Norway Considers Nationalizing Power, Limiting Exports, Amidst European Price Surge

By ZeroHedge-Tyler DurdenSaturday, Dec 14, 2024 - 09:35 AM

A jump in power prices in Europe has made the case for Norway’s ruling party to limit power exports, according to a new Bloomberg report. The Labor Party plans to prioritize ending Denmark's power link in its 2026 renewal in its election manifesto for next September, according to insiders cited in the report.

Power prices in Oslo hit their highest since December 2022 on Thursday but dropped 65% by Friday.

Lawmaker Ingvild Kjerkol commented: “In spite of full water reservoirs, power prices are sky high. It’s very hard to explain to people in Norway why a country with a large power surplus should have high electricity prices.”

This aligns with Prime Minister Jonas Gahr Store’s Labor Party and its coalition partner, the Center Party, which previously advocated curbing power exports during the energy crisis. While not an EU member, Norway is part of the single energy market, which restricts prolonged export limitations.

Norway’s stance on electricity contrasts with its pivotal role as the EU’s top natural gas supplier, providing a third of the bloc’s needs. Analyst Bjorn Inge Vik attributed recent price spikes to cold weather and low wind output, which pressured Europe’s gas reserves and electricity costs.

According to the Bloomberg report, Norwegians, long accustomed to low, stable hydroelectric power prices, now face higher rates due to increased market integration and volatility. With 17 international power cables, Kjerkol noted that Norway will remain tied to the global power trade.

Volue analyst Bjorn Inge Vik commented: “It’s been cold and with very little wind, so those are the fundamentals that have eaten into gas storage in Europe and underpin electricity prices as well.”

Norwegians have traditionally enjoyed low power prices thanks to over 1,000 hydroelectric plants, but growing market integration has brought continental price volatility to the Nordic region.

Norway’s grid connects to Sweden and several countries via subsea cables, including Denmark, Germany, the Netherlands, and the UK. Last year, Norway rejected a proposal for a second UK electricity cable to retain more power for its own growing electrification needs.

Though Norway typically exports power to the UK, Thursday saw fluctuating power flows as northwest Europe faced soaring prices. An industry leader cautioned that severing market connections could lead to future supply challenges.

Bard Standal, deputy leader of renewables lobby Fornybar Norge concluded: “The trend is that there is very little renewable energy being built in Norway, while there is a lot being built around us. In a few years time, the cooperation with these countries may be what ensures energy security and low power prices.”