THE way energy bills work in Scotland is quite different from other European nations.
In Scotland, energy bills are made up of a standing charge (a fixed daily fee) and a usage charge, depending on how much electricity and gas you use.
It works similarly to the rest of the UK, but there are several factors which are unique to Scotland.
Scotland has a higher share of renewable energy – such as our reliance on wind and hydro power – and the fact we experience colder weather means homes need more heating, leading to higher costs.
However, other countries in Europe have their own way of structuring energy bills.
A lot of it comes down to the kind of energy a country relies on – which depends on its topography (a fancy word for describing the landscape).
According to the European Commission, as of the first half of 2024, Germany, Ireland and Denmark reported the highest household electricity prices in Europe – whereas Hungary, Bulgaria and Malta reported the lowest.
We've taken a look at how other European nations – specifically small, independent countries similar to Scotland – structure their energy bills.
Norway
Norway has a de-regulated energy market, unlike the UK which is regulated by Ofgem.
A typical energy bill consists of a consumption charge and a fee which goes towards maintaining the local electricity grid company.
This fee, known as the "nettleie" in Norway, consists of a fixed charge plus a variable charge based on your consumption.
There is also an electricity tax, imposed by the government on electricity usage.
The country generates around 90% of its electricity from hydropower, as its landscape is made up of many rivers, waterfalls and mountains.
There are more than 1700 hydroelectric plants in Norway – making it one of the most hydro-dependent nations in the world.
Around 10% of Norway's energy comes from wind power, while thermal energy counts for around 3%. The country doesn't tend to rely on solar energy due to it having long, dark winters.
Similar to Scotland, prices can vary between seasons - when it's colder there is more demand for heating, while during the summer more hydropower is available, bringing costs down as a result.
Denmark
An energy bill in Denmark consists of charges for electricity consumption, grid fees and taxes.
Consumption prices are often linked to Nord Pool, the Nordic electricity exchange (more on that in a bit...)
Just like Norway, grid fees include a fixed monthly fee and a variable fee based on consumption.
Through the electricity tax, the Danish Government is trying to discourage excessive energy consumption and instead encourage energy efficiency.
Part of the tax is also used to subsidise renewable energy projects, and it's also a significant source of income for funding public services, infrastructure and welfare programmes.
Denmark relies heavily on wind power – more than half of its electricity is generated from both onshore and offshore wind turbines.
Around 20% of Denmark's energy comes from biomass – wood pellets, straw and biogas which generate electricity – and many old coal power plants have been converted to generate energy from biomass instead.
Sweden
Energy bills in Sweden are structured in the same way as Norway and Denmark – there's a consumption charge, a grid fee and an electricity tax.
Almost all electricity in Sweden comes from renewable or low-carbon sources (approximately 40% hydropower, 20% wind power, 40% nuclear power).
Hydropower is Sweden's largest energy source. Most of the country's hydropower plants are in the north, close to rivers.
There are three active nuclear power plants in Sweden. The Swedish Government is not planning on building any new reactors, but it still generates electricity from the existing ones.
What is Nord Pool?
There's been some mention of Nord Pool here, so it might be helpful to break down exactly what it means.
Nord Pool is the Nordic and Baltic electricity market – and one of the largest electricity exchanges in Europe.
It operates in 20 countries including the Nordic and Baltic regions, parts of the UK (excluding Northern Ireland) and across Central Western Europe encompassing Austria, Belgium, France, Germany, the Netherlands, Luxembourg and Poland.
Electricity producers will sell electricity to suppliers, who will distribute it to customers. Prices are determined by supply and demand - and they can fluctuate daily and even hourly for Nordic customers.
Factors which affect prices include the weather, demand and energy production levels.
Electricity is often cheaper at night or when there is high wind or hydropower production, while it can get more expensive during peak hours.
The UK's electricity market allows for energy trading with Europe. Scotland's excess renewable energy – in particular, wind power – is traded on Nord Pool.
The exchange also allows for cheaper electricity imports from Norway via the North Sea Link.
However, cross-border trading between Scotland and European nations remains difficult, as the UK is no longer part of the EU's internal energy market.
