An expansion of wind power in both Norway and Sweden could dampen any potential price increases from rising exports. Norway is planning to tap in on its very favorable wind conditions along its western coast. But after Statkraft AS and a Credit Suisse Group AG-backed fund said it would invest $1.2 billion in wind power in wind parks in the central Norway, development has largely stalled in large due to local protests. The regulator hasn’t approved any new applications since April and is waiting on a new framework.
Norway became one of the richest countries in the world thanks to its vast reservoirs of oil and natural gas. As green energy takes root, utilities and grid companies want to replicate some of that success with hydro power.
The Nordic nation’s rich supplies of water enable hydro plants to feed almost all domestic electricity needs and have some left over for neighboring countries too. The Dutch grid already is drawing Norwegian power, while projects are underway to link with England and Germany. A link to Scotland is awaiting approval.
The technology has a key advantage over solar and wind farms – operators can decide when to release the water through turbines, making its supply of clean energy as dependable as a traditional fossil fuel plant. But the vision of Norway as a giant green battery for northern Europe has detractors at home. Companies from energy-intensive smelters to chemical makers fear that additional connections will boost power prices and cut the competitive edge that cheaper hydropower has given them for decades.
“The way it looks today, there is no upside to building more cables,” said Ole Borge Yttredal, executive director at the Federation of Norwegian Industries. “The Nordic region needs a surplus of power to be attractive to the industry.”
Nordic power prices have this decade been 21% and 7% cheaper than in the U.K. and Germany, respectively. But when electricity begins to flow between Norway and those nations in 2021, the cost of electricity in the Nordic region will start to increase toward continental levels, according to industry consultant Wattsight AS.
There is also resistance among opposition lawmakers of using Norway’s renewable resources to export cheap power abroad when the nation is planning to electrify everything at home from transport and oil platforms to industrial processes. Should Norway send all of its excess electricity to other nations, it would still only cover 0.5% of European demand, said Sigbjorn Gjelsvik, a lawmaker for the Center Party.
“Norway will never be the green battery of Europe,” Gjelsvik said in an interview. “The idea of exporting our power as a pure commodity, and that this will save the world, that’s an unwise environmental and climate policy and not a very sound business policy.”
Norway has been trading electricity with other nations since the 1960s. It’s been a boost to the economy, although at a much smaller scale than oil and gas exports. Energy Minister Kjell Borge Freiberg said earlier this year that more international cables also have cut domestic grid costs.
The behemoths building and planning the links, from U.K.’s National Grid Plc to Tennet Holding BV and Vattenfall AB, also argue that the exports of green power will cut carbon emissions in nations where more power is generated by burning fossil fuels than in the Nordic region.
A second cable with the U.K. could provide benefits for its owners, and consumers (through increased security of supply and lower local grid investments) by as much as 25 billion kroner, ($2.7 billion) during its 40-year life, according to Northconnect AS, the project firm owned by Vattenfall and three Norwegian utilities.
It would also reduce U.K. carbon emissions by as much as 2 million tons per year. If approved, it could be online by 2023.
“There is huge demand for flexible generation in the U.K. to cut the use of fossil fuels, so this is a very good climate initiative,” said Lars Nermoen, a company spokesman.
Because of Brexit, the firm’s application has been put on hold, awaiting a market analysis by regulator NVE in October. The watchdog will then the pass on its recommendation on whether the cable should be built or not to the Petroleum and Energy Ministry, which will make the decision.
Trading between nations also makes the European market more efficient. When it’s really windy on the other side of the cables, Norway can import cheap wind power, and export its hydro electricity at other times. During those hours and days, domestic prices will increase slightly, according to Statnett SF, the national grid company.
But as the nation’s hydro plants to a large extent are owned by the state and municipalities, that would boost the national coffers, according to a company spokeswoman. The more than four decades of oil and gas exports helped Norway create the world’s biggest wealth fund with $1 trillion in assets.
An expansion of wind power in both Norway and Sweden could dampen any potential price increases from rising exports. Norway is planning to tap in on its very favorable wind conditions along its western coast.
But after Statkraft AS and a Credit Suisse Group AG-backed fund said it would invest $1.2 billion in wind power in wind parks in the central Norway, development has largely stalled in large due to local protests. The regulator hasn’t approved any new applications since April and is waiting on a new framework.
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