Berlin’s insistence on a uniform electricity price across the whole of Germany is driving up bills in Oslo and pushing Norway out of the European electricity market, Energy Minister Terje Aasland has told Euractiv.

When electricity prices on short-term markets go up, Germans, who are mostly on fixed-price contracts, barely bat an eyelid. But Norwegians, with nine in ten households billed in real time, feel the pain. During peak demand, taking a shower can cost you over €4 in electricity alone.

A surge of anti-EU sentiment has seen Brussels blamed for driving up prices.

This is bad news for two massive cables connecting the country to Denmark, which are up for renewal this year. The cables have become synonymous with the political difficulties plaguing Europe’s energy system, where grid-to-grid ties with neighbours are no longer seen as easy wins.

“The situation from when Skagerak 1 and 2 were built in 1975 has changed a lot,” Aasland told Euractiv during an exclusive interview in Brussels, referring to the two cables by name.

Asymmetry

Built when Denmark’s power grid ran on coal, not wind, Oslo would send surplus hydroelectric power south during the day. At night, the electricity would flow north, Aasland recounted.

“Symmetry is key,” Aasland said.

But these days, Norwegians question whether the situation remains mutually beneficial.

With countries adding ever more renewables to the grid – not stable hydropower, but variable wind and solar – Norwegian electricity exports to the EU have roughly trebled since the noughties, turning the Nordic country into a massive net electricity exporter.

While that is good news for Norway’s electricity industry, consumers fear the profits come at their expense.

Aasland said he would decide what to do with the cables once he had a forthcoming report from the country’s grid operator, Statnett.

The German problem

Norway’s struggles can be traced directly to Germany, whose outsized demand and significant need for power generation, along with its geographical position, have made it the heart of the EU’s electricity system and its uniform electricity pricing zone.

Nordic countries long ago split their grids into discrete ‘bidding zones’ so electricity prices vary from region to region. That system aims to keep consumption as close to generation as possible.

But Berlin, unable to countenance a world in which Volkswagen in the north and BMW in the south pay different electricity prices, continues to resist calls to split its huge single pricing zone, costing the country and its neighbours billions in grid management fees.

So should the country finally do what many – including the EU’s energy regulator – consider the right thing?

“That’s up to the German politicians to do, but we organise it in five price zones,” Aasland said. “When it comes to the technical use of the investments, it is the best way, and they should have different price zones, yes.”

Baseload champion

Norway, with its ample hydropower resources, has built six cables tying it to the EU over the years. With its 25% connection rate, it is better connected to the wider European grid than the Netherlands or France, let alone Spain.

The massive dams dotted across Scandinavia, and the hydropower they generate, have become essential to keeping prices down on the European mainland. Here, just as with its fossil fuels, Oslo enjoys considerable leverage in Brussels, despite never having joined the union.

The Norwegian energy minister suggested that Oslo, along with Stockholm and Helsinki, might be getting fed up with mainland Europe looking north for help whenever the wind drops or the sun doesn’t shine.

“We are pushing together with Sweden and Finland for more baseload capacity in Europe,” Aasland said. “The Norwegian hydropower system cannot cover the lack of baseload in Europe by itself.”

(rh, cm)