Can you imagine a life without electricity? Horrendous.
In this day and age, using electricity is as natural as breathing. Everything you do inside and outside your house, from cleaning, doing the laundry, watching TV, heating a meal in the microwave, and whatnot, are all things you do with the help of electrical power. In fact, we are probably so used to the convenience and comfort provided by electricity that we pay little attention to how it all even works. Well, at least not until we’re the ones who actually have to pay for it.
That’s right; adulting hits hard when you’re the one responsible for paying your bills. Suddenly, everything feels relevant, and you start asking more questions. Like, why in the world is my electricity bill this high?
Kidding aside, there are various factors that are contributing to the electrical prices in Norway. One such factor is the power region you belong to. You’ve all probably heard the term here and there, but never actually understood their significance so today, we’re going to talk all about it. Starting with, what a power region is in the first place.
What Are Power Regions?
Power regions are basically what you call the divisions of the power supply in Norway, as you can read more about here: https://bestestrøm.no/norges-fem-strømregioner/. As much as the country strives to create a coabout:blankntinuous supply or flow of electricity from the southernmost part to the northernmost area of the country, doing so will take a whole lot of time (and a whole lot of money) to bring to fruition. So, for the time being, Norway’s electrical distribution is divided into 5 separate regions, which are otherwise known as price zones. Below, we have them listed:
- Eastern Norway
- Southern Norway
- Central Norway
- Northern Norway
- Western Norway
These price zones, as the name suggests, have different power price points due to the fact that they have different realities when it comes to the production and consumption of electrical power. Norway is famously known for its capacity to generate renewable energy by utilizing hydropower. Each region produces power locally and how much they can produce is highly dependent on market and environmental conditions. Therefore, the amount they produce as well as the actual demand for electricity affects how much they’ll charge consumers.
To better understand this, let’s look at the factors that affect prices in different power regions.
Weather
One of the biggest factors that primarily affect electrical prices is the type of weather the region experiences. It’s important to note that Norway mainly uses hydropower for its electricity production. This means that the amount of rainfall that a region experiences in a year can greatly affect how high or low electrical costs get.
The more rainfall the area has, the more water goes into the reserves, and the more power is produced. Thus, having more supply of locally produced energy for public consumption. Unfortunately, not all areas of Norway are visited by abundant rain every year. As of recent years, Southern and Eastern Norway has seen little rain and extensive sun, leading to prolonged dry seasons. This has caused electricity prices to go up in these areas as opposed to its counterpart, Northern Norway.
It is said that prices in Southern and Eastern Norway can be five times greater than thosein Northern regions, especially during winter months. A large part of it is also due to the fact that electricity prices are subject to VAT in the Southern and Eastern power zones so that, too, contributes to the spike in price.
Public Demand
The next factor that affects your electricity costs is the current demand for it. Basic economics would tell you that prices are typically higher in areas that have higher demand for a product or commodity. In this case, areas that are more populated or have bigger infrastructures that require more electricity to run typically have higher electrical costs as well. The same goes when it’s peak season, such as the cold winter when people are most likely to exhaust more energy to keep their homes warm and comfy.
Whatever the case may be, as long as people’s demand for higher electrical consumption is evident, then you can expect prices to be higher than normal.
International Power Prices
The international market also affects how electricity costs are locally. Norway, much like other European nations, participates in the global trading of electricity or power (check this out). When prices at Nord Pool go up, so do local electrical costs. Significant world events, such as Russia’s recent conflict with Ukraine, also affected international power prices as gas and oil prices were up due to trading issues and limitations.
If you want to better predict the flow of electricity costs and forecast whether itwill go up or down, staying up to date with market averages is a must.
Local Tax Laws
Lastly, local tax laws are another factor that can influence the cost of electricity in your area. As mentioned above, Norway is divided into 5 power regions. All of which have distinct laws that govern them, including taxation laws. For example, electricity is VAT exempt in the Northern region which is why the electricity rate is significantly lower per kWh. Value-added tax is typically 25% of the base value of a commodity so living in areas that do not add VAT on top of electrical costs is a big advantage.
Which Power Region Has the Best Electricity Prices?
If we still haven’t given it away or you have yet to realize it, the best electricity rates can be found in the Northern Power region of Norway. And by best prices, we don’t just mean saving a couple of kroner.
The rate difference can be as much as five times lower than what the costs are down in the Southern or Eastern regions. This is largely due to the fact that the Northern area experiences more rain in a year. Thus, enabling energy companies to produce more electricity by using hydropower.
Also, because the Northern region does not add VAT to electricity rates, the overall price is significantly reduced. While the most ideal solution to achieve cheaper power rates is to move to the Northern region, it’s highly unlikely for you to do so. After all, moving residences is easier said than done – not to mention, it costs a pretty penny too.
So, if you are living in other regions, what can you do to keep your electricity costs down? Let’s find out below.
What Can You Do to Lower Your Electric Bill When You Live In More Expensive Regions?
Buy Inverter-Type Appliances
Inverter-type appliances are recent models equipped with energy-saving technology. You can enjoy the same functions (if not better) of your current appliances for far less than what they currently consume in electricity by simply upgrading to inverter models.
Older appliances tend to cost you more in the long run if you consider their high electrical consumption. After all, back then, such things were not as big a concern as they are today since electricity prices were more affordable. With inflation rates skyrocketing in recent years, these energy-saving devices can be a key factor in landing bigger savings.
Turn Off Your Main Power Supply When You’re Not at Home
Unless you have appliances that you need to keep running 24/7 such as a freezer, turning off your main power switch when you are leaving the house is a good cost-saving technique for electricity. This is especially effective when you have plans that will require you to leave home for extended periods of time.
When your devices are plugged in, even when they’re not turned on or in use, they still consume electricity so shutting down and unplugging everything is good practice for cutting down electrical costs. Not to mention, it’s safer this way too as most house fires happen because of power-related accidents.
Choose A Spot Price Contract
Lastly, opt for a spot-price contract. This refers to buying electricity or power for exactly how much it is sold in the international markets. This is a type of contract many Norwegian companies can offer, so make sure you ask. Companies typically have a surcharge on top of the base electricity rate (kWh) so take your time and carefully go over your options to find the best deals.
The spot price is more cost-effective long-term. While the prices fluctuate daily and there is no certainty about how high or low prices can get (as opposed to fixed prices), recent studies show that spot price contracts help households save up to 8% on their electrical bills annually. Not a bad deal at all, if you ask me.
Now that you know what the different power regions are and what factors affect the prices in each region, you are better equipped to make smarter choices when it comes to selecting the right company to partner with to maximize your cost savings.
