Drought blamed for high power rates

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The lengthy spell of hot and dry weather in central and southern Norway has sent electricity rates soaring. New figures show they’re now 90 percent higher than they were when they bottomed out exactly three years ago.

Hot, dry weather and parched ground are already causing major problems for Norwegian farmers. Now electricity rates are climbing as well. PHOTO: newsinenglish.no

State statistics bureau SSB (Statistics Norway) cited high temperatures and rapid melting of last winter’s record amounts of snow and ice as the main reason that electricity rates are now historically high. They rose by nearly 10 percent in June alone, according to the consumer price index released by SSB this week.

SSB noted that the snowmelt initially left reservoirs tied to Norway’s hydroelectric power source comfortably full. Now the high temperatures and lack of any significant rainfall in the past two months is having an effect on prices. Water levels are falling, rivers and creeks are running low or empty and there’s hardly any snow left in the mountains.

Newspaper Dagens Næringsliv (DN) reported that analysts think the prices will stay high through the summer, when they’re otherwise traditionally low. “There’s hardly any snow left to melt in the mountains at all,” Ole Tom Djupskås, a power analyst at Thompson Reuters, told DN. “The situation is even worse than it was a month ago, when we had 25 TWh less water and snow than normal. Now we have 35 TWh less than normal.”

While the reservoirs were fuller than normal in recent weeks, now their water levels are on the way down. Djupskås said the problem is that the snow has melted and the ground is very dry. There’s little if any water left to seep into the reservoirs.

He also claims that while there were record snow depths at lower elevations in Norway last winter, snow levels in the mountains weren’t so high. “There wasn’t as much snow in the mountains, that’s something we just think there was because there was so much in the lowlands because of the cold weather,” he told DN. “In total there wasn’t so much snow in the mountains in Norway this winter.”

Tor Reier Lilleholt, chief analyst at Wattsight, told DN that actual electricity rates have been higher in earlier years, “but when we add in the fees and price of electricity distribution (nettleie), I don’t think they’ve ever been higher than this summer.”

Another factor pushing electricity rates up is that any coal-power imported from Europe is very expensive because of higher fees on carbon emissions. Demand for both coal- and gas power has also increased in Asia, sending prices up as well. Lilleholt predicts water levels in Norway’s reservoirs will also continue to decline over the next few weeks because the ground around them is so dry.

It all means that electricity rates are likely to remain high. “We need a considerably wetter summer and fall in order for rates to fall,” Djupskås said. Forecasts currently call for at least another week to 10 days of temperatures as high as 30C and no rain.

newsinenglish.no/Nina Berglund