Overview of the Electricity Price Mechanism in the Norwegian Market
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The Norwegian electricity price is a highly debated theme these days. There are many opinions when it comes to why electricity price decrease or increase. This thesis aims to investigate and provide an overview of which variables that makes an impact, and how they impact the electricity price. Through developing an Electricity Price Model, scenarios analysis, and an Electricity Price Loop the thesis defines relevant variables and utilizes these variables in potential scenarios which further result in a generalized overview of the electricity price mechanism. There is limited existing research done with the same target of shaping an overview of the electricity price mechanism. Studies are often too specific to be used in further research and relevant studies are based on markets with unstable or non-electrical infrastructure. This has caused the thesis to rely on reports, media, governmental publications, and businesses as a reference. By combining these sources, the thesis achieves diversity and objectivity throughout the research. The statistical data is gathered from the Norwegian Statistics, which is governmental and presents data from departments and organizations. Additionally, the electricity price is complex to investigate as it is in constant change of numerous numbers of variables with an indirect impact on the price. Consequently, has it been necessary to make justified assumptions to explain certain variables ́ impact and act in potential scenarios throughout the process. Electricity price is affected by the economy, consumption, politics, climate, and production- related variables that together form the outcome of electricity price. They act differently under varying price scenarios and are indirectly impacting each other. Although, the thesis develops an Electricity Price Loop that presents an overview of the general electricity price mechanism.