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ENERGY

Could the Norwegian government introduce a cap on energy prices? 

Due to soaring prices, the Norwegian government is mulling over several solutions, including a potential price cap for electricity and limiting energy exports abroad. 

Pictured are powerlines in Norway.
Norway's governemnt has said it is looking at measures to curb energy bills. Pictured are powerlines in Norway. Photo by Fré Sonneveld on Unsplash

High energy exports in the last 12 months, low filling levels in Norwegian reservoirs and an uncertain energy situation around Europe have led to soaring electricity prices in southern Norway. 

Last year the government introduced a scheme whereby it covers 80 percent of consumers’ energy bills where the price rose above 70 øre/kWh. The portion of the bill under 70 øre is paid in full by households. The portion the government covers will increase to 90 percent in October. 

Critics have argued that the current scheme still leaves households struggling with their bills. As a result, Norway’s government has said it is mulling its options to curb energy bills.

Norway primarily depends on hydroelectric dams to help it meet its energy needs. Still, reservoirs in southern Norway have been at the lowest level for ten years, public broadcaster NRK reports. 

Low reservoir filling over the past year has conceded with record exports with higher prices on the continent, making sending power abroad an enticing proposition.

Recently, exports have fallen significantly, and the government is considering introducing a limit to reduce the possibility of energy rationing being introduced this winter. 

“Restrictions on the export of electricity to Europe may be one of the measures that is needed,” Elisabeth Sæther, state secretary at the Ministry of Oil and Energy, told NRK. 

Earlier this week, Prime Minister Jonas Gahr Støre ruled out completely shutting off exports to the continent. 

“It is a dangerous thought and will not serve us well. It could give us more expensive power and lack of power in given situations. We will hardly be able to import power when we need it without contributing to other countries when they need it. There is a reciprocity in this,” he told the newspaper Aftenposten earlier in the week. 

Sæther also told NRK that the government was weighing up putting a maximum price on energy but warned that it could have unforeseen consequences. 

“We are afraid that a maximum price means that more water is drawn into the reservoirs, which we need for the winter. It is a serious situation. We must prevent ourselves from getting into a situation where we lack enough power this winter,” she told the broadcaster. 

At the end of May, the state-owned Statnett announced that the supply situation in Norway might be under strain – in some scenarios – all the way up to and through the winter, especially if Southern Norway experiences drier than usual weather in the second part of the year. 

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ENERGY

German households to receive relief for gas costs ‘starting in January’

To help German residents with skyrocketing energy costs, the government is planning to provide relief starting in January, according to draft legislation.

German households to receive relief for gas costs 'starting in January'

Through the gas price cap, the so-called Gaspreisbremse, both German residents and companies will receive retrospective relief for their gas costs starting in January 2023, according to the draft. 

Previously the relief payments were set to stretch between March 2023 and spring 2024, with 25,000 larger businesses, as well as almost 2,000 hospitals and schools to receive the help starting in January. 

READ ALSO: How much could households save under Germany’s new price cap?

The German government is reacting to the sharp rise in energy prices with energy price brakes worth billions and wants to soften the blow on both private households and companies. 

Germany will also be divvying out a one-off energy relief payment in December.

READ ALSO: When will people in Germany get their December gas bill payment?

How much will households and businesses receive?

Under the gas price cap, households and small and medium-sized enterprises are to receive a guaranteed gas gross price of 12 cents per kilowatt hour for 80 percent of their current consumption. For the remaining 20 percent of consumption, the contract price is set to apply.

For district heating, the guaranteed gross price is to be capped at 9.5 cents. 

Starting in January, a gas price brake is also planned for industry. These large consumers are to receive a guaranteed price of 7 cents per kilowatt hour net for 70 percent of their previous consumption volume.

The largest part of the energy price brake is to be financed by a “defence umbrella”, or special reserve, totalling up to €200 billion. The government is still taking on new debt in order to finance the energy caps. 

Russia’s war against Ukraine has increasingly aggravated the situation on the energy markets in Germany and Europe in the course of 2022, the draft states. 

In particular, the recent large price increases for natural gas and heat represent a “considerable, in some cases existence-threatening burden for residents and companies in Germany,” it continued. “They are an enormous socio-political and economic challenge.”

Vocabulary

relief – (die) Entlastung

Natural gas – (das) Erdgas

Consumption – (der) Verbrauch

cushion/soften a blow – abfedern

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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