If you are new in Norway, then you may get confused about the way their electricity companies work. If this is the case, then it’s normal because things are run a little bit differently over here. You most likely are used to a less simplified way of using and paying for power. But things are quite more complicated in Norway.
Perhaps, your reason for reading this article at the moment is not because you’ve just relocated to Norway. Maybe, it is because you are curious about the systems over here. Regardless of your reason for wanting to know more about this topic, trust us, we’ve got everything covered.
With the soaring rate of electricity prices, it’s best to understand how the system works. This way, you’ll be able to get the best rate while avoiding unreliable providers. This article is the best place to start your research.
Here, we will be looking at all you have to know about the pricing system for electricity in Norway. We will also look at the reason for this, and everything else in between. It promises to be an informative and fun read, so endeavor to stick with us to the end.
Power Price Hour by Hour
If you have been observing the system for a while, then you must have noticed that the price of electricity tends to change by the hour. This is a very important thing anyone needs to know about this Norwegian system. Unlike in other places, in Norway, the amount you pay for electricity will vary by the hour.
But why is this so you might be wondering? Well, the reason this happens is that in Norway, the power companies assign an electricity meter to each house. This meter then continuously measures the electricity consumption and then transmits it to the power company. This way, the electricity price for today is determined the day before.
So, today’s electricity price will be determined based on prediction. You can visit bestestrøm.no – dagensstrømpris to learn more. It’s a process that involves predicting how much electricity you’ll demand and how much power the electricity company thinks they’ll generate that day. Based on this demand and supply forecast, the company will then calculate the price for power for that day.
Another thing that you’ll need to get used to is the fact that you get two power bills in Norway. Confusing?We know, but it gets easier once you understand. Let’s break it down for you.
When it comes to power, Norwegians have to pay two companies. The power company and the grid company. Now, there are so many power companies in Norway that you can choose from for your needs. However, the majority of these companies do not produce electricity (although some do).
What these companies do is buy power and then sell it to their consumers to make a profit. Electricity companies are simply middlemen in the whole process and sometimes do not offer that much value. They may offer convenience with their apps and automated systems that remind you to do certain things like charge your vehicle during hours with lower prices but that’s about the value they offer. This is why much thought should be put into selecting the best electricity company.
Grid companies, on the other hand, have the role of distributing and transmitting energy from the plants to their consumers. Unlike electricity companies where you get to pick which one to use, you can’t choose a grid company. This is because the grid company that supplies you is determined by the company that has a grid system in your location. So, you get what you get with grid companies, but you can decide on the power company of your choice.
Also, note that some companies will often combine these two bills. This is done to improve convenience. So, when you get your electricity bill, it may seem like just one. But it isn’t, as the money you pay would go to two distinct companies.
A Breakdown of a Norwegian Power Bill
At this point, you might feel you have a good grasp of the electricity system in Norway. However, you are only halfway there. We told you it can be quite complicated and if you have gotten your first bill, then you would absolutely agree with us on that.
Your Norwegian electricity bill will read entirely differently from anything you are used to. So, you may likely get confused on your first trial of reading the bill. But we are here to make this easier for you. Therefore, we’ll be looking at the different parts that make up the bill and how you can understand them.
The Electricity Price
Remember that you most likely will be getting two bills and even when it comes as one, the money goes to the power and grid companies. So, on the side of the power company, you’ll get a bill for the power you’ve used in the month times the electricity price for the month. We know what you are wondering and yes, the price changes by the hour, but you can’t have a breakdown like that on your bill.
If you receive a bill that breaks down the entire way the price changed every hour and how that was calculated to arrive at the amount you have to pay, it’ll be too tedious to read. So, what these companies do is, they calculate the average monthly amount based on the hourly price. However, you do not get a breakdown of this calculation, you just need to believe that the company did their math well.
The next thing you’ll find on your bill is called a supplement. This supplement as you can guess from the name is added to the actual power cost. This is meant to cover the company’s profit.
Getting a good deal can influence the cost of the supplement. With a good deal, the supplement might even be negative. This would reduce your overall power price at least significantly.
Some companies may have a fixed cost that they attach to the supplement and actual power price. The fixed costs of the best deals are zero. However, if you don’t have a great deal, you might pay about 5 dollars (50 NOK) on fixed costs.
Remember you still need to pay the grid company. This is also the actual price for the power you consume and is measured per kWh. You may be wondering why you have to pay this fee according to your energy consumption since the grid system is the same regardless of the energy consumed.
However, the grid companies argue that this is necessary because the amount of energy used puts a strain on the system. Meaning, the more energy used, the more strain is put on the system. So, the company will have to use more money for the maintenance and repair of the system to keep it running optimally. As of last year, the grid price is usually more expensive during the day and cheaper at night.
All the prices we have discussed so far have a sales tax of about 25% attached to them. But apart from this, the grid bill has about two taxes attached to it. The amount is quite small and is based on your energy usage.
The first tax is called the consumption tax (forbruksavgift). This goes straight to the government. The second tax is called nova fee (nova-avgift). This is used to finance energy transmission and efficiency.
In July 2022, fixed grid cost was altered to make people spread their energy consumption as much as possible within a day. They did this through the capacity supplement. Put simply, grid companies monitor your energy usage and determine the hours when you use energy the most.
If this is less than 5 kWh, you’d receive a low capacity supplement for the month. If it’s higher than 5 kWh, then you’ll pay a higher amount. Basically, the higher your energy usage, the higher your capacity supplement.
All of the things we have discussed so far are only relevant if you have a spot-price deal. But there are other deals that you can use instead of this. Instead of using a contract where the price changes by the hour, you can get a fixed contract or one that specifies how much you get charged per kWh.
However, these other deals are similar to buying insurance. There’s the chance of paying more money than the energy you consume. Most people who use these other deals often do so because they do not like unpredictable outcomes which the spot contracts are known for. But spot contracts are relatively cheaper, only that they do not give the stability these other deals offer.
Understanding how the electricity system works in Norway can be quite a task. But once you understand it, you can use this understanding to your advantage to get a great deal. Hopefully, everything we have discussed in this article will help you get the best out of your electrical needs in Norway.
An author of Namaste UI, published several articles focused on blogging, business, web design & development, e-commerce, finance, health, lifestyle, marketing, social media, SEO, travel.
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