Title: Why Norway's Critiquing Germany's Surprise Contender
When two stretches of meager wind and solar energy (Dunkelflauten) hit Germany, electricity prices on the stock exchange skyrocket. This causes frustration among German companies, but Norwegian consumers share their displeasure, as they endure some of the highest electricity prices in years. However, energy expert Bruno Burger finds these complaints misleading.
In December, Norway and Sweden experienced a period of low wind, causing upturn in electricity prices. Germans were especially agitated, as their power grid shares lines with Norway and Sweden. The Nord-Link cable connects Germany with Norway, while the transmission line to Sweden is named after the Baltic Sea.
These power lines share different power grids and facilitate electricity trading. It's a win-win situation: If Germany experiences a wind boom, generating excess electricity, Sweden benefits, and vice versa.
However, this interconnectedness has a downside. When German demand for renewable electricity from the north soars, prices there increase, fueling outrage against the German energy system.
Pocket-friendly electricity
Unlike Germany, Norway and Sweden have disjointed power grids, divided into various price zones. According to Bruno Burger from the Fraunhofer Institute for Solar Energy Systems (ISE), in the ntv podcast "Wieder was gelernt", these zones can span extensive distances. If the power lines don't have enough capacity to transport sufficient electricity, countries are divided into multiple price zones.
As a result, regions with an abundance of renewable energy enjoy below-average electricity prices, while regions with scarce renewables pay transportation costs.
Norway has six price zones. The northernmost zone, NO4, generates about 99% of the country's electricity via 365 hydropower plants. Last year, the average price in this zone was a mere 2.3 cents per kilowatt-hour.
Further south lie the zones NO3, NO5, and NO1, along with the southernmost tips NO2NSL and NO2. There, electricity prices reach an exorbitant 5 cents per kilowatt-hour for Norwegian standards. These are also the regions that connect to Germany and Britain, which led to trouble on December 12.
"A pretty grim situation"
On that particular day, a period of low wind hit Germany, significantly reducing the generation of wind power. In order to meet demand, energy suppliers embraced coal and gas power plants and tapped into the Norwegian and Swedish "electricity reserves" via the sea cables. The German stock exchange electricity prices soared to up to 936 euros per megawatt-hour, or 93 cents per kilowatt-hour—a steep increase compared to the average of 8 cents in 2024.
However, most German households remained oblivious to this price surge, as they have fixed-rate contracts. In Norway, on the other hand, the majority of households rely on smart meters, which directly reflect the stock exchange prices. During the low-wind period on December 12, stock exchange electricity prices in the southern price zones swelled to 35 cents per kilowatt-hour, marking the most expensive electricity since December 2022 for Norwegians.
Norway's Minister of Energy, Terje Aasland, did not mince words when discussing the situation. He spoke to the "Financial Times" of an "absolutely grim situation." Norwegian Prime Minister Jonas Gahr Store, opting for diplomacy, urged Europe to discuss distributing the renewable energy system and stabilizing electricity prices.
In Sweden, the response was similar. Swedish Minister of Energy, Ebba Busch, was "angry," even threatening to halt construction of a second power line should Germany fail to adapt to the Nordic model by establishing separate price zones for North Germany to keep prices in check.
"This is where the real problem lies"
According to energy expert Bruno Burger, Norwegian complaints may not be entirely warranted. While the Norwegian government has capped prices at seven cents per kilowatt hour, anything above that is subsidized by 90%. However, this subsidy does not cover the remaining 10%, which Burger argues is the "real issue." The opposition demands that all additional costs be covered by the subsidy, which results in a negligible increase in the price for Norwegian consumers.
Furthermore, Norway generates more renewable electricity than it consumes on an annual basis. For years, they have consistently delivered about 110% of their electricity consumption. Sales of excess electricity to Germany and Britain provide revenue that can be used to subsidize domestic electricity prices, ultimately benefiting Norwegian state-owned energy company Statkraft via inflated electricity prices and the Norwegian state via taxes and fees.
"The steel plant, however, does not seem to notice..."
The energy expert takes issue with something else: The power line from Norway to Germany has a capacity of only 1.4 gigawatts, which is roughly five percent of Norway's daily hydropower and wind output. Regardless of whether the electricity is cheap or expensive, this performance will flow to Germany. The sole exception is when Germany generates more electricity than required, negating the dependency on cheap Norwegian supplies, causing the direction of the electricity flow to reverse, with Germany supplying electricity to Norway.
This is what bothers Burger the most. "Everyone grumbles when stock market electricity prices increase," he remarks, referring to the steel plant in Riesa that temporarily halted production. However, the steel plant fails to recognize that electricity prices due to renewables are typically zero or even negative for about 459 hours a year, and it receives the electricity for free during those hours.
Important to Burger is also the fact that the stock market electricity prices decreased by 16% in 2024 compared to 2023, and even further by 18% compared to 2021—before the Ukraine war and the German nuclear phase-out.
In the context of Norway's multiple price zones for electricity, Bruno Burger highlights that the northernmost zone, NO4, generates nearly all of Norway's electricity at a mere 2.3 cents per kilowatt-hour, while regions closer to Germany and Britain, such as NO2, have exorbitant prices due to insufficient capacity in power lines to transport sufficient electricity.
Despite Norway generating more renewable electricity than consumed annually and selling excess to Germany and Britain, the steel plant in Riesa in Germany temporarily halted production due to the perceived high electricity prices, failing to recognize that for about 459 hours a year, electricity prices due to renewables are often zero or even negative, providing free electricity during those hours.
