Power company Volte offers businesses a fixed price for electricity of less than one kroner per kilowatt-hour with a three-year lock-in period. – I would like to think that it will be relevant to more people now, says general manager Simen Armond i Volte.
About 3,200 companies received three billion in electricity support before Christmas. Instead, from the new year, the government says favorable fixed price contracts should solve the headache for companies struggling with high electricity prices.
Many industry associations have complained that the prices are too high, and that a stable price of less than one kroner per kilowatt hour would require a commitment of at least five years.
Fixed prices have fallen somewhat recently, and contracts with a three-year lock-in period are now below one kroner per kilowatt hour.
Volte, the electricity company owned by Eviny and Hafslund, offers a fixed price of one kroner (99.8 øre) per kilowatt hour for three years, excluding network rent and taxes.
– The fixed prices we see are linked to the spot price in the market. This is a signal that the market expects lower point prices in the future. Managing director Simon Armand i Volte tells e24 that falling prices are good for all parties.
Volte offers these fixed prices only in regions NO1 (southeastern Norway) and NO5 (parts of western Norway), where the supplier Hafslund produces. Companies in southwest Norway have received the most expensive electricity in the past year, but they have not been offered this fixed price.
Companies in NO1 and NO5 can set electricity prices below 80 øre per kilowatt hour for five years and below 70 øre per kilowatt hour for seven years, Volde explains.
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Trade Unions on Fixed Price for Electricity: – Will not work
I think contracts will change
Many industry associations complain that fixed price contracts require companies to commit to buying a fixed amount of electricity throughout the day. Companies that operate only during the day must commit to buying expensive electricity and selling it at night and on weekends when electricity is scarce – and thus lose money.
– There are some companies Doubt Think buying fixed volumes isn’t for everyone?
– I think there will be changes. These programs will mature and adapt to the market, but some technology development will need to be done to do that. Armand says there’s nothing in the regulations that prevents us from doing that.
Industry Minister Jan Christian Westray also pointed this out and asked for the easing of arrangements to control electricity prices during times when power and electricity companies actually use the electricity.
– If we can do that, these contracts will benefit many more companies than today. According to the Volte boss, this does not benefit everyone when everyone has to buy a fixed dose today.
– Do you expect a big increase after this price drop?
– I would like to think that it will be relevant to many people now. As the price falls, the potential loss to a firm on the settlement amount against the spot price is smaller. But the fixed price is still one kroner per kilowatt-hour, and if the spot price approaches zero in the summer, Armand says, the company faces huge losses if it has to sell the remaining power.
– There is still a way to go before these fixed prices become a solution for most companies, and then we need to prepare other profiles for the consumption of companies, he adds.
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Industrial companies slaughter new power contracts: – The whole scheme is an illusion
– Can’t protect jobs
The average price of electricity in southern Norway was a record last year, two kroner per kilowatt-hour excluding network rent and taxes. The year before, the average price was 76 øre per kilowatt hour, but before that prices were generally much lower.
– Heidi Finstad, CEO of Treindustrien, tells E24 that the average electricity price in southern Norway in the period 2016-2020 was between 30 and 35 øre per kilowatt hour.
She is not satisfied even though the three-year contracts are now down to one kroner. He believes the program will still be inappropriate for many companies.
– One krone is three times the normal price of electricity. If you plan based on the 35 øre electricity price, it’s clear that you can’t secure jobs at three times the price overnight. Finstad tells E24 that companies cannot lock themselves into such a position for three years.
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Asking power companies to reduce fixed prices: – Know their arrival times
Requests a support plan
The head of the wood industry was satisfied with Volte’s signals that there may be contracts to allow companies to connect electricity during times when they actually use electricity.
– but it also has a cost. Energy Norway says that developing such contracts requires a lot of resources. What companies need is livable electricity prices, and we don’t know what the terms of these contracts will be. Finstadt says companies should be compensated as long as these better deals are in place.
– What should companies do in terms of price to be satisfied?
– We have calculated it and we believe that you should not exceed 60 øre per kilowatt hour. If you go above 60 øre per kilowatt-hour, Finstad says companies must cover 80 percent of costs above this level.
– I believe that a support program lasting at least two years should be implemented so that companies can get out of this uncertainty. The scheme, which was in place before Christmas, was short-lived and affected only a small number of companies. Here, you are heading for disaster for Norwegian jobs, warns Finstad.
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