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How much will Danish energy bills go up this winter?

Energy prices are already high and gas supplies to Denmark are currently cut off with the Nordstream 1 gas pipe closed. How expensive could bills get this winter?

How much will Danish energy bills go up this winter?
Energy bills this winter are expected to eclipse those from last year, putting a severe dent in family budgets. File photo: Ida Marie Odgaard/Ritzau Scanpix

Gas prices on the European market shot up by around 25 percent on Monday following Russia’s move to indefinitely cut supplies to Europe via the Nordstream 1 gas pipeline last weekend.

The effects of that decision can be expected to be felt by for both gas and electricity customers in Denmark in one to two months, an analyst said earlier this week.

“Danish gas consumers will initially be hit hard by these increases, but so will electricity customers because gas is very important in electricity production,” senior economist with Sydbank, Søren Kristensen, told news wire Ritzau on Monday.

The extent by which energy bills are bloated this winter could come as a shock to people in Denmark because the seriousness of the situation is not fully understood, an expert analyst told newspaper Politiken.

“In countries like Germany, Switzerland and Austria, the public has been prepared for months for drastic price increases, and in Germany the debate has been made clear to everyone that gas may be rationed. But I am yet to hear a Danish politician say the equivalent,” independent economist Andreas Steno Larsen of Steno Research told Politiken.

Although Denmark supplies a comparatively large proportion of its own energy through wind power, it is not self-sufficient “every day”, Larsen said.

“And when we’re not, we’ll have a massive problem this winter. It will be a rude awakening for many people from October onwards,” he said.

In a written comment to Politiken, energy minister Dan Jørgensen said that an already serious situation has been made even more critical because no gas is coming to Europe from Russia.

“It can already be felt and will continue to hit Danish families hard,” Jørgensen said.

A draft 2023 budget presented last week by the government sets aside funding for cost of living relief but did not specify the recipients of such spending.

READ ALSO: Why energy prices worry rural Danes more than those in cities

While the exact numbers provided by different analysts vary, they all project a steep upturn in bills compared to last winter, when costs had already increased from earlier years.

According to calculations by bank Nykredit reported by Politiken and broadcaster DR, a family living in a house with independent gas heating could face a bill around 33,000 kroner (for one year, commencing in August) higher in 2022-23 than in 2021-22.

Electricity bills could go up by as much as 12,700 kroner for a family with two adults and two children which uses around 4,000 kilowatts per hour, according to Nykredit’s calculations. Such a household can expect to pay 22,324 kroner for the year compared to 9,269 kroner for the previous year.

The figures are based on the assumption that prices this winter will be the same as the average cost for gas and electricity in August. The current situation with the closure of the Nordstream 1 pipeline makes a fall in prices unlikely.

It should be noted that homes which are on district heating networks are less vulnerable to increased gas prices compared to houses with independent natural gas boilers. This is because power stations that produce district heating may not be fully dependent on gas.

But all homes will nevertheless be affected to some extent because electricity prices are also affected.

READ ALSO: What you need to know about Denmark’s housing ‘energimærke’

Similarly bleak estimates of energy bills were also made by Danske Bank.

In comments to financial publication Børsen, Danske Bank’s consumer economist Louise Aggerstrøm Hansen said the overall bill for the heating season – October 1st to April 30th next year – could be four times higher than usual for an “average family” defined as two adults and two children with standardised consumption.

“This will require major cutbacks in many families, first and foremost on their heating budgets but also in other areas,” Hansen said.

Figures provided by Hansen to DR show that a household which paid 10,200 kroner in bills for natural gas heating in the 2020/21 winter season and 22,500 kroner last year can expect costs of up to 37,200 kroner for the coming winter.

This corresponds to eye-watering extra costs of around 4,000 kroner per month or 27,000 kroner in total compared to two years ago.

The interest organisation for the energy sector, Green Power Denmark, provided a comparable prediction. An older house with an independent gas heater could see its heating bill go up by 7,500 for the months of October to December, the organisation told Politiken.

On Wednesday, the EU Commission presented five proposals to rein in gas prices amid the international shortage, including a cap on the purchase price of Russian gas. The plan is scheduled to be further discussed at EU level by energy ministers from member states on Friday.

Russian president Vladimir Putin vowed to completely cut off the flow of gas if a price cap is introduced.

READ ALSO: How people in Denmark are changing their energy use to keep bills down

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Why the energy crisis isn’t over yet in Denmark

Denmark has cut the majority of its consumption of Russian gas but it is too early to disregard all energy saving measures, experts advise.

Why the energy crisis isn’t over yet in Denmark

Gas stocks in Denmark remain high despite the winter having reached the halfway mark, but it would not be prudent to drop good energy saving habits, broadcaster DR writes.

Before the Russian invasion of Ukraine, 40 percent of the natural gas used by Europe came from Russia. That has now been reduced to around 8-10 percent, DR reports.

This means that the EU has moved towards its target of becoming independent of Russian gas, a senior consultant in the Danish energy sector told the broadcaster.

“We have put plans into action and with the amount of gas we are saving now, we are almost at the point of being able to go without Russian gas,” Kristian Rune Poulsen of Green Power Denmark, the interest organisation for the energy sector, said.

The reason for this is that imports of liquid gas from North America and the Middle East have been increased, but also because consumers and businesses across Europe have managed to reduce consumption.

“In Denmark, we used 37 percent less gas in 2022 compared with 2021. How much of this is actual savings and how much is from switching to other fuels, we don’t yet know for sure,” Poulsen said.

Europe currently has good gas stocks and prices are expected to be stable for the rest of the winter.

READ ALSO: Low European gas prices ‘will benefit’ energy consumers in Denmark

But it’s too early to call off the energy crisis and turn up thermostats without a care, according to a number of experts who spoke to DR.

“There’s no doubt that it’s a huge success that we’ve succeeded in saving 20-25 percent on gas and significantly increased imports of liquid gas,” Brian Vad Mathiesen, energy researcher at Aalborg University, said to DR.

“But we still get Russian gas through Turkey and Ukraine, and countries like Hungary and Romania are still dependent on Russian gas,” he said.

Moscow could therefore still use gas as leverage to drive a wedge between European countries, he stated.

A senior researcher in international relations also said that measures to conserve gas should continue.

“We’ve been good at cutting back. But if we stop saving now, we’ll run into problems next year,” Trine Villumsen Berling of the Danish Institute for International Studies told DR.

Much of the gas currently stored was originally supplied by Russia, she noted. Power plants still need to use gas to produce energy when weather conditions reduce wind output, she also said.

“We need Danes to still have those good habits. We must remain aware of how we use energy and how much we turn on the heating for quite a while yet,” she said.

“We must remember that in future we won’t get much gas from Russia and that we are only in this healthy situation because we have been good at conserving,” added Poulsen of Green Power Denmark.