December 9, 2022

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- There is no place for such jumps in the price of energy - E24

– There is no place for such jumps in the price of energy – E24

Former energy minister and CEO of Hydro Eivind Reiten fears that “unwise” measures will go ahead if politicians do not quickly put together a credible green transition plan.

Cecily Bjland’s Director of Energy in Community Projects and former Energy Minister and CEO of Hydro Eivind Reiten.
published:

Arendal (E24): At a packed Arendalsuka restaurant, E24 meets former Energy Minister and Hydro President Eivind Reiten, along with Samfunnsbedriftene’s Energy Director Cecilie Bjelland, who regulate parts of the energy industry.

The two are calling for an action plan from parliament and the government. Ritten believes that Norwegians will not accept today’s high electricity prices.

There is no room in the social contract for such jumps in energy prices as we are now seeing over time, says Ritten.

Beland notes that the situation is also difficult for the electricity industry.

– it is very difficult. Nobody wants such high prices, and it is important to come up with short-term measures. She says this is about ensuring confidence and security in the Norwegian system.

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Fears of ‘unwise’ measures

Ritten and Bjland agree: Parliament and government must act quickly, figuring out how, over time, Norway will secure enough affordable electricity and enough transmission capacity in a time of major restructuring.

Parliament must sit and agree on what we will produce and where we will produce it. Then you can get started and shorten the processing time, says Beland.

If there is no such plan, Ritten fears that “unwise” measures will push forward.

Over time, you will be politically compelled to do unwise things, if you don’t now get a plan of action so that people can see that something is happening. If there is only fumbling around, as it has now largely become, then in the end you are pushed to do stupid things. Hopefully we can avoid that, says Ritten.

– What kind of unwise actions can one be forced to do?

– It is, for example, to force it to stop exports for periods, or to introduce maximum prices. In addition, this would easily lead to a heated political debate about how high the maximum price should be. That way, you get all the energy directed around the wrong scale anyway, says Ritten.

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Trying to find mechanisms where you will sit with such an organized system that someone decides roughly both the price and the amount of energy per day is unwise. He adds that this is where I hope you don’t get to.

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You will maintain the market

As Secretary of Energy, Ritten was responsible for the Energy Act, which opened the door to the energy market we see today. He does not think it was wrong for Norway to introduce a market-based system.

– I certainly don’t mean it. I haven’t heard anyone think that, the point is that we have basically the lowest energy prices in Europe in all the years since the Energy Act was passed, because it gave a better distribution of energy in Norway, he says.

– If power law is not to blame, then who is? Or should one not talk about guilt?

– If you keep the war at bay, which helps get through all of that, as far as there are some culprits, there are massive changes in energy policy, says Ritten.

He believes that climate policy is working much faster than energy policy.

– Many countries’ energy policy lags behind the ambitions of climate policy, and the rapid energy transition we’re going through right now should almost certainly be called an experiment, Ritten says.

You will save the cables

Many people criticize the power cables, especially the newer cables to Germany and Great Britain, which were opened at the same time that energy prices rose a lot.

Reiten certainly wants to keep the cables, but he thinks contracts could be renegotiated so that Norway exports more when Europe really needs the power, that is, when wind and sun aren’t around.

He believes that it is the most efficient and profitable for both parties.

– We absolutely should have cables, but we must bear in mind that the world is undergoing a total change in this area, says Ritten.

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Weaknesses appear during the day

While Prime Minister Jonas Gahr Storr points to Russia’s war in Ukraine and a slowdown in Russian gas shipments to Europe as the reason for the price hike, Reiten is more concerned with long-term challenges in the energy system.

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He thinks they will come anyway.

– The sad things that are happening in Ukraine only put a violent turbocharger on such a short term. We are facing dramatic changes over ten years. It’s an energy policy experiment, what the Germans and British are doing now by phasing out cheap conventional energy and then quickly building up new energy capacity. This has never been done before, and no one here knows if this will end happily, says Ritten.

– You’re just accelerating the development that would have happened anyway, and you need the grid and the power we should have been building for the next 20 years now?

– That’s what happened in many ways. What happened to our East has caused us grave consequences now. He says that all the weaknesses in the system are showing up today.

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I think Statnett’s mandate works

According to NRK, many politicians want one audit By Statnett for “misleading” people. At the time, Statnett calculated that the new power cables would lead to only a few higher energy prices in Norway on average over time.

However, Reiten wouldn’t change anything about Statnett’s mandate, instead giving them the task of building networks quickly.

– In my opinion, Statnett has the right mandate today, it’s just that the politicians have to tell them to keep building, to accelerate the development program, with the support of Parliament so that they can do it faster, says Ritten.

He acknowledges that economists have been the brakes. In order to achieve climate reduction goals and new jobs, grid and energy development must be accelerated, he believes.

– My profession, social economists, has some responsibility here. We were terrified that we might get hurt by building too much capacity too soon, he says.

He wants the Norwegian parliament to say this should be a priority for the next five years, and to create a fast track for action.

The climate demands and 2030 commitments of the Paris Agreement mean that energy production must increase. Many have recognized this, and I hear very little, if not none, from Norwegian politicians. They just assure us that democratic processes will continue as before, Ritten says.

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You want a national plan

Bjelland believes Statnett should get the money and mandate they need, and that politicians should come up with a comprehensive plan for grid development and power generation.

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– It’s a bit good that Reiten is in charge of the civilian economists, because we’ve pointed out for a long time that network development in particular has been reduced to an Excel exercise in the current system. It does not correlate well with big political visions. We’re advocating something along the lines of a National Transit Plan, where you’re on top when queues come in, she says.

Bjelland wants an initiative to facilitate business development, also in rural areas, and believes that you can’t just develop what is economically profitable today.

Create a national production plan that spells out what we think we’ll need in terms of power in five years, 10 years and 15 years, and let politicians argue about it the same way they argue about a national transportation plan. Then they can make directional choices then and there, so that you don’t have to apply for each individual license and have to wait ten years to see if it goes through, she says.

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Bjland believes Norway would have had challenges with the green transition even without the cables.

Even without cables, we would face this energy transition, with visions of new jobs and reductions in climate emissions, she says.

She thinks it is a shame that the renegotiation is taking place at the same time that the European Union is going through an energy crisis caused by the war in Ukraine.

– There was a lot of talk about suffocating cables or showing full solidarity. The solution has to be somewhere in between. She says you should be able to explore including the EU in the energy policy vision as a whole.

– We are now giving priority to extracting more gas at the expense of oil, and we are violating our principles for the sake of the European Union. Then the EU should be able to allow us more flexibility about cables so that we can bring the Norwegian population with us. One should not only look at renegotiating cables, but in general, she says.

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