Norway will have to prioritise maintaining its hydropower reservoir levels if they fall to low levels, and that may limit its exports, Oil and Energy Minister Terje Aasland said in a statement to the Norwegian parliament (the Storting) about Norway’s electricity situation on 8 August.
Norway is carrying out a delicate balancing act as it tries to manage water supplies while ensuring that business and domestic customers – and the European market – have access to its hydropower. Meanwhile, as in the rest of Europe, power bills are seeing dramatic increases.
Aasland said that Norway cannot ignore the fact that its electricity capacity – mainly hydropower with increasing investment in wind and solar – is weather dependent. There are large variations from year to year and although the country normally has a power surplus, that may not always be the case. There may also be several dry years together, or warm winters. (Much of the Norwegian hydro system is refilled annually, as snow melts, and warm rainy winters may in fact be drier than colder winters with more snowfall.)
Aasland said that in those times, “We depend on our connections to Sweden, Denmark, Germany, the UK, Finland and the Netherlands working well. It would be short-term and unwise to end this energy cooperation, even if the situation is now demanding.”
But the GB system is now on a different basis to others connected to Norway. Aasland said, “As EU countries, Sweden, Denmark and Finland are covered by the same energy regulations as Germany and the Netherlands, with which we also have international connections. A breach of the cooperation under this framework will also be a breach of the Nordic energy cooperation. The European countries go to great lengths to stand together against Russia’s economic warfare in the energy sector.”
The minister said Norway had to ensure its own supply. As a result “we will introduce a stronger framework to ensure Norwegian security of supply. We will work out an arrangement that ensures that the hydropower reserves are safeguarded when there is little water in the reservoirs – just as other countries also secure their energy reserves.”
That would mean prioritising reserves, and “In practice, this will involve control mechanisms that limit the possibility of export“.
Aasland said “The government considers the situation to be serious,” with “the use of gas deliveries as an economic weapon against European countries” coinciding with a dry spring and summer in some parts of the country. Electricity production in southern Norway has been 18% lower than at the same time last year.
The minister said a period of electricity rationing in the spring, “cannot be ruled out) but stressed that the probability was low and it would “be a matter of a limited area of the country, a few days or a few weeks in April/May, and would primarily have an effect on business”.
The ministry has already worked with power producers on monitoring and managing reservoir levels. That measure, reduced power generation and the use of imports means reservoir levels are higher than had been feared.
Long and short term response
Hydropower operators have to manage water storage but limiting generation can leave them vulnerable to accusations of hoarding or even driving prices up in a tight market. Aasland alluded to this balancing act, saying “saving water now as insurance against even more demanding situations later, contributes to already high prices now becoming even higher…
“ Before the summer, I went out with a clear request to the power producers to conserve water in the reservoirs that have the capacity to store the water until next spring, when there is a danger that it could run out.
We now see that it has worked. Although the situation is assessed as tight, NVE believes that there is a low probability that there will be a need for rationing for the winter. “
The government has responded to the “serious and complex” situation by promising to continue to subsidise electricity bills, increased housing allowances, given extra support to students and allocated more money to municipalities to help vulnerable households.
and with short and long term measures aimed at reducing bills and safeguarding hydro capacity. Other measures include fixed price agreements for businesses,
In the long term, Aasland said, “there are only three things that work – more renewable power, more power grids and more efficient use of our energy.
The government has opened up more onshore wind power, expects increased investment in hydropower and launched a large-scale investment in offshore wind. Development of solar power can provide rapid and profitable development of new energy production. In the state budget, we will present a plan for increased energy efficiency.”