The power market ensures that resources are used efficiently, that security of supply is maintained, and helps keep electricity from becoming more expensive than necessary.
An important principle in the regulation of the power system is the distinction between monopoly activities and activities suited for competition. The Energy Act forms the basis for the free buying and selling of electricity and a strictly regulated grid operation.
Electricity differs from other goods in that it is less suited for storage. There must always be an exact balance between production and consumption.
In the wholesale market, large volumes of electricity are bought and sold, and this is where the price is determined for each individual 15-minute interval in the following day. Pricing is based on the supply and demand from many market participants, given the available grid capacity.
Short-term market adjustments ensure that the cheapest production resources are used first. Furthermore, electricity prices send signals about power scarcity in the form of investment signals.
Transmission and distribution of electricity are natural monopolies, and competition is therefore not allowed in grid operations.
Norway introduced market-based power trading in 1991. Instead of planning a gradual transition to market-based solutions, as many European countries did, Norway opened the market to all customers from the very beginning. Hence, Norway was the first country to provide universal market access.
The power exchange Statnett Marked AS (now Nord Pool AS) became an important element of the market. Even before this, fluctuating hydropower production in different parts of the country created a need for market-based solutions and electricity trading. In 1971, Norwegian producers established a power exchange for spot power (known as Samkjøringen). Samkjøringen was formalised as early as 1931, and was a result of many years of cooperation and power exchange between power plants.
Today, the Nordic countries are closely linked, both by physical interconnectors, and by financial market integration. Nord Pool, based outside of Oslo, is the exchange for physical power trade for the Nordic and Baltic countries. Nord Pool grew into the world’s first international power exchange from 1996 onwards, as Sweden, Denmark and Finland joined. The Nordic market is also integrated, in both physical and financial terms, with power markets in the rest of Europe. Financial power trading in Europe takes place on the Nasdaq exchange in Stockholm. Market participants use Nasdaq for price hedging and to trade in long-term products and derivatives.
Norway is part of a joint Nordic power market with Sweden, Denmark, and Finland, which in turn is integrated into the European power market through interconnections to the Netherlands, Germany, the United Kingdom, the Baltic states, Poland, and Russia.
In Europe, efforts are underway to improve the internal energy market and to better connect the European markets. European market coupling has previously been based on voluntary cooperation and regional initiatives.
Market coupling takes place through an implicit auction, which means that prices and electricity flows between areas are calculated simultaneously in the day-ahead market. Market participants on different sides of national borders submit their bids to sell and buy for each 15-minute interval of the following day, without needing to reserve grid capacity in advance.
More integrated physical electricity markets in Europe require increased harmonization of technical regulations, trading systems, and market design. Norway actively participates in this work through close cooperation with our Nordic neighbors and through the EEA Agreement.
The EU’s Third Energy Package from 2009 consists of five legal acts that continue and strengthen the regulation of the internal markets for electricity and natural gas. This package replaces the legal acts that made up the EU’s Second Energy Package. The Third Energy Package has been incorporated into the EEA Agreement and came into effect in Norway in the autumn of 2019.
The main elements of the Third Energy Package focus on reducing and regulating vertically integrated companies—meaning companies that operate in electricity production, transmission, and/or trading—strengthening common regulation of energy markets, developing cross-border infrastructure, and ensuring a secure electricity supply.
In 2018 and 2019, the Clean Energy Package (“Clean Energy for all Europeans”) was adopted in the EU. This package consists of eight legal acts and represents a further development of the rules and concepts in the Third Energy Package. The purpose of the EU’s Clean Energy Package is to facilitate the transition from fossil fuels to renewable energy so that member states can meet climate goals and fulfill the Paris Agreement. The package includes rules designed to give renewable energy competitive market access and sets requirements for emission reductions, energy efficiency, and the expansion of renewable energy. A key goal is to improve the internal energy market so that it can handle more weather-dependent power production and contribute to a comprehensive green transition in Europe.
In 2024, the EU adopted a reform of the electricity market aimed at making the power system more resilient to price fluctuations, strengthening energy security, and supporting the transition to renewable energy. The reform facilitates more stable and predictable electricity prices through increased use of long-term contracts and promotes investments in green energy and flexible solutions. It also grants new rights to consumers, including the ability to combine fixed-price contracts with dynamic pricing agreements and to share self-produced electricity with others.
Power supplied to the grid follows the laws of physics and flows down the path of least resistance. It is not possible to separate different power deliveries from each other. A consumer who switches on the power has no way of knowing who produced the electricity or how far it has been transported through the grid. The grid companies keep account of how much power each producer delivers and how much each end user consumes, and this forms the basis for settlement. Producers are paid for the volume of power they deliver, and end users pay for their consumption.
The power market can be divided into wholesale and end-user markets. Large volumes are bought and sold in the wholesale market by power producers, brokers, power suppliers, energy companies and large industrial customers. Power suppliers trade on behalf of small and medium-sized end users and small-scale businesses and industry.
The wholesale market consists of several markets where bids are submitted and where prices are determined:
- the day-ahead market
- the continuous intraday market
- the balancing markets
Day-ahead and intraday trading take place on organized marketplaces (power exchanges).
The balancing markets are operated by Statnett, which has been granted a license to exercise system responsibility. To ensure the instantaneous balance in the power system, Statnett uses the balancing markets to regulate consumption and production up or down, depending on the imbalance. Market participants can also enter into bilateral contracts for the purchase and sale of electricity at agreed prices, volumes, and delivery periods.
In the end-user market, individual consumers enter into agreements to purchase electricity from a supplier of their choice. In Norway, the end-user market consists of roughly one-third household customers, one-third industry, and one-third medium-sized end users, such as hotels and retail chains.
Since 1997, Statnett has been responsible for settling imbalances in the Norwegian power market, known as balance settlement. The purpose of balance settlement is to ensure that all input and withdrawal of electrical energy are correctly accounted for, so that balance is achieved in the power market. In this context, balance means that agreed consumption or production must equal actual consumption or produced volume. To gain access to trade in the wholesale market, participants are required to enter into a balance agreement with Statnett. The participant must either be balance responsible themselves or have an agreement with a balance responsible party who handles the participant’s imbalance toward the settlement responsible party.
In the Nordic power market, imbalance settlement is carried out by eSett, which operates on behalf of the system-responsible grid companies in Norway, Sweden, Finland, and Denmark.
As part of the joint Nordic project, the Nordic Balancing Model (NBM), Norway and the other Nordic countries have transitioned to 15-minute settlement periods. The goal of the NBM is to modernize balancing processes and facilitate a more flexible and efficient power system, adapted to increased shares of intermittent production and more trading closer to the time of operation. As part of this modernization, automated balancing has also been introduced to enable faster and more precise handling of imbalances in the power system. Automation and IT support are crucial to ensuring balance in a power system with shorter regulation periods and smaller safety margins.
The day-ahead and intraday markets
The day-ahead market is the main market for electricity trading in the Nordic region, where most volumes are traded. In the day-ahead market, contracts are traded for the delivery of physical electricity for each 15-minute interval of the following day. Previously, this was based on hourly intervals, but starting in 2025, the market has transitioned to 15-minute resolution, in line with European requirements and the need for more precise balance between production and consumption. This transition provides more detailed price and volume signals and is intended to facilitate better integration of weather-dependent power production and flexible resources.
Market participants submit their bids to sell and buy into the power exchange’s trading system between 8:00 AM and 12:00 PM. Before 10:00 AM, the system operator (Statnett) allocates transmission capacity to the market for each bidding area. The auction closes at 12:00 PM. Based on the incoming buy and sell bids and the available transmission capacity, prices are calculated for each 15-minute interval of the next day.
The Nordic day-ahead market is linked with day-ahead markets across much of Europe through what is known as an implicit auction. This means that participants bid on energy and transmission capacity simultaneously. The Nordic power market is also price-coupled with large parts of Europe (PCR). Price coupling means that Nord Pool calculates electricity prices in the various areas using a common European price algorithm, at the same time every day.
The balance between supply and demand is largely ensured in the day-ahead market. However, events can occur after the day-ahead auction, such as changed weather forecasts, that cause participants’ actual production or consumption to differ from their positions in the day-ahead market.
In the intraday market, trading takes place continuously from the clearing of the day-ahead market until one hour before the operating hour. This allows participants to trade themselves into balance if they see that actual production or consumption differs from their declared position in the day-ahead market. The transition to 15-minute resolution also applies in the intraday market and gives participants better opportunities to balance their positions if actual production or consumption deviates from the plan.
Balancing markets
Although the day-ahead and intraday markets create a balance between production and consumption leading up to the operating hour, there will still be unforeseen events that disturb the balance during the operating hour. As the system operator, Statnett is responsible for ensuring that the power system is balanced at all times. To secure this instantaneous balance, Statnett uses the balancing markets to purchase flexibility so that consumption and production can be regulated up or down depending on the imbalance.
In the Nordics, the balancing markets are divided into fast frequency reserves (FFR), primary reserves (FCR), secondary reserves (aFRR), and tertiary reserves (mFRR). The power system is balanced at a frequency of 50 Hz. Fast frequency reserves, primary reserves, and secondary reserves are activated automatically in response to frequency changes. Previously, tertiary reserves were activated manually by the Nordic system operators, but from 2025 these will also be activated automatically.
Imbalances are first regulated using fast frequency reserves. These reserves are activated within approximately one second after a frequency change. A commercial market for acquiring FFR was established by Statnett in 2022. After that, primary regulation is used to stabilize the frequency change. Primary reserves are traded in a separate daily and weekly market for primary reserves. If imbalances persist for several minutes, secondary regulation takes over, freeing primary regulation resources to handle new imbalances. Previously, the Nordic system operators purchased secondary reserves in separate national weekly markets. In 2022, a joint Nordic capacity market for aFRR was launched.
If further needs arise, tertiary reserves are activated, known as mFRR (manual Frequency Restoration Reserve). mFRR frees up aFRR and is also used to avoid congestion in the grid. mFRR is the slowest and most energy-rich reserve, with a minimum bid size of 5 MW and an activation time of up to 12.5 minutes. Activation occurs every 15 minutes, in line with the transition to 15-minute resolution in balance settlement.
From 2025, the previous regulating power market is replaced by a new activation market for mFRR, called mFRR EAM (Energy Activation Market). This is a common Nordic market where bids are sorted in a shared list, and activation happens automatically based on forecasted imbalances in each price area. Statnett calculates the need for regulation every 15 minutes and sends the activation requirement to a common Nordic activation function, which selects bids and activates resources. Operators still have the possibility to intervene manually if needed, but this is exceptional.
mFRR EAM is based on the same algorithm as the European reserve trading platforms, MARI (mFRR) and PICASSO (aFRR). The Nordic TSOs will eventually connect to the European trading platforms.
To ensure sufficient balancing capacity, the capacity market for mFRR (mFRR CM) is used, which replaced the previous regulating power options market (RKOM) in 2024. In this market, providers are paid to make up- and down-regulation resources available, regardless of whether they are activated. Capacity from both production and consumption can be offered, and electricity-intensive industry contributes flexibility through rapid changes in consumption.
System price
Every day, the power exchange Nord Pool calculates the system price for electricity for the upcoming day. The system price is a theoretical price, calculated based on the assumption that there are no transmission constraints (bottlenecks) in the Nordic transmission grid. The system price is the same for the entire Nordic market and serves as a reference price for price setting in the financial power market in the Nordic region.
Power price
Producers submit how much they wish to produce at a given price level. The bids reflect the value the producers assign to their production, which is largely related to the running production costs of the power plant. Buyers submit the amount of electricity they want to purchase at different price levels. The price is determined by the balance between supply and demand in the day-ahead market.
In market equilibrium, it is the cost of producing electricity in the "last" power unit, the marginal cost, that sets the price. This ensures that the cheapest energy resources are used, so that electricity demand is met at the lowest possible cost to society. The high exchange capacity with foreign countries means that the price level in Norway is largely influenced by the costs of producing electricity in thermal power plants, especially the price of coal, gas, and emission allowances. The amount of renewable production and consumption in the countries Norway is connected to also plays a role.
A large share of hydropower in the Norwegian and Swedish production mix means that variations in inflow to reservoirs have a significant effect on price fluctuations in the Nordic region. In periods of high inflow, there is a large supply of electricity, and prices are pushed down. In years with low rainfall and less inflow, prices increase. With a growing share of wind and solar power in the Nordic market, the same applies for periods with a lot or little wind and sun. Market prices are also influenced by temperature fluctuations, as these affect heating demand in households, among other things.
Bidding areas
In addition to the system price, the power exchanges calculate area prices that take into account bottlenecks in the transmission grid. The area prices are the prices that balance the purchase and sale bids from market participants within the different bidding areas in the Nordic region. In recent years, Norway has been divided into five bidding areas, Sweden into four areas, Denmark into two areas, while Finland consists of one area.
The reason bottlenecks and different electricity prices between areas can occur is that we have varying regional power situations, which can change from hour to hour and between seasons and years. Some regions may have a power surplus in one situation, while others have a deficit. In deficit areas, there is therefore a need to import electricity, while in surplus areas there is a need to export electricity. If there is insufficient transmission capacity to import and export this electricity, bottlenecks arise between the areas. In certain cases, this can lead to hours with negative electricity prices. This may occur, for example, due to significant rainfall combined with transmission capacity limitations out of the price areas.
When dividing into bidding areas, a market area is defined on each side of the bottleneck. This allows deficit areas to have an area price higher than the price in surplus areas. Electricity flows from areas with low prices to areas with high prices, which helps increase electricity supply where it is most needed. Furthermore, area prices provide signals to market participants about where it is most valuable to increase or reduce production and consumption. In areas with tight electricity supply, production increases while consumption decreases, improving electricity availability and supply security.
In addition to being an important tool for balancing the system in the short term, area prices help highlight the need for more long-term measures in the power system. Area prices signal to producers and consumers where it is most advantageous to locate new production or large new consumption.
Dividing into bidding areas does not automatically mean different area prices will occur. When there are no capacity constraints in the Nordic transmission grid, area prices are the same throughout the Nordic region and correspond to the system price.
Consumers who purchase power for their own consumption, are called end users. End users in Norway are free to choose their power supplier. Small end users normally purchase electricity from a power supplier, while larger end users, such as large industrial companies, often choose to purchase directly in the wholesale market or enter into a bilateral agreement with an electricity producer.
Power contracts
Electricity is a homogeneous product, meaning it is not possible to distinguish between different electricity deliveries. What differentiates electricity suppliers from each other are the electricity contracts they offer. Generally, end-users can choose between three main types of electricity contracts: fixed-price contracts, contracts with standard variable price, and contracts based on market price with a markup (spot price agreement).
A fixed-price contract is an agreement on a fixed price for electricity over a period, for example, one year. The supplier is then obligated to deliver electricity at the agreed price, regardless of what happens to the electricity price in the market. A fixed-price contract is therefore a type of financial contract where the customer is price-secured for the duration of the contract. Electricity suppliers set the fixed price based on expectations of the electricity price, in addition to a markup to cover costs. The difference between the fixed price and the expected market price during the period represents the risk premium for the price guarantee.
The price of the standard variable electricity price varies with developments in the electricity market. The standard variable price is also a form of financial contract but with a relatively short price guarantee period. The supplier is required to inform about price changes 30 days before they take effect.
Contracts based on market price with a markup are agreements where the price follows the market price set on Nord Pool. In addition to the market price, the customer must pay a markup. Such contracts are the closest households and smaller businesses get to the day-ahead market.
The Norwegian Consumer Council maintains a website, www.strompris.no, where it is possible to compare all the different contracts offered by electricity suppliers. This makes it easy for a consumer to find the most suitable contract.
Smart Electricity Meters (AMS)
All grid companies are required to ensure that smart electricity meters (AMS) are installed at every individual metering point. AMS provides consumers with better information about their own electricity consumption and more accurate billing so that customers are charged for their actual consumption. Electricity customers also gain better insight into their electricity usage and the ability to use electricity in a more flexible and efficient way. The vast majority of Norwegian electricity customers have now adopted a smart electricity meter. As of the third quarter of 2022, AMS meters with communication modules were installed at 98.8 percent of the metering points in the distribution network. The implementation of AMS is therefore considered complete in Norway. The remaining 1.2 % of metering points are either AMS meters without communication modules, older meters, or unmetered consumption points in the low-voltage network.
The total electricity bill for an end-user consists of several components that must be paid for: the electricity (power price), connection to and use of the electricity grid (grid tariff), consumption tax on electricity (electricity tax), and value added tax (VAT). In addition, there is a fee earmarked for the Climate and Energy Fund managed by Enova, as well as payment for electricity certificates. The share of the electricity price in the end-user price depends on the market price level. The electricity tax and the Enova fee are politically determined amounts, while the cost of the electricity certificates varies with the associated certificate market. Grid tariffs are set by the grid companies based on a revenue framework and tariff principles established by the Norwegian Water Resources and Energy Directorate (NVE). The grid tariffs are intended to reflect the costs of transporting electricity to the end-user.
The electricity support scheme for households was introduced in December 2021. The support scheme protects households against the highest electricity prices. The "Norgespris" was introduced in October 2025 as an optional alternative to the electricity support scheme for households. The scheme also includes secondary homes. Norgespris is a government-funded scheme that means consumers pay a fixed price per kilowatt-hour of electricity. The purpose of both the electricity support scheme and Norgespris is to provide security and predictability for households during times of unstable and sometimes very high electricity prices. More information about the government’s electricity measures can be found here: Regjeringens strømtiltak - regjeringen.no
End-user prices
Updated: 23.04.2025
Print illustration Download data End-user prices Download PDF Download as image (PNG)
Financial power trading includes trading with financial instruments used for risk management and speculation. All contracts are settled financially without any physical power deliveries. Financial products are often called long-term contracts because they apply to periods further ahead in time than those for physical products.
Financial power trading can take place either bilaterally or on a power exchange. In the Nordic countries, financial trading takes place mainly on the Nasdaq OMX Commodities AS (Nasdaq OMX) exchange. Nasdaq OMX has a license from the Financial Supervisory Authority of Norway, which is also the supervisory authority for the marketplace. At Nasdaq OMX, players can hedge prices for purchase and sale of power for up to six years ahead, split by days, weeks, months, quarters and years.
Financial products include future and forward contracts, electricity price area differentials (EPAD) and options.
Nasdaq OMX Clearing AB (Nasdaq Clearing) is the clearing house for the financial contracts on Nasdaq OMX. Nasdaq Clearing has a license from the Swedish Financial Supervisory Authority. Clearing activities make an important contribution to operational efficiency in the Nordic power market. Nasdaq Clearing acts as the counterparty in all financial trading on Nasdaq OMX. Bilateral financial agreements can also be cleared. This eliminates the counterparty risk for the participants.
Future and forward contracts are agreements on financial settlement of an agreed power volume, for an agreed time period and at an agreed price. For future contracts, settlement can take place during both the trading and the delivery period, whereas for forward contracts, it always takes place when the contract ends. Future and forward contracts are important instruments for price hedging.
Electricity price area differentials (EPAD) are forward contracts that cover the difference between the area price and system price.
An option involves a right, but not an obligation, to buy or sell a forward contract in the future at an agreed price. NASDAQ OMX only lists European options, which can only be exercised on their expiration, at the end of the contract period.
Norway has had transmission connections to foreign countries since 1960, when the first connection to Sweden was built. Since then, connections have been established to Denmark, Finland, Russia, the Netherlands, Germany, and the United Kingdom. Norway has been a net exporter in 19 of the last 25 years. The period from the mid-1990s to the mid-2000s was characterized by several years of net power imports more than before. Over the last ten years, the power balance has improved, and Norway has had an average net export of approximately 14 TWh per year.
In 2024, total power exports amounted to 33.1 TWh, with power imports of 14.7 TWh. This results in a net electricity export of 18.4 TWh. The net export was high due to good inflow to the reservoirs and capacity upgrades in the grid, in addition to relatively high prices in Europe. Except for 2019, there has been net export every year since 2010.
Norway’s exchange capacity with foreign countries is approximately 9,000 MW. This is distributed as about 4,000 MW to Sweden, 1,400 MW to Germany, 1,400 MW to the United Kingdom, 1,600 MW to Denmark, and 700 MW to the Netherlands. 9,000 MW corresponds to a theoretical potential for power transmission of 80 TWh per year, but actual utilization is much lower.
Import, eksport og nettoeksport, 2000-2024
Updated: 03.04.2025
Source: NVE
Print illustration Download data Import, eksport og nettoeksport, 2000-2024 Download PDF Download as image (PNG)
Power trading allows countries to derive mutual benefits from differences between the natural resources available, electricity production systems and consumption patterns. Trade between countries results in lower overall costs than if each country were to provide for its energy supplies alone.
Power trading is organised with the objective of ensuring that power always flows to where its value is greatest, i.e. from low-price areas to high-price areas. The exchange between Norway’s hydropower-based system and power systems with different production mixes on the continent over various periods illustrates this. The Norwegian power system has a relatively flat price structure due to low costs for adjusting production up or down. In the European power system, with an increasing share of solar and wind power, there is greater variation in electricity prices.
The differences in production mix and price structure mean that Norway can import relatively cheap electricity from abroad during periods of high solar and wind power production, and export electricity when the sun is not shining and the wind is not blowing. At the same time, Norway’s hydropower-based system is weather-dependent, and the transmission connections provide important import opportunities during periods of low reservoir levels and low inflow. In this way, electricity exchange is important both for Norway’s supply security and for increasing the value of Norwegian hydropower.