What is the difference between electricity and grid rent?

Are you unsure why your electricity bill is split in two? Then you are not alone. Here is the difference between electricity and grid rent.

Put simply: The electricity component of your bill is what you pay for your actual electricity consumption, while the grid rent is what you pay for the electricity to be supplied to your home. Electricity charges and grid rent are two different things but are interdependent, which is why you have to pay for both to use electricity at home.

How grid rent work

You pay grid rent to the grid operator that owns the power grid in your area to have the electricity supplied to your home. This means that you cannot choose which grid operator will receive the grid rent because it depends on where you live.

The grid operator sends information about the grid rent you will pay to your electricity supplier. Your electricity supplier then determines how much you will pay for the actual electricity and will add this to your bill. If your electricity supplier has an agreement of joint invoicing of grid rent and electricity, your grid rent and electricity charge will appear on the same invoice.

If your electricity supplier does not have an agreement of joint invoicing of grid rent and electricity, your grid rent charge and electricity charge will be on separate invoices. Are you unsure whether both charges appear on the same invoice? Contact your electricity supplier.

As well as the supply of electricity, grid rent cover the cost of operational efficiency and the development and maintenance of power grids and electricity meters. Your grid operator can assist you with questions about power outages and provide detailed information about your electricity consumption, past consumption.

The role of an electricity supplier

An electricity supplier buys electricity from Nord Pool, Nordic power exchange, and sells it to you. It bases its charges on the average purchase price (spot price) set by the power exchange. It has no control over the power grid, and you are free to choose whichever electricity supplier you like.

It is a combination of the price of electricity and your electricity consumption that determines how much you pay your supplier. Your electricity supplier can answer questions about your invoice and your actual electricity consumption.

Why your bill lists both electricity and grid rent

The reason you receive a joint invoice for both electricity and grid rent is to make things easier for you as a customer. It gives you a better overview of your total electricity costs, and this is the standard practice throughout Norway.

In addition to electricity and grid rent, your electricity bill also comprises taxes and fees to the state – which all electricity customers must pay.