At QuantifiedCarbon, we couldn’t resist digging into this problem. Using an hourly dispatch model of the European electricity market, we modelled electricity prices in 2025 for 32 different weather years, both with and without the interconnector, to analyse the potential impact of such a decision. The results provide some fascinating insights—and should be an interesting read for both Ebba Busch (Sweden’s Minister for Energy, Business, and Industry) and Norway’s Terje Aasland (Minister of Petroleum and Energy)!
In summary, cutting the NO2 (South Norway) and DK1 (Jylland) interconnector leads to a price reduction of around -4.5 €/MWh in Southern Norway, averaged over the year across all 32 weather years. This equates to about 400 million euros of cost savings for electricity consumers in south Norway per year. It will also reduce electricity costs by 200 million euros per year in Sweden and 80 million euros in Finland. Regions south of Norway would instead see increased prices with the biggest effect in DK1, at more than +6 €/MWh, or 130 million euros per year. The effect, in €/MWh, for the relevant market areas is summarised in the bar chart above.
While electricity consumers in Norway, Sweden and Finland would save money on average, this move would not be without risks. Seasonal price volatility would increase, exposing the region to sharper price swings, particularly during dry or extreme weather years when hydropower generation is stressed. In such problematic years, prices in south Norway would actually increase—potentially undermining some short-term benefits of the disconnection. This is summarised in the histogram above, showing that some years see price reductions as large as –7 €/MWh, while problematic years may see increases of up to +2 €/MWh.
Beyond the local consequences for Norway and Denmark, this decision could also have far-reaching ripple effects. Flows would increase elsewhere, further stressing an already congested grid. Cutting interconnectors could also undermine the confidence in the Nordic electricity market and possibly dampen the willingness to invest in electricity production across the region. This can be especially problematic for a future electrification where demand is expected to grow and attracting new generation capacity is vital. Furthermore, it raises concerns that other countries might begin to re-evaluate their own interconnections, setting a precedent for isolating grids rather than strengthening collaborative energy systems.
This debate highlights the delicate balance between maintaining national energy security and fostering regional cooperation. It also underscores the importance of evidence-based policy decisions when navigating these complex dynamics. If you are interested in more analysis of this kind, don’t hesitate to contact us at Quantified Carbon.
https://www.ft.com/content/f0b621a1-54f2-49fc-acc1-a660e9131740
https://borsen.dagbladet.no/nyheter/frekk-og-kunnskapslos/82401534
