Norway Rethinks Energy Links to Europe Amid Record Electricity Prices

A wind turbine farm in the Baltic Sea, northeast of Rugen Island in Germany, on June 16, 2022. Fred Tanneau/AFP via Getty Images

Norway is considering scaling back its energy ties with Europe as domestic electricity prices soar to record levels.

Minister of Petroleum and Energy Terje Aasland, from Norway’s ruling center-left Labour Party, told the Financial Times on Friday that the government is rethinking its export agreements after electricity prices reached their highest levels since 2009.

On Thursday, electricity prices in southern Norway hit NKr13.16 ($1.18) per kilowatt hour, nearly 20 times higher than the previous week.

Norway’s interconnectors are high-voltage subsea cables that link its electricity grid to Denmark and neighboring countries, enabling the exchange of power between markets and allowing it to export its abundant hydropower and import electricity when needed.

The Labour government said that it may turn off the interconnectors when they come up for renewal in 2026.

The conservative Progress Party, which is leading the polls, also argued that renewable energy exports from Germany, and also the UK, are contributing to a “price infection” spreading to Norway when there is no wind and solar energy being produced.

The Labour Party’s Elisabeth Sæther, who is state secretary in the Norwegian Ministry of Petroleum and Energy, told The Epoch Times via email that the two oldest of the four interconnectors between Norway and Denmark are “close to the end of their technical lifetime.”

The Norwegian government said that the two interconnectors that the Labour Party is discussing, make up approximately 5 percent of Norway’s interconnector capacity.

Sæther said that Statnett, the system operator of the Norwegian power system, is currently assessing whether it will reinvest in the cables.

“If we receive an application for renewal of the interconnectors, domestic security of supply and effects on power prices for Norwegian businesses and households will be important aspects of the assessment of whether to grant a license,” she added.

Germany

Germany, Europe’s largest economy, has been at the center of the energy debate since it shut down its last three nuclear power plants in 2023.

While these plants could have operated for decades, Germany opted to rely more heavily on alternative sources such as wind and solar.

Critics, including Swedish Deputy Prime Minister and Energy Minister Ebba Busch, have been vocal about the ripple effects of Germany’s decisions.

“The roller coaster of electricity prices is horrible,” Busch said on X last week.

On Dec. 12, she told Swedish broadcaster SVT that she was “mad” over Germany shutting down nuclear power.

“Sweden today has an electricity system with major problems,” she wrote on X on Dec. 16. “Electricity prices are unpredictable and ride a roller coaster—too low to encourage investment but at the same time so high that families and households live in fear of what the electricity bill will end up at.”

The Epoch Times contacted Busch for comment but received no reply by publication time.

Energy Nationalism

Critics said that the growing discontent in Norway and Sweden reflects a broader trend of energy nationalism.

Harry Wilkinson, head of policy at the Global Warming Policy Foundation, told The Epoch Times by email that Norway may be reluctant to subsidize Germany.

“Electricity interconnectors mean that high prices from one country can spread to others, and this risk is prompting the rise of energy nationalism,” Wilkinson said.

“Norway, which has cheap electricity from hydropower, is understandably reluctant to subsidize Germany’s risky experiment with renewables and bonkers nuclear phase-out,” he said.

“The failed energy policies of the UK and Germany are akin to economic suicide, so it is no surprise that other countries want to avoid any contagion. Their Governments must get energy prices down if they want good relations with their neighbors.”

‘Scandinavian Charity’

Andy Mayer, energy analyst at free-market think tank the Institute of Economic Affairs (IEA), told The Epoch Times by email that in theory, the EU’s single energy market “means the haves provide for the have-nots, ensuring energy security through interconnectors, pipelines, and shipping.”

He said that in practice, exporting a surplus drives up the price of energy at home, which, with the war in Ukraine, and regular winter “Dunkelflaute” (sustained windless days), is “fueling nationalism.”

He said that “Germany’s disastrous Energiewende [energy policy], abandoning nuclear power and fossil fuels simultaneously for renewables, has left them dependent on Polish coal, American shale gas, French nuclear, and Scandinavian charity.”

He noted that Sweden believes Germany should restart nuclear projects and, in the interim, introduce locational (i.e., higher) pricing to reduce demand, particularly in Northern Germany. Meanwhile, Norway, with its strained hydropower reservoirs, has been threatening to curtail exports for two years and is now discussing cutting a link to Denmark in 2026.

“If these policies come in, they will by necessity cascade, as each surplus country in turn seeks to avoid being the costliest supplier of last resort to the thirsty many. If they don’t, anger with rising prices is likely to increase until they do,” he said.

“The unintended consequence of the EU’s drive to decarbonize too quickly then might be a stronger regional backlash against Net Zero and an undermining of the single market.”

The Epoch Times contacted the German government for comment but received no response by publication time.

Correction: An earlier version of this article misstated Andy Mayer’s title. The Epoch Times regrets the error.