Norway aims to cut energy links with Europe due to soaring prices

“It’s an absolutely sh*t situation,” said Norway’s energy minister Terje Aasland cited by FT, reacting to electricity prices in the country that are six times that of the EU average these days.

The two ruling parties in Norway are pledging to campaign to cut the two power interconnectors that link the country with Denmark, when they come up for renewal in 2026, reports the FT. The smaller coalition party, the Center Party is eyeing revisiting similar energy links with the UK and Europe.

One of the reasons is that electricity prices are extremely high in the country these days, something that the energy minister Terje Aasland described as outrageous, cited Norwegian newspaper E24.

With current high Norwegian prices, critics argue Norway should only send electricity from its abundant hydropower abroad after it has ensured low prices at home, as was the case for decades previously.

What happened to Norwegian electricity prices?

A big part of Norwegian electricity generation comes from hydropower, but some 10% of the electricity supply is delivered by wind power mainly coming from the continent. Recently, there was a lack of wind in Germany and the North Sea, coupled with low temperatures in Norway.

So when EU power prices jump,as they have done recently, this price shock spills over to Norway.

The electricity price in the country’s southernmost area rose to over 13 kroner (€1.12) per kilowatt hour in the most expensive hour, including network rental and fees. For comparison, the EU average for the first half of 2024 was €0.1867 per KWh.

Eastern Norway also receives high prices, while the Western part of the country largely escapes the worst prices. In the north, electricity is still cheap due to the fact that it benefits the most from hydropower.

The cost is supposed to go lower in the coming days, according to Norwegian media outlets, citing meteorology forecasts that suggest that wind production is supposed to pick up this weekend in Europe and prices are starting to decrease on Friday, according to Norwegian newspaper Nettavisen.

However, the currently elevated cost was enough to give a new spark to the debate about how much Norway wants to share its power capacity.

Electricity prices are setting the tone for the upcoming elections

High electricity prices have been a source of discontent in the country for recent years and the issue of sharing the country’s own power while having to pay a high price for electricity is likely to set the tone of political debates before next year’s election

The ruling Norwegian Labor Party will not renew the so-called “Denmark cables”, said Are Tomasgard in the party’s program committee, cited by Norwegian newspaper bt.no.

“We cannot continue this way. It has gotten out of control. And we are going to take that control back again,” he added.

The country’s hydropower is an important source of electricity for the rest of Europe. Norway is also Western Europe’s largest petroleum and gas producer.

Norway, however, is not a part of the EU, the country is a key EU partner in single market initiatives, including the electricity interconnection.

The smaller governing party Center Party is campaigning to renegotiate terms with the United Kingdom and Germany regarding energy export to these countries.

The proposal to scrap the cables will be discussed at the national convention in April, promised the Labour party.