Power prices on the rice - Almost a perfect storm

No one appreciates high electricity costs, but at least that's the small positive we can see from there, and it's very nice.

Says the Operations Manager at Skanska, Karin Lund

Most wise minds agree that unusually dry times, Russian warfare, and new power cables have a not insignificant part of the blame for the increased electricity prices. Before this different everyday life, we Norwegians lived in a different everyday life from before, as one of the few countries where electricity was a vanishingly small part of the bill. But alas, luck finally had to turn and here South-East Norway is in the middle of the power shock. We have spoken to some of our farm owners about how the increased electricity costs have affected them.

Nobody appreciates high electricity costs

Skanska Eiendomsutvikling's largest building, Parallell, is well over 19,000 square meters. The passive house must use little heat, but even with them, such an increase in the price of electricity does not go unnoticed. As a result of the increase in the price of electricity, the price of district heating, which Parallell is required to use due to regulation in the area, has also become insanely high, which naturally results in increased joint costs.

The operations Manager at Skanska Norge, Karin Lund, talks about challenges in budget planning for the coming year.

You become unsure of what to plan for from assumed electricity prices. We usually budget 1.5 million for district heating, but this year the electricity costs have increased by 40/50%. Almost a 50% increase of 1.5 million... that's a lot of money. This is not something we make a profit on, and it will unfortunately be a bill that the tenants have to pay their share of. Fortunately, most people have an understanding of the situation, because most of them also experience the same in private.

Gives initiatives in the right direction

Lund can also tell about several inquiries from tenants who live in older buildings and who want to move into buildings that are better equipped to use less energy and which, as a result, have lower energy costs.

In this way, the crazy electricity prices give initiatives to build even more environmentally friendly buildings. The industry can more easily defend investing in energy-efficient solutions, which are good in the long term. It's a bit like that, nobody appreciates high electricity costs, but at least that's the small positive we can see from there, and it's very nice.

At Parallell, they do a lot to reduce the electricity demand in the offices in general. The facade has a passive house standard, there are LED lights and control of presence lights throughout the building. There has been a focus on energy-saving solutions at all levels.

We haven't started turning down the temperature yet, but we don't have such a high temperature here before on the premises. It has been about 20 degrees, and in a dense building like Parallell, the heat does not disappear through nooks and crannies either.

Reasonable power consumption

Parallell uses its 44 wells when the building needs to be cooled in the summer. This provides cooling of the building with almost no electricity consumption. They also have energy-heat recuperators in the ventilation, which means that the exhaust air (the air heated by the body and office equipment) goes into the ventilation system and is used to heat the fresh new air that is drawn into the building.

Most new buildings have heat recovery systems, which means that we do not waste heat. Provided that the building is tight, and it is here at Parallell, we are very proud of that. We have also focused on controlling both air and light. If you're not in the office, the lights don't come on either, then it's dark. And we run the ventilation at the absolute minimum on the floors of the building that are not taken over by the tenants. Quite reasonable power consumption, she concludes.

What can you do to save electricity?

There will soon be an infinite number of energy-saving tips, everything from drawing the curtains to pouring the coffee into a thermos. They are all good, but in the pain of life you have to choose: we have collected what we think are the best saving tips for everyday office life here:

• Lower the indoor temperature. We know... this may sound particularly unappealing, but for every degree, you lower the indoor temperature, you save approx. 5% of the heating costs.
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• Air the room out quickly and intensively rather than slowly and moderately
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• Turn off lights and heat in rooms you are not staying in.
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• Take shorter showers. Heating water is what we use the second most electricity for...
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• Turn off the PC completely. Many devices use the same amount of power when they are on standby as when they are on(!)

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How have electricity prices developed over the past year for an electricity provider?

Executive director for Innovation and business development, Øystein Sæther says that it is natural to focus a lot on this with electricity prices during the day.

Of course, now the war in Ukraine and the continent's lack of supply of gas from Russia led to a widespread shortage of gas which reflects in the price of electricity. Electricity prices are reflected through an imbalance between production and demand, which is closely related to gas prices in Europe. Here you cannot isolate the electricity prices for yourself without also looking at the energy prices in the rest of Europe.

Almost a perfect storm

It is bad enough with the situation with gas in the situation that has been and is, but there has also been a so-called dry year and poor inflow into Norwegian water reservoirs which has again created a stressful situation on the energy side.

This has led to prices fluctuating a great deal, particularly high compared to what we have historical data on within the Norwegian and Northern European power market. also, the question is what does it look like in the future, and then you can ask yourself - yes, the one who knew. It will be difficult to predict. But you are almost in a perfect storm. There are an incredible number of things that have influenced this energy market in the actual current year and last year. Both on the delivery side and not least on the consumer side. Those are the long lines...

It's all about balance in the market

More use of clean renewable energy is required and expected from a climate perspective and the imbalance we see now is also a part of electrification and the de-carbonization of society.

I also believe that the price level we have seen in recent months in Norway is also not a price level that a power producer would benefit from for Skagerak Energi. The main reason for this, in the long term, is the important part of the role of power producers such as Skagerak Energi to contribute to the electrification and decarbonization of society. At the same time, we now see that many of the initiatives and processes that have been ongoing to achieve this require lower energy prices than what we see in the market today.

Because it's about a balance between consumption and production, and making the resources we already have a better way than what we do today.

We intend to be a strong contributor to achieving the climate goals we have set ourselves, both at Skagerak Energi but also globally and as a nation. So even though we are profiting at this price level right now, we see this price level in relation to clean renewable energy as not sustainable.

The prices

Skagerak Energi sells all products on the open market, through Europe's leading power exchange, Nord Pool. In that way, they have not priced setters in the market, it is the market itself that is. Skagerak Energi is a hydroelectric power producer.

We can talk in both large and small terms about this energy market and what kind of situation southeast Norway is in. But it is not Skagerak Energi that is responsible for pricing, it is a functioning market that has been working for a long time now, which does. We do not influence anything other than what we produce from our resources, and it is the market itself that sets the price for it.

You can say that power producers such as Skagerak Energi have done well with these prices, but with very long lenses on, Sæther is still in no doubt that this is something that they, as a long-term energy producer and power supplier, do not see benefit from.

It's all about balance in this market. The backdrop is how important it is not to forget the climate challenge we are also facing... We want more reasonable prices than what is the case today.

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Tripled energy costs

Lillestrøm Delta is a property company with a focus on commercial buildings in the Lillestrøm area. With their 10 employees, all of whom have local roots and a heart for the city, they manage a total of around 350 tenancies. The property company works to deliver quality in property management, so the companies are satisfied tenants and their customers feel comfortable when they come to visit one of Lillestrøm Delta's buildings. Power and energy consumption is an important part of any tenancy, and Lillestrøm Delta has not escaped the increased electricity costs in recent times either.

Managing director Rolf Th. Holm can say that the energy costs in some buildings have doubled, while in other places it has almost tripled.

We always think about the totality of a tenancy and then the priority is to think about how we can reduce this extreme electricity expenditure for our tenants. Our mission is to reduce the ongoing energy consumption in the building. In our existing buildings, building operators regularly check all temperature settings, and operating hours and compare it to the electricity consumption of the previous month, and the previous year.

Benchmarking to detect deviations

If deviations in electricity consumption appear, they take the necessary measures to reduce consumption. Delta Lillestrøm knows that the future is green building. Tenants will choose landlords with an environmental focus.

In one case we have also replaced an oil boiler with an air-to-water heat pump, in another building we have installed air-to-air pumps. We have also replaced a ventilation system to achieve higher heat recovery and we are lowering the temperature in our buildings to 19 degrees where there are shared facilities. For the most part, it has been well received. We then also compare buildings against buildings. How much electricity does one building use versus another? We also do this type of benchmarking with water and waste in addition.

Environmentally certified buildings gain a competitive advantage in the future

In the long term, they believe that environmentally certified and older buildings where active measures have been taken will be the most attractive in a competitive situation going forward. 

We are very proud of our newest project, Quarter 1 in Lillestrøm. We have worked for that, and achieved the BREEAM NOR certification - Excellent.

The price adjustment is now about electricity, while the cost of housing is the same. After all, there are very few who thought a couple of years ago that we would have to deal with the enormous expenses we are now incurring. But, here we are. And since it will always be the total cost that matters, we are actively working to remove unnecessary power consumption, concludes Rolf Th. Holm.

‍If you have any questions about the price increase, read our questions and answers, or feel free to contact us at kundeservice@evolve.no

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Sources:

energinorge.no "This is why the electricity price is unusually high" 25.06.2022

energinorge.no "Simple tips to save electricity this winter"

NVE.no "High electricity prices have resulted in reduced consumption" 09/02/2022

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