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Thursday, May 23, 2024

Heavy rain may lower electricity rates

It may be small comfort for all the Norwegians dealing with flood damage from heavy rain over the past few weeks, but the downpours may at least fend off more high electricity rates this winter. Reservoirs are full, allowing lots of hydroelectric power generation.

A flooded river roaring through the Norwegian city of Hønefoss is among those causing lots of problems and damage lately. All the rain pouring down on Southern Norway during recent weeks, though, will likely lead to lower electricity rates this winter. PHOTO: Arbeiderpartiet

The extreme weather system “Hans” alone contributed enough water in just a few days to let both Norway and Sweden produce 11 terawatt hours (TWh) of power in just a few days, according to Marius Holm Rennesund, an analyst at consulting firm Thema. He told news service E24 that should lead to “nicer electricity rates this winter than those in the past two years.”

Even more rain has fallen since “Hans” went on his rampage in early August. Torrential downpours just in the past few days brought flood warnings back up to red-alert levels from the mountain valleys of Hallingdal and Gudbrandsdalen down to Drammen at sea level. Portions of Oslo, Nordre Follo, Bærum and Indre Østfold were also hit hard.

By Monday, insurance companies were reporting receipt of hundreds more claims for damage compensation. Cars were under water in garages, homes and especially cellars were flooded, roads were closed and both bus- and rail service were cancelled again. Flooding was especially severe in Ringerike, Jevnaker, Hokksund and elsewhere along the river leading into Drammen, but also in Søndre Land, Gran in Hadeland, Jevnaker, Hole, Modum and Lier. Much of Nesbyen in Hallingdal was under water once again, too, and whole neighbourhoods were evacuated.

Water levels were expected to peak and start declining from Tuesday evening. Residents of Hokksund and Mjøndalen were calling the situation “unreal … there’s water everywhere,” as one woman told newspaper Aftenposten. An additional 1,400 insurance claims had been filed by Monday afternoon.

Norway still generates most of its electricity from its rivers and waterfalls. PHOTO: Møst

The costs of all the damage, plus all the road and bridge repairs that will be needed, are now heading into the billions of kroner. The only comfort is the prospect of lower electricity rates this winter, after two years when monthly bills quadrupled.

Kjetil Lund, who heads the state waterways agency NVE, told newspaper VG earlier this month that he thinks “we’ll avoid the last years’ rate shocks.” More imports of power can also help, along with the fact that gas supplies for Europe now appear sufficient. Improved energy efficiency can also bring down bills.

Analyst Rennesund agrees, telling E24 that all factors indicate more moderate electricity rates ahead. “It looks like we won’t land in a situation with sky-high rates like we’ve seen the past two years,” he said.

Rennesund doesn’t expect a return to Norway’s traditionally low electricity rates, though, predicting a rate of around 90 øre per kilowatt hour around New Year in Southern Norway. Since an average Norwegian home uses around 20,000kwh a month, electricity bills are expected to be around NOK 1,500 (USD 150 at current exchange rates).

Rates may fall to 30-40 øre/kwh in central and northern areas of Norway, where hydroelectric- and wind power supplies are highest, analyst Olav Bornen of Volt Power Analytics told E24.  Siri Line Hove Ås, another analyst at Aneo, further noted that Norway is in the opposite situation heading into this winter than last: “We had a very dry summer last year, with historically low reservoir levels.” Now all the rain has changed that.

All the analysts cautioned that there’s no guarantee of much lower electricity rates, which could shoot up again if gas supplies to Europe are interrupted of if a cold snap hits the Nordic countries and the continent at the same time, warned Botnen. Ås noted that Norway has “more control” over the market now, with reservoir levels at more than 75 percent full, adding that the risk of high electricity rates is minimal. Berglund



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