NVE CEO Kjetil Lund fears long-term high electricity prices. – They can stay high for a while, also through next winter, he says.
The winter’s electricity price crisis has made a big dent in ordinary people’s budgets, and many have had to turn up several thousand kroner extra per month in electricity expenses.
The state has taken crisis measures and introduced electricity support, but it is limited and will only last until March.
Now Kjetil Lund, director of the Norwegian Water Resources and Energy Directorate (NVE), goes out and warns: the price of electricity can be very high for a long time.
– We must be prepared for the fact that electricity prices may remain high throughout this year, Lund says to E24.
– They will probably go down a bit this summer, but we must be prepared that prices can be far higher than what we are used to for the season. There is also a lot of uncertainty associated with next winter, he says.
You get this in power support for January
– Expensive gas and little water
– There are two main drivers behind this. The most important explanation for the high electricity prices we have had recently is high gas prices. If gas prices continue to be high, Norwegian electricity prices will also remain high. It is a gloomy situation in Europe, he says.
– In addition, we have a low degree of filling, and this means that in order to get into a normal resource situation towards the autumn, we are dependent on a lot of precipitation. It is common in a weather-based system like the Norwegian one, he says.
– How long can prices stay high, in the worst case?
– They can stay high for a while, also through next winter. But there is a large room for maneuver here, both in terms of gas prices, wind power production and inflows, he says.
– Can prices remain high until 2024?
– Until 2024, there are many uncertain factors that may affect our forecasts. But it is conceivable, says Lund.
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Little gas in stock
According to several analysts, a shortage of gas is a key reason for the sky-high electricity prices in most of Europe.
Europe’s gas reserves are empty than usual, and it can be demanding to refill them enough to avoid new periods of expensive electricity until next winter.
The Ukraine conflict may also affect this. Russia has exported less gas to Europe than usual this winter, and if it continues, Europe may struggle to replenish its stocks.
High gas prices also contribute to Norway receiving enormous export revenues last year. Last year, Norway earned NOK 475.8 billion on gas, far more than on oil, according to Statistics Norway.
– Follow the development
– Why are you warning about this now?
– We follow developments in the power market, and believe that one must be prepared for high prices throughout the summer and through next winter. People’s expenses will be lower throughout the summer due to falling consumption, but the electricity price itself may remain higher than usual, Lund says.
– Does this mean that the government should have a plan in case the population needs electricity support even after March?
– I do not want to go into that. It will be up to the government and the Storting, says Lund.
– Some believe that Norway should slow down electricity exports to Europe, in which case what will it lead to?
– This is currently regulated by agreements, where the main rule is that the connections can be used. Lately, we have seen that the cables have also been used a lot for the import of power, says Lund.
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