 15:51 CET

A light bulb

The main reason for the soaring electricity prices is the rising cost of gas. Photo: Mads Claus Rasmussen/Ritzau Scanpix

In a press release, the Danish Utility Regulator, (Forsyningstilsynet), explained that the price of electricity for households and small businesses continued to rise from the second quarter to the third quarter of 2022 by 15 percent.

This gives a total increase of approximately 83 percent since the price increases that started in the third quarter of 2021.

The main reason for the soaring electricity prices is the rising cost of gas.

“We started to see price increases for electricity in the second half of 2021, and they were largely driven by price increases for gas, which in turn was due to the world economy getting back into gear after the coronavirus lockdowns”, Chief consultant Kristian Rune Poulsen from Green Power Denmark told news wire Ritzau.

“When the Russians then started to withhold deliveries of gas, which happened after the invasion of Ukraine, it escalated, ” Poulsen said.

Gas and electricity prices are closely linked, as the market is regulated by the most expensive energy source.

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Danish electricity company announces 'record negative prices' after sunny May

Last month saw a total of 75 and 59 hours of ‘negative’ electricity prices in the western and eastern halves of Denmark respectively, Norlys said in a press release.

Unfortunately, a ‘negative’ price doesn’t mean you will be paid for switching the lights on, because taxes and transport costs must still be added to the base price.

Specifically, the total price paid by customers can include (in addition to the base rate) state tariffs, subscriptions, one-off charges, VAT and payments to the local energy grid.

Tariffs, like the cost of raw electricity, can also fluctuate from hour to hour. This depends on the tariff model used by individual companies.

But lower electricity prices can be taken advantage of by setting timers on thirsty appliances like dishwashers and tumble dryers and running them at these times. This can include off-peak times of the day when there is less demand for power, as well as fluctuations related to production.

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The total of 134 hours across Denmark in which customers receive a discount due to the negative ‘raw’ energy price is a record for a single month, Norlys said.

“We know that many of our customers follow electricity prices closely and the trend in May also underlines that there is a very good reason for this,” Norlys director for energy sales Mads Brøgger said in the statement.

“It’s good for your wallet and the green transition alike if you can plan your consumption for the hours in which there is a lot of sun and wind, making the electricity price low,” he said.

READ ALSO: How an app function can help cut your Danish electricity bill

May’s high frequency of negative base electricity rates can be attributed to the pleasant spring weather, which provided both wind and sun to the energy system in Denmark.

Meanwhile, Denmark’s electricity infrastructure has become more closely connected to other parts of Europe, notably Germany and The Netherlands. Both countries have increased their solar power capacity in recent years.

“It benefits us to have many sunshine hours, as was the case in May. Meanwhile, energy consumption was low in May because it was warm enough not to need electricity for heating, but not hot enough to need it for cooling. So there was a sweet spot in many ways,” Brøgger said.

The trend of low electricity prices has so far continued into June, with negative base rates occurring on Sunday for a number of hours in both the eastern and western parts of the country.

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