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Why Norway's energy exports are so controversial and how it affects energy bills

Frazer Norwell
Frazer Norwell - [email protected]
Why Norway's energy exports are so controversial and how it affects energy bills
This is why power exports are so controversial in Norway. Pictured is dam. Photo by Bjørn Kamfjord on Unsplash

Norway has been exporting power to European countries in record amounts in recent years. However, the practice has proved controversial with some wanting the supply to the continent cut off. 

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Norway exported a record amount of power to Europe via cables in 2021, figures from Statistics Norway (SSB) show.

"A new peak was set for exports in 2021. The level is 30 percent higher than the average for the last five years," Magne Holstad said in Statistics Norway's annual report on electricity exports. 

The practice has proven especially controversial over the past year as Norway has seen sky-rocketing electricity prices throughout the winter, with steep prices continuing into summer and expected to be a mainstay of winter coming. 

Foreign cables mainly affect southern Norway as that is where the cables connect the Scandinavian country with the European energy market. This is then compounded by low reservoir levels in southern Norway as the country is reliant on hydroelectric power for its energy needs. 

Electricity on the continent is typically more expensive, so even with low reservoir levels, exporting energy abroad makes for an attractive revenue stream. 

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However, this also means that when the country needs to import electricity to meet its needs, it pays a hefty premium, which is then passed on to consumers. 

"As you know, there are five electricity price zones in Norway, and there are extreme price differences between the north and the south. The electricity price in Northern Norway is pretty low, but the transmission capacity isn't large enough, so all the excess hydropower can't be sent to the south. 

"Therefore, the prices are a lot higher in the Oslo area, the Bergen area, and the southern market zones. These are connected to the UK and Germany by cables, so we see the influence of European prices feeding into Norwegian prices there," Nathalie Gerl, the lead power analyst at Refinitiv, told The Local.

With European power exports contributing to high prices and exacerbating low reservoir and supply levels, there have been calls on the government to limit or completely halt sending power abroad. 

READ ALSO: Why energy prices in Norway will continue to rise this winter

The Centre Party's parliamentary group, with the party being part of the coalition government with Labour, has called on the country's decision-makers to halt energy exports. This looks unlikely as earlier this year, a parliamentary majority voted down introducing export limits

Activists also want to see the cables axed. Lawyer Olav Sylte manages the Facebook group Vi som krever billigere strøm (we who demand cheaper electricity) and believes cutting the power cables could help ease soaring prices in Norway. 

"In my opinion, ending the foreign cables to England and Germany could be part of the solution here. The government should never have done that, and it's time to stop it. If not, we will have big problems in the winter," he said to The Local.

At the end of May, the state-owned Statnett announced that the supply situation in Norway might be under strain – in some scenarios – all the way up to and through the winter, especially if Southern Norway experiences drier than usual weather in the second part of the year. 

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Despite this, Prime Minister Jonas Gahr Støre has ruled out pulling Norway from the European energy market. 

"It is a dangerous thought and will not serve us well. It could give us more expensive power and lack of power in given situations. We will hardly be able to import power when we need it without contributing to other countries when they need it. There is a reciprocity in this," he told the newspaper Aftenposten

The PM added that Norway's power cables amounted to a good deal.  

"It is a dangerous thought and will not serve us well. It could give us more expensive power and lack of power in given situations. We will hardly be able to import power when we need it without contributing to other countries when they need it. There is a reciprocity in this," he explained. 

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