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What affects the electricity price?

What affects the electricity price?

What affects the electricity price in Norway?

When you receive your electricity bill in the mail or by email, you might wonder what determines the price you pay for electricity. Here is a brief introduction to the most important factors affecting electricity prices in Norway.

1. Hydropower and rainfall amounts

The dominant energy source in Norway is hydropower. Over 95% of all electricity produced comes from hydropower plants. This means that rainfall amounts and water reservoirs have a huge influence on electricity prices. Heavy rainfall leads to full water reservoirs and therefore lower electricity prices, while low rainfall can drain reservoirs and increase prices.

2. International electricity trade

Although Norway is self-sufficient in electricity, we also trade electricity internationally, especially with neighboring countries such as Sweden, Denmark, Finland, and the Netherlands. This is done via submarine cables and border crossings. When prices are high abroad, we export electricity, and when prices are low, we import. This trade affects the Norwegian electricity price.

3. Production costs and infrastructure

The costs associated with producing and transporting electricity also play a role. Although hydropower itself is an inexpensive energy source, there are costs associated with maintaining dams, power lines, and networks. Increased costs here can lead to higher electricity prices for consumers.

4. Political decisions and regulations

Government policies and regulations can influence electricity prices. Taxes, fees, and support schemes can either increase or decrease prices, depending on political priorities. For example, subsidies for renewable energy can make it cheaper for consumers.

5. Demand

The demand for electricity varies throughout the year. Winter in Norway is cold and dark, which is when we use the most electricity for heating and lighting. Increased demand can push prices up. In summer, when days are long and warm, demand is lower, which can contribute to lower prices.

6. Alternative energy sources

Although hydropower dominates, Norway is also investing in other energy sources such as wind and solar power. These sources can contribute to increased production and thus affect the price. If wind or solar power production increases, it can potentially push electricity prices down.

7. Global energy prices

The world market price for oil, gas, and coal can also affect electricity prices in Norway, even if these are not direct sources of our electricity production. This is because high energy prices internationally can increase demand for Norwegian electricity.


The electricity price in Norway is determined by a combination of natural conditions, international trade, infrastructure costs, political decisions, and market dynamics. Although we have a stable and renewable energy source in hydropower, the price we pay for electricity is subject to many variables that can change from year to year.

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