October 1, 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 Hydro CEO Eivind Reiten fears the “unwise” actions will go ahead if politicians do not quickly put together a credible plan for a green transition.

Cecily Byland, Director of Energy for Community Projects and former Minister of Energy and CEO of Hydro Eivind Reiten.
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Arendal (E24): At a busy Arendalsuka restaurant, E24 meets former energy minister and Hydro head Eivind Reiten, along with energy director Cecilie Bjelland at Samfunnsbedriftene, which regulates parts of the energy industry.

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

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

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

– it is very difficult. Nobody wants those high prices, and it’s 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 Byland agree: Parliament and the government must act quickly, figuring out how, over time, Norway will secure enough affordable electricity and sufficient transmission capacity at the time of major restructuring.

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

If there is no such plan, Ritten fears, “unwise” actions will pay off.

Over time, you will be forced to do unwise things politically, if you do not now get a plan of action so that people will see that something is happening. If there is only fumbling, as it is largely now, then in the end you are being pushed to do stupid things. I hope we can avoid that, says Ritten.

What kind of unwise actions can one be forced to take?

– is, for example, being forced to stop exports for periods, or to introduce maximum prices. In addition, this will 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.

– Trying to find mechanisms where you would sit with such a structured system that someone would decide both the price and roughly the amount of energy per day is unwise. And that’s where I hope you don’t get to, he adds.

You will keep the market

As Secretary of Energy, Ritten was jointly responsible for the Energy Act, which opened the door to the energy market we see today. He doesn’t think it was wrong for Norway to offer a market-based system.

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

– If the law of energy is not to blame, then who is? Or should one not speak of guilt?

“If you keep the war at bay, which helps bypass it all, as much as there are some culprits, there are massive changes in energy policy,” says Ritten.

He believes that climate policy works much faster than energy policy.

Energy policy in many countries lags behind ambitions in climate policy, and the rapid energy transition we are now going through should almost be called an experiment, says Ritten.

You will keep the cables

Many people are critical of power cables, especially the newer cables to Germany and Great Britain, which have been opened at the same time that energy prices have skyrocketed.

Reiten certainly wants to keep the cables, but thinks it is possible to renegotiate the contracts so that Norway exports to a greater extent when Europe really needs the power, that is, when wind and sun are not available.

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

We should absolutely have cables, but we have to keep in mind that the world is experiencing a total change in this area, says Ritten.

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

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He thinks they will come anyway.

The sad things happening in Ukraine have only set a violent turbo in this short term. We are facing dramatic changes over ten years. It’s an experiment in energy policy, what the Germans and British are doing now by phasing out cheap conventional energy and then rapidly building 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 that we should have built over the next 20 years now?

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

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I think Statnett’s mandate is working

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

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

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

He acknowledges that the economists were the brakes. He believes that in order to achieve climate reduction goals and new jobs, grid and energy development processes must be accelerated.

– My profession, social economists, has some responsibility here. We were terrified that we might get hurt by building up 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.

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

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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 little good that Reiten is taking charge of civilian economists, because we have long indicated that network development in particular has been reduced to an Excel exercise in the current system. It does not relate well to big political visions. We’re calling for something along the lines of the National Transportation Plan, where you’re up front when queues arrive, she says.

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

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

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Biland believes Norway would have faced challenges with the green switch even without the cables.

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

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

There was a lot of talk about suffocating the cables or showing complete solidarity. The solution should be somewhere in between. She says you should be able to explore engaging the EU in the overall energy policy vision.

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

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