Northern Norway has the lowest power price in the Nordics over the last five years, and the lowest estimated future power prices.
The lowest historical power prices
Lower historical power prices (average last five years [2015 - 2019]) for Northern Norway compared to selected price areas in the Nordics. Compared to the power prices seen in Europe, the difference is much larger.
The lowest future power prices
The main reasons that Northern Norway is estimated to have the lowest power prices in Norway, the Nordics and Europe are:
- Continued oversupply of renewable energy. Additional wind and hydropower projects to be constructed in the region.
- Grid constrains limit the export of the power southwards. Leads to increased oversupply of production in Northern Norway, but it might also limit long-term wind power growth.
- Northern Norway is and will not be connected by interconnectors to high price areas such as UK or Continental Europe. Northern Norway is mainly couple with price areas SE1 and SE2 (Northern Sweden) and NO3 (Mid-Norway), which are also assumed to have low power prices going forward.
The graph below shows the average estimated power price difference from 2020 – 2040 compared to the average system price in the Nordics, which is the average power prices in the Nordics. The data is based on three independent power price analytics from SKM, Wattsight and StormGeo.
Other analyses confirm this. Both Statnett, Norway’s TSO, and NVE, the Norwegian Water Resources and Energy Directorate, estimates that Northern Norway will have the lowest power prices in Norway and the Nordics in the future. The Nordics were as a region also assumed to have the lowest power prices in a European comparison. Power prices from NVE’s report given in real 2019-prices:
The Nordics offers at the moment a favourable PPA market for consumers as there are more sellers than buyers in the PPA market due to the fact that the funding side of renewable projects need long-term hedge to receive project financing. Several examples that DC operators have signed long-term PPAs in the Nordics over the last years.
Low electricity tax
All consumers in Norway must pay an electricity tax for the power they consume. The electricity tax for a data center larger than 0.5 MW is per 2020 set to only 0.505 øre/kWh = ~0.46 EUR/MWh.