Beste Spotpris- Optimize Your Energy Cost with the Best Spot Price

Electricity is an essential commodity that everyone needs for daily living. Apart from households, business enterprises, industries, and government agencies all need this commodity to function daily.

Seeing as pa electricity suppliers is so important, it is understandable that people are looking for how to maximize it while reducing costs. Many people do not know how to manage theseever-increasing energy costs. In this article, therefore, we will explore factors that affect the cost of electricity with a focus on spotpris strøm, Norwegian for the spot price of electricity. We will also look at how you can optimize your energy costs without compromising your convenience or accumulating exorbitant energy bills. 

Understanding Electricity Spot Price

Before you can optimize your energy cost, you have to understand the pricing system. There are different pricing systems for electricity in Norway and they are spot, fixed, and variableprices. These options are what you get when you are looking to sign up with a supplier.

Your energy bill consists of several components which include internet subscription, electricity consumption, surcharges, and state taxes. For your electricity consumption, you can choose any of the payment options stated above. A good number of consumers choose spot price because it is said to be the cheapest of all the 3 options.

Spot price means the same thing as the current market rate. This is the same cost at which the supplier buys the commodity. All electricity providers trade on the Electricity Exchange Nord Pool and prices are affected by demand and supply and other market factors. This therefore means that spot pricechanges on an hourly basis.

This by extension also means that if your subscription contract is for the spot rate option, your energy bill will fluctuate depending on the season of the year, weather, and demand.  Another factor that will also affect your bill is the region or part of the country you live in.

Factors that Affect Spot Price of Electricity

Since spot price means the current market rate and this rate is determined by different factors, you need to know the factors that affect it.  Find below some of these factors:-

Weather Conditions

The bulk of the country’s electricity is generated by hydropower; this therefore means that power generation relies greatly on weather conditions such as rainfall, snowmelt, and precipitation. When there is an abundance of the aforementioned, the water level in the reservoir is high but when the weather is dry, the water level in the reservoir is low.

The water levels affect the production of electricity which ultimately impacts the supply available. This will in turn lead to an increase or reduction in rates.

Fuel Prices

 Although the bulk of the country’s electricity production is based on hydropower, there are some regions where fossil fuels are still used to generate power. In those areas, the cost of oil and gas affects the cost of electricity.

Demand and Supply

This is one of the most common factors that determine the spot price of electricity. When the weather is cold, especially in the winter months, every household will require electrical energy to heat their homes. This in turn leads to increased demand which will in turn increase prices. On the other hand, demand drops during the summer months which also leads to a reduction in prices.

Market Regulations

In every clime, government policies and regulations including market forces affect spot prices of commodities and this is also the case with electricity in Norway. Regulatory issues such as subsidies for alternative energy sources or initiatives that support carbon prices can all affect pricing in the energy sector. Visit https://blogs.worldbank.org/ for more insight on how government policies and regulations can affect market prices.

Production Mix

The method through which electricity is generated in regions also affects prices. Production mix refers to the proportion of fossil and nuclear fuels used and renewables used for the generation of power.  Regions that rely heavily on renewable energy will always have their electricity prices impacted by the weather conditionsatthe time.

From the above, you can see that these factors are mainly things that you cannot control. Therefore before choosing the spot price option for your contract, you have to be able to cope with the fluctuation that you will experience on your bills. Additionally, you should note that although there will be a monthly average in addition to surcharges, state fees, and 25% VAT, the electricity cost will constantly change.

Understanding the Structure of Spot Pricing

We have explained the basic concept of spot price and the factors that determine or affect it. If you want to choose this option you should note the following:-

Surcharge

This is an additional amount that the provider adds on the spot price as markup (this is their profit). This amount varies largely depending on the provider in question. You will be required to pay a fixed amount monthly or/and per kilowatt/hour. This fee can be anywhere from 2.90 øre to 13.60 øre per kWh

Since you can choose any company as your electricity supplier, you need to consider the amount they charge as a mark–up. Granted the spot price is the same across suppliers but the surcharge can make a big difference. It is therefore best for you to look out for the company that offers the lowest surcharge and monthly fee possible.

Price Zones

You need to bear in mind that Norway has 5 power regions which are also known as price zones. These zones all have different prices for electricity based on the factors that we discussed earlier. The prices in the Northern region have been lower in recent years than in the Southern region. The reason for this difference is mainly because of the weather conditions in both regions.

Advantages and Disadvantages of Spot Price Contracts

Research has shown that a higher percentage of households in the country opt for the spot price agreement. The reason that many do is because they get to pay exactly what is obtained in the Nord pool exchange. So when prices are low from source the same reduction is reflected in their bills.

This reason is considered the biggest advantage but unfortunately, it is also a disadvantage at the same time. It is a disadvantage because when prices rise at the exchange, your bill also increases. A typical example is during winter when the force of nature affects demand and supply. So unless you can roll with the unpredictability of this option, you might want to consider other options.

Comparison between Fixed and Spot Prices

Fixed price as the name implies is an agreement in which the consumer pays a fixed rate for electricity over an agreed period. Spot price on the other hand as we have established earlier follows the current costof the electricity exchange which means that your electricity bill will keep changing from time to time.

So let’s see the comparison below:-

S/N	Fixed Price	Spot Price
	Predictability – You know what to expect as your energy bill per time	Unpredictability – Your bill per time depends on the rate at the Nord Pool, so you do not know for sure how much your bill will be at the end of the month.
	More Expensive – Your billis set higher than the spot price	Cheaper – Since your bill depends on the price at the Nord Pool, you get the exact rates when prices are low
	Inflexible – No matter what happens at the Nord exchange your bill remains the same. You cannot enjoy any cost reduction.	Flexibility – You get to enjoy a reduction in your bill as costs reduce at the electricity exchange.

Conclusion

Although the spot price option for energy bills is unpredictable, it has been noted to be the cheapest for now and the Consumer Council recommends it.  However, we have taken time to discuss the basics of this option and give you the pros and cons and a comparison table.  So before you make a choice, consider all the variables so that you can choose the best option for you.