Norwegian fixed price meets criticism
Highlights from our debate "From energy efficiency incentives to fixed price. What does this mean for the power industry and businesses?". The Norwegian government is about to introduce a temporary nation-wide fixed price on electricity. “Not a step towards building a future energy system,” says Tor Reier Lilleholt, Head of Analysis at Volue.
The voluntary offering of a fixed price of NOK 0,5/kwh from 1 October 2025 to 31 December 2026 is introduced in a long-stretched country where prices vary greatly. It responds to outcries from the population in price areas that – at times – have experienced prices 40 times higher than in other areas.
How will a fixed price affect the market and the motivation to save energy? That was the topic for a Volue event during Arendalsuka, a week of societal debate in Arendal, Norway.
Being a key speaker at the event, Tor Reier Lilleholt, Head of Analysis at Volue argued that the fixed price, labelled Norgespris, could lead to increased prices in 2027 when the offering expires.
“When energy saving incentives are removed, consumption of energy is likely to increase. Consumers adopt a more relaxed approach to energy consumption which could lead to higher demand and higher prices,” said Lilleholt.
In some areas, and based on previous price levels, Norgespris will be profitable for many households and holiday homes – particularly in Southern Norway, where prices are more correlated to the European market because of interconnectors.
“Norgespris looks like a good deal in Southern Norway. It can be a good deal in Mid-Norway, but it is definitely not an option in Northern Norway,” said Lilleholt.
He has calculated that the cost for Norway would be NOK 11 billion if all of Southern Norway and half of Mid-Norway should accept the offer.
“There are alternative ways to use NOK 11 billion to reduce the electricity bill while also shaping our future energy system. Strong subsidies of heat pumps, for instance, would provide instant and long-term energy saving effects, which would be welcomed by power grid operators, the environment and the public,” said Lilleholt.
Peer Olav Østli, EVP Grid Operations as Norwegian TSO Statnett, says removing incentives for energy savings makes him concerned.
“Today, higher prices during peak periods help reduce consumption and assist in a rational development of the power grid. If price is no longer an issue, things will be different,” said Østli.
Terje Bakke Nævdal, Deputy Chair of the Board of Directors of Distriktsenergi, expects a strong increase in consumption when a fixed price is introduced.
“Norgespris will ruin the market and place obstacles for a future energy system. We also don’t have a tradition for fixed prices in Norway, perhaps because the government – unlike other countries – usually intervenes and saves us,” said Nævdal.
Linda Merkesdal, Member of Parliament for the ruling Labour Party (AP) dismissed the idea of increased consumption.
“I believe the fixed price will continue to stimulate energy savings. NOK 0,5/kwh is not for free,” said Merkesdal.
Recent polls show that only 36 per cent of the population has decided to go for Norgespris. The actual percentage of households that will accept the offering, is expected to be higher.
