Strings of lights hang over a street in Trondheim, where Norwegians, long accustomed to cheap electricity, have had to rethink their habits due to recent price increases.Photography by Anna Liminowicz/The Globe and Mail
Vibeke Mostad plugged in her electric car at a charging station in downtown Trondheim, in western Norway, and grimaced as she calculated the cost of the boost.
She would pay about 80 kroner for two hours, or almost $11. That’s not bad compared with prices in many countries, but it’s a 50-per-cent increase from a few months ago. Her electricity bill at home has climbed even more. She’s paying the same amount in one month that she used to pay in three. “The price is going higher and higher,” Ms. Mostad said. “You have to think about when to put the washing machine on.”
Like a lot of Norwegians, Ms. Mostad rarely paid much attention to the cost of energy until recently. The country’s abundance of hydroelectric power meant electricity had been dirt cheap for decades. So much so that Norwegians didn’t hesitate to leave the lights on in every room or keep hot tubs warm at cottages even when no one was there.
Vibeke Mostad charges her electric car, a process that costs more than it did a few months ago.
A combination of factors has sent the cost of electricity soaring and left Norwegians scrambling to cut back and seek alternatives.
The price rise has also sparked a debate about Norway’s massive oil and gas revenues and whether the government should start taking money out of the country’s US$1.3-trillion sovereign wealth fund.
“Energy has become more and more important, politically, and it will be more and more important in the future,” said Harald Norvik, a former chief executive of Equinor, which used to be called Statoil. “But it’s also more and more difficult to balance the consumption with the supply.”
Norway had long been in an enviable position when it came to energy. For years the country’s five million people have relied almost exclusively on inexpensive hydroelectric power to heat their homes and run everything from fridges to cars. At the same time, Norway’s substantial offshore oil and gas production has been sold abroad and generated hefty returns for the government’s coffers. Since the mid-1990s almost all that revenue has been tucked into the Government Pension Fund Global. It has grown into one of the largest investment vehicles in the world, with stakes in 9,000 companies in 70 countries.
Unusually dry weather last summer together with the war in Ukraine and Norway’s integration into European electricity markets have upset that lucrative energy balance.
Water levels in reservoirs across much of the south have dropped by as much as 20 per cent, cutting power generation at dozens of hydroelectric plants. Even though northern regions had plenty of rainfall, most of the electricity generated there couldn’t be shipped to the more populous south because of a lack of cross-country transmission lines.
Norway also exports electricity to its European neighbours through a deregulated market that directs power to wherever prices are highest. Europe has seen record energy prices because of the political fallout from Russia’s invasion of Ukraine, including sanctions and a move away from Russian oil and gas, and that has driven up prices in Norway.
Trondheim is home to about 205,000 people, a slightly smaller population than Regina's. Norway's five million inhabitants get almost all their daily energy needs from hydroelectric plants whose output has slowed down due to drier weather.
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The Norwegian government has tried to cushion the blow through generous subsidies, but many people still feel the pinch. More than 600,000 people have joined a Facebook page called “We who demand cheaper electricity,” and some small businesses have been forced to close.
“We have to think about the price more than ever,” said Reverend Arne Rokseth, who oversees two Lutheran churches around Malvik, a small town outside Trondheim. Rev. Rokseth said the electricity bill in December for both churches and two halls was about 110,000 kroner ($14,700). “That’s what we normally spend in a year,” he said. The price came down in January, but if it goes back up, he said he may have to reduce the number of services.
Several congregants who gathered last Sunday for a baptism shared similar woes. Stian Bokseth has taken to washing his clothes between 11 p.m. and 1 a.m. to take advantage of lower overnight prices. “That’s just the way it is,” he said with a shrug.
Bjorn Pettersen says demand is rising for his Trondheim company's battery kits.
High electricity prices have prompted some people to consider alternative energy sources. Demand for solar panels has increased so much that customers often have to wait a year for installation.
Bjorn Pettersen and his small team at Chainpro AS in Trondheim have experienced a surge in demand for the company’s battery kits. Chainpro recycles discarded batteries from electric cars and creates power packs for homes. The packs contain six batteries, which can be charged at night, when rates are lower, then used during the day to power lights and appliances. “Our sales go up and up,” he said.
The power crunch has also led some Norwegians to call for the government to do what many thought unthinkable: spend money from the oil fund. “I can’t see why we can’t have some of it,” said Trond Kopreitan, a 67-year-old retiree in Stjordal, outside Trondheim, whose electricity bill has jumped as much as tenfold. He believes the fund should be used to improve the health care system and support the elderly.
Trond Kopreitan, right, gathers with friends in a coffee shop in Stjordal. He suggests Norway should dip into its oil fund to improve social services.
The oil fund has been considered sacrosanct since the first deposit in 1996, and successive governments have stuck to the mantra that the money is for future generations. In its latest annual budget, the centre-left coalition said it planned to lower withdrawals from the fund to 2.5 per cent from 3 per cent.
The strategy of socking away so much cash has come into question, especially in light of the massive revenues the country has been earning because of the war in Ukraine.
Norway had been the second-biggest supplier of natural gas to Europe, after Russia. But Western sanctions against Russia and Moscow’s decision to cut gas supplies to the West in retaliation have put more reliance on Norway. As a result, the Nordic country expects to receive 1.38-trillion kroner ($185-billion) in net revenue from oil and gas this year. That’s up from 1.17-trillion kroner in 2022 and 287.5-billion in 2021.
“Most of Europe is becoming poorer. Norway is becoming richer. It’s morally wrong to keep all this money,” said Lars-Henrik Paarup Michelsen, the general manager of the Norwegian Climate Foundation. Mr. Michelsen said the excess revenue generated because of the war should be set aside to help rebuild Ukraine and promote green energy.
Kristoffer Robin Haug is a legislator in Norway's Green Party.
His position has found a smattering of support in parliament. “What will profit Norway the most in the long run?” said Green Party MP Kristoffer Robin Haug. “It would be a safer world where more countries are available for international trade. So to spend that money on the safety of Europe, rebuilding Ukraine and the health and safety of all people who are suffering in this crisis would benefit Norway in the long run.”
Hilde Andersen disagrees. She and her husband, Bjorn, live in Malvik and have done what they can to be energy-conscious. They installed solar panels a couple of years ago and drive an electric car. Their electricity bill has jumped sixfold, and they’re worried about the cost of everything else, including food. But they don’t want to see the government dip into the oil fund. “It’s for the future,” she said. “It’s for future generations.”
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