Norway’s electricity crisis could hit Britain this winter
Stop someone on the street in London and ask them about interconnectors and chances are they will look at you blankly. But in Oslo, energy trading through these massive undersea cables has become a major issue. And one with huge implications for Britain
There is a real chance that Norway will run out of water this winter, meaning it will not be able to maintain electricity supplies to Britain.
Norway could be forced to restrict exports under new powers which allow them to be restricted if there is a prospect of hydrological shortages. And not just once the shortages manifest.
With elections to the Norwegian parliament on Sept 8th, this is a hot button issue – as low water levels lead to high prices for consumers.
Reservoir levels in southern Norway are now well below the 20-year average and heading towards 20-year lows. This is hugely concerning. Norway has almost no pumping capability which means that once the water has been used, it will not be replaced until it rains or the snow melts.
The south of Norway is the main region of tension. This is where the interconnectors to Britain and Germany land, and where the population is highest.
Image: Statnett
Since these two interconnectors opened in 2021, the region has seen higher prices. The issue of high and volatile prices has led to them becoming an issue of concern among the general public.
Earlier this year, the governing coalition collapsed when the Centre Party left over disagreements with the Labour Party over interconnectors and energy policy. The Centre Party opposed implementation of the EU 4th Energy Package which is a legal requirement, and wants to cancel the interconnector deals with Britain and Germany.
Even the Labour Party agreed to defer implementation of the Energy Package and not to approve any more interconnection in the face of widespread public opposition.
Almost all of the parties competing in the upcoming election are against interconnection promising either no new cables, or the cancellation of existing ones.
Notably, there is consensus that two of the Skagerrak links with Denmark which are coming to the end of their lives in the next year or so will not be renewed, which will cut cross-border capacity with Denmark by almost a third.
This is highly significant – Norway cutting electricity trading with one of its Scandinavian neighbours reflects the strength of public opposition to the cables. But Denmark also acts as a transit country for electricity exports from Norway to Germany, Great Britain and the Netherlands, so this move will have a wider impact.
What happens next if water levels continue to drop remains to be seen, but the risks are real. In recent years, wet weather in late autumn has eased tight hydro balances, but experts are doubtful this will be repeated this time – if autumn rain follows the pattern of the past few years, hydro levels will fall to 20-year lows and the authorities will be forced to act.
Image: Statnett
There has only been a handful of days this year that Norway was a net importer of electricity. Other than to Sweden, from whom Norway tends to import, Norway exports electricity almost all of the time.
European countries like Britain, Germany, Denmark, Finland and the Netherlands have come to rely on cheap Norwegian hydro – but what happens if the water runs out?
The answer is rationing. Under amendments to Norway’s Energy Act, Statnett and local grid operators are legally required to prepare rationing plans in case water runs critically low.
These plans are not published, but the last time Norway came close to rationing was in 2003, when a prolonged drought forced Statnett to consider emergency measures. If water levels fall critically low, the Norwegian Water Resources and Energy Directorate (known as NVE) will implement rationing.
Of course, in scarcity conditions, prices will rise, and Norway should attract imports which could stress neighbouring grids.
Britain and Germany have become accustomed to receiving 1400 megawatts of Norwegian imports – approximately the size of two large gas power stations.
What Norway should do is impose export tariffs to raise the price of Norwegian electricity exports. This may sound protectionist, but it would correct a distortion in the current pricing method.
There is also a basic question of fairness here: Norwegian hydro resources should primarily be used for the benefit of Norwegians. Not just because they paid for the reservoirs and dams in the first place but because they also lack alternatives.
In a highly electrified society, electricity rationing could cause real hardship – we saw in the Iberian Peninsula blackout earlier tis year how 11 people lost their lives in very benign weather conditions.
A blackout or power rationing in a Norwegian winter would be far more dangerous. Asking Norwegians to endure that so German industry can keep running is politically toxic.
The EU complains that restricting exports would be unfair and violate trading rules unless shortages are actually taking place. This is not entirely true – countries are allowed under international trading rules to protect domestic stocks in order to prevent shortages.
With parliamentary elections in just over a week’s time, and a real prospect of electricity rationing this winter, it’s time that Norwegian politicians put Norwegians first and stop pandering to European neighbours who have chosen to under-invest in their own generation capacity.
And British policymakers should take note – even if Norway does not make a political decision to suspend exports, a lack of water will have the same result. Whether by politics or by physics, Britain cannot rely on Norwegian hydro this winter.
Indeed Norway might have to import two gas power stations worth of baseload generation from Britain this coming winter, essentially doubling the adverse impact on our grid.
Policymakers must face that reality now, not when the lights start to go out.
See more here telegraph.co.uk
Header image: Sean Gallup / 2020 Getty Images
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