Why experts are sceptical about Norway's plans for fixed energy prices
The scheme, dubbed 'Norgespris', would allow consumers in Norway to opt for a fixed price of 40 øre per kWh.
Plans were submitted for consultation earlier this week, and the government wants to have the scheme in place from October 1st.
Energy analyst Tor Lilleholt is one of the experts who has been critical of the government scheme.
He told the business and financial site E24 that the government is focusing too much on high electricity price peaks to try and ease the cost of living for consumers, and pointed to food prices increasing more than energy costs.
'Politicians assume that we have a dysfunctional market, but I, who work with this every day, see that this is not true. The price mechanism works,' he told E24.
Lilleholt added that the scheme would undermine long-term goals such as improving energy efficiency.
As the scheme would offer a fixed price, consumers would, therefore, no longer need to plan their usage around price peaks.
The government has said it wants to have a consumption cap on the fixed price.
During the consultation, it wants to establish whether a cap of 5,000 kWh per month would be suitable or whether it should be lower.
Only four percent of households in Norway have a consumption higher than this, according to government estimates.
Asbjørn Torvanger, senior researcher at Cicero Center for Climate Research, told E24 that the fixed-price being offered to private homes and not businesses would also create issues.
'Small and medium-sized businesses do not receive a fixed price, and thus a higher price than otherwise. The need to reduce power consumption is therefore being sent to another sector of society, namely private business,' he said.
He said that large companies that have been able to secure fixed-price deals would also struggle once their current contracts expire as energy prices are expected to rise, and the Norgespris scheme could reduce investment in renewables and efficiency.
Torvanger pointed out that the scheme would also see wealthier households receive more support than less well-off ones. This is because the scheme will apply to both primary residences and holiday homes in Norway, meaning those who own two homes will receive more government support overall.
'Electricity policy leads to an unbalanced redistribution in several ways,' he said.
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