Statkraft and responsible process

Chronicle: The security of supply in Norway is based on both hydropower and energy exchange. Normally in Europe, this would not present any challenges.

It may seem odd that Norway, which is blessed with a lot of hydroelectric power, is so strongly affected by the energy situation in Europe. But Norway’s energy supply has for many decades been dependent on hydroelectricity being supplied with supplies from our neighboring countries when needed. Do we have hay
Security of supply In Norway, it is important to have both responsible operation of hydroelectric reservoirs as well as energy exchange with other countries.

Hydropower offers great diversity

Norwegian hydroelectric reservoirs make up about half of the total reservoir capacity in Europe. Reservoirs are the backbone of Norway’s energy supply, as they can store water so that energy can be produced when it is needed.

There are big differences in tanks – some can store water for only a few hours of use, others for months or years. Precipitation varies greatly from year to year, and can make a 60 TWh difference in potential energy production.

In comparison, the total consumption in Greater Oslo is about 18 TWh
year. The significant uncertainty about the amount of water available must be taken into account by Statkraft and other producers when we plan production. It is important to have enough water for the coming winter
At the same time, we should avoid reservoirs becoming too full to have room for water from a rapid thaw or wet autumn. This can also be important to avoid flood damage.

Norway and Europe

For several decades, the Norwegian energy system has been linked to our European neighbors, especially Denmark and Sweden. This means that Norway can import energy when we have very little ourselves, and therefore we have not had to develop our production capacity to cover the need in drought years, which can happen approximately every ten years.

Thus, Norwegian society provides significant expenditures and large-scale natural interventions. The exchange capacity also allows electricity to be exported when solar and wind production in our neighboring countries is low and import when it is high. For nearly 15 years, a cable has been laid between Norway and the Netherlands, and last fall the cables were opened to Germany and England.

Transport capacity means that the price level in Norway is affected by the level in other countries. Because of the war in Ukraine and Russia’s cut in gas supplies, energy prices are now very high in all of Europe
And in Norway.

The correlation between electricity prices in Norway and neighboring countries has been apparent for a number of years, even when we only had transmission connections to Denmark and Sweden. Many transport connections have strengthened the connection, but in the current situation we will have a very high level
Electricity prices in Norway are also without the latest cables.

Responsibility and hydropower

Last year’s autumn was drier than usual, and less snow than usual in large parts of southern Norway. Normally in Europe, this would not have posed any challenges. But with the war in Ukraine, this is not a normal situation, and we cannot rule out rationing in other countries, which in turn could limit imports into Norway. Although the probability of such a coincidence is not great, the consequences are dire.

At Statkraft, we take this situation into account. When we plan production at our hydropower plants, we carefully evaluate uncertainties. Precipitation in the next six months is an essential part of that, and we’re doing detailed analyzes of potential production in different precipitation situations. Now we also take into account that a situation may arise where import is not possible. This means we store more water.

Blåsjø, the largest water reservoir in Europe, is a good example of this. Virtually no water from this reservoir was used in July, and we’ve also pumped water into Blåsjø so we can use it later. Increased water storage is now driving up electricity prices, but stored water can provide more production and increase supply security for the winter.

energy exchange

There are also conditions in our neighboring countries that can contribute positively to this situation. The UK has a good capacity to import LNG, so the prices of both gas and electricity are much lower there than on the continent. So we could have a situation where we can exchange electricity with the UK as usual, even if there is a power shortage in Germany.

Germany already uses a relatively small amount of gas for power generation, but it has a large capacity in coal-fired power plants that can be used if there is a shortage of gas. It will also reduce the possibility of Norway experiencing an energy shortage.

Norway has a strong energy system. This is because of our large water reservoirs, but also because of the opportunity to exchange energy with other countries. Over time, it gave us lower costs than if we were self-sufficient. However, we are now deeply affected by the exceptional situation created by the war in Ukraine, to which all European countries are struggling to find solutions.

In the long term, Europe’s diversification of gas sources and strong growth in renewable energy will reduce dependence on Russian gas. Together with the upgrading of hydropower and new renewable production in Norway, this can contribute to the improvement of the energy system as in the future Norway can also import cheap energy from our neighboring countries and export it this year when we have a surplus.