New steps to reduce electricity bills and maintain control over national energy resources

‘Today we are presenting a package of powerful measures to reduce electricity bills and to maintain strong, national control over energy distribution. We are proposing a fixed price of NOK 0.4 per kilowatt-hour, which is an effective means of stabilising household electricity costs,’ said Prime Minister Jonas Gahr Støre.

‘This package shows that we have full control our national power distribution. And we are using that to lower the price of electricity for consumers. Given the great instability in the European power markets, the Government does not want Norway to align itself more closely with the European energy system. We are therefore saying no to new electricity interconnectors, and we will not be adopting the EU’s controversial market rules,’ said Minister of Energy Terje Aasland.

The Government's package to reduce electricity costs and maintain control of national power resources:

• Introduction of a fixed price of NOK 0.4 per kWh
• Reduction of VAT on grid tariffs
• No adoption of controversial EU market rules
• No new electricity interconnectors
• Nordic cooperation to counteract high, unstable prices

Introduction of a fixed price of NOK 0.4 per kWh

The Government will propose the introduction of a fixed price for Norwegian consumers of NOK 0.4 per kWh. The pricing scheme is expected to come into effect on 1 October 2025. The scheme will apply to both primary and holiday homes. The fixed price will be available as an option for those who prefer to have a stable, predictable price throughout the year instead of a normal electricity plan linked to the electricity support scheme. The fixed price is based on historical average prices and future projected prices.

The existing general electricity support scheme will be continued. Consumers who decide not to choose the fixed price will still be covered under this scheme.

‘The fixed price scheme will make it easier for people to anticipate their electricity costs. For those who need predictability, a fixed price of NOK 0.4 per kilowatt-hour could be a better option than relying on the electricity support scheme. We are giving people a choice between two different schemes, and they can decide for themselves which one is best for them. We want to make it simple for households to choose,’ said Mr Støre.

The Government expects the fixed price scheme to come into effect by at the latest 1 October 2025. The current electricity support scheme will also be continued. Under this support scheme, 90% of the power price above NOK 0.75 per kWh (excluding VAT) is covered for each hour the spot price exceeds that level. This shields customers from high electricity prices while at the same time ensuring that they pay less when energy prices are low.

For example, for an average household in southern Norway (price area NO2), the fixed price, as per prices in 2025, would give the household a savings of NOK 2 800 per year in electricity costs. The majority of these savings would be in the winter, when prices are higher. Correspondingly, a household that uses the current support scheme would receive support in the form of a deduction of NOK 1 265 to its electricity bill. However, this household would also pay a lower electricity price in the periods where electricity prices have gone down, especially in the summer.

Reduction of VAT on grid tariffs

There is a high demand for grid capacity throughout Norway. Large parts of the power grid are outdated. There is an increasing need for investment in the power grid, driven in part by climate change, industry and digitalisation. As the power grid is expanded, grid tariffs will rise. Increased grid development will therefore have a direct impact on the total amount of a household’s electricity bill.

The Government is therefore proposing to reduce VAT on grid tariffs from 25 % to 15 % from 1 July 2025. This will lead to an overall savings of roughly NOK 1.8 billion per year for Norwegian households. The amount each household saves will vary, but the cost reduction will be greatest in the months when electricity consumption is the highest.

Reduced grid tariffs are the first step towards the elimination of all VAT on these charges. In the next parliamentary period, the Government will remove all VAT on grid tariffs.

Will not adopt controversial EU market rules  

Given the great instability in the European energy markets, the Government does not want Norway to align itself more closely to the European energy system by introducing the controversial market rules included in the Clean Energy Package. This also applies for the next parliamentary period.

‘It is the Government’s responsibility to ensure that Norway has a reliable energy supply. There is widespread instability in the power markets and each directive must be evaluated separately. It is not in Norway’s interests to adopt these rules. This decision is based on sound assessment, and that is something I expect the EU to understand. This in no way challenges the credibility of the EEA Agreement,’ said Mr Aasland.

The Government will assess the EU’s efforts to improve competitiveness and create a foundation for low and stable energy prices, as well as the evaluation and follow-up on the review of the classification of member states into price areas for the purchase and sale of electricity.

Nordic cooperation to counteract high, unstable electricity prices

The Government will take the initiative to establish Nordic cooperation to consider measures that can help to reduce extreme fluctuations in electricity prices resulting from the northern European power exchange, and safeguard the Nordic power supply system.

The Nordic countries have cooperated closely in the electricity market for many years and have worked together to develop a well-functioning energy market.

Under the Nordic Council of Ministers, the Government is already taking part in a joint effort to assess the impacts of the organisation of the electricity market, including changes that are under discussion and planning, in the countries that are linked to the Nordic market. This includes Germany, the Netherlands and the United Kingdom. The results of this effort are expected to be published in early 2026.

No new electricity interconnectors during the next parliamentary period

The Government will ask Statnett to postpone planning for new subsea interconnectors to other countries until 2029.

Statnett is to continue its work to ascertain what should be done about the two oldest power cables between Norway and Denmark (SK1 and 2) at the end of their technical lifetime.