February 4, 2023

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Power Price, Statnet | Statnet issues a warning to the government: Very high prices and power outages are reported

(Online newspaper): When state actors talk to each other, it is often in dry language. You need to be “bureaucratically fluent” to understand the content.

But in a more direct letter, first reported by an industry website EuropowerStatnet issues strong warnings to the government about the Norwegian power system in both the short and long term.

As Europower writes: “The letter is full of warnings about developments in the Norwegian power system.”

Four concrete caveats

Statnett gets straight to the point, warning of “anticipated significant challenges” going forward, focusing on four main points:

  • Too little electricity, both energy and power, can lead to “too high prices.”
  • If authorities disrupt the power market, “it” could lead to StateNet cutting power to some customers.
  • New industries with large electricity requirements are relatively easy to establish themselves
  • More power generation needs to be built – offshore wind is not enough

The letter was sent just before Christmas, and Gunnar G., StateNet’s executive vice president for power systems and markets, said: Signed by Lovas.

More consumption, not more power

In the letter, Statnett wrote that the major challenge is the sharp rise in consumption while there is no increase in power generation.

“There is enormous interest in electrification across all sectors of society Great interest in establishing a new energy-based business. According to the Energy Act, Statenet and network companies have a connection obligation and an obligation to provide market access to consumer actors as long as network capacity exists, but No one is obligated to generate more electricity. Only a limited number of specific manufacturing projects are registered on StatNet.”

According to StatNet, the effect is simple:

“Over time Power price hike Hence consumption growth slows down. I will eat at the same time Prices vary more than ever beforeAnd it will from time to time Too high power prices to “force” the necessary reductions in consumption In times of scarcity.”

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Prices must be too high for firms and consumers to consume.

Dependent on imports – prices rise and industry leaves Norway

According to Statnett, increasing consumption but not production means that Norway will have a power shortage in four years.

According to Statnett, the direct effect will be for Norway then More expensive than our neighbors.

“Ultimately, this will affect the willingness to invest in new energy consuming businesses Current electrification and industrial growth is gradually slowing down.”

They further write that more electricity generation is absolutely necessary for Norway to carry out our most important climate actions. Climate action is mainly about replacing fossil energy with electricity.

Not enough electricity

According to Statnett, the “key challenge in the coming years” is to ensure that sufficient electricity is available when wind power generation is low. The problem with wind power is that it produces a lot when the wind is blowing, but nothing when it’s not.

So StatNet is clear that it needs to develop new power generation that will fill the gaps:

– To manage the situation in the long run, the balance of power needs to be strengthened. This is the best solution for Norway Access to electricity from hydropower plants should be increasedIn addition Consumption should be more flexibleStatnett writes.

They warn about the situation in Eastern Norway, Central Norway and Northern Norway in particular.

– In these areas, there are relatively small adjustable power generation and significant consumption projects. Considering the expected growth in consumption in the coming years, it will be in times Not everyone can get electricity Consumption needs in the regions. During such periods, the sum of available productive capacity and potential “imports” from neighboring areas, May not be large enough to cover all expected consumption.

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Warns against tampering with electricity market

Statnett is aware that there are strong forces that want to change the energy market to achieve more stable prices and disconnect Norwegian electricity prices from European levels.

They strongly warn against this – because Norway will soon become dependent on imports from abroad.

– in times scarcity A power market will ensure a price level that ensures enough players voluntarily reduce their consumption until equilibrium is reached. That is why It is important that the market is allowed to function.

They shout that they are working to strengthen the network, but depend on a functioning market:

– Anyway, it’s a clear conclusion Electricity prices vary considerably more than beforeand now and then pwas at high levels. It should also be calculated from time to time Big price differences Between price ranges, the average price is not necessarily very different.

It wants to make it very difficult to establish a new industry

Statnett is particularly concerned that power companies are forcing new companies and industry mergers, even when there isn’t actually enough capacity.

According to Statnett, they are unlikely to say no to customer requests to avoid shortages and higher prices.

“Both existing and new consumer players will be at a premium in the future Consumption had to be reduced as a result of high prices. Alternatively, Statenet is a short-term system manager Ensure that consumption is reduced By or with the balance sheet market Mandatory measures. Assuming the market does not provide the necessary price response over time, security of supply is threatened, and perhaps we are at a point. Had to introduce link freeze Industrial consumption is high in some parts of the country.”

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They believe the current regulations are outdated:

“The provision for obligation to connect was established at a different time, with relatively limited projects for power surpluses and new energy-based activities. Now the situation has reversed, with energy surpluses declining rapidly, and few projects for new power generation. So we suggest that the authorities consider the regulations in the light of this changed scenario – Or more seriously facilitate new power generation across the country.”

Statnet: – Wants to inform authorities

Netavisen asked if StatNet wanted to comment on the letter and why such a letter was needed.

– StateNet has overall responsibility for ensuring the socially rational development and operation of the electricity system. We have an obligation to connect with new power consumption, but there are few tools to ensure adequate power generation. We would like to convey to the authorities that investment in both power generation and better production capacity is required to meet society’s needs and preferences for increased consumption.

– Both the number of inquiries about the necessary connection to new consumption and our analysis going forward show that there is a need for large-scale new power generation to meet these needs, says Communications Manager Marta Hagerup Nilsson.