Norway set to curb electricity exports in blow to European energy supplies

Norway is to curb electricity exports to Europe if water levels for its hydropower plants remain low in a blow to hopes that the Nordic country could help ease its neighbours’ energy concerns ahead of a difficult winter.

Under political pressure from high local electricity prices despite abundant hydropower resources, Norway’s centre-left government decided on Monday to prioritise refilling its reservoirs when their water levels are below seasonal averages.

Norway is one of the biggest electricity exporters in Europe, often selling via cables to the UK, Germany, Netherlands and Denmark. This latest move foreshadows a tough winter for the Continent as it grapples with the implications for energy supplies of Russia’s invasion of Ukraine.

“The government will ensure that we have arrangements that prioritise the filling of our hydropower reservoirs and the security of supply for electricity, and limit exports when the water level in the reservoirs falls to very low levels,” Terje Aasland, Norway’s oil and energy minister, told political parties.

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Norway has exported electricity throughout its summer even though many hydropower reservoirs are at historically low levels following a dry winter and spring.

Water levels in the south of Norway — where most of its export cables are based — are at their lowest since 1996 at just 49.3 per cent, compared with a seasonal average of 74.4 per cent, according to the Norwegian Water Resources and Energy Directorate.

Aasland said officials would decide the exact mechanism in the next week but suggested that when reservoir levels were below the seasonal average, exports would be curbed.

He added that electricity rationing — initially for street lights and mountain cabins — was a possibility in Norway, although unlikely even though the situation was “tight”.

Some Norwegian politicians have suggested shutting off exports until the energy crisis is over amid anger at high prices for domestic consumers even while the state is earning record amounts from selling energy. Authorities have said that is not possible as Norway, although not an EU member, is part of the single energy market in Europe and has bilateral agreements covering the cables.

While in many European countries electricity demand has largely either plateaued or declined since 1990, Norway’s domestic power consumption has risen almost 25 per cent over the same period as it has curbed use of fossil fuels and encouraged electric car ownership.

Other big European electricity exporters, in particular France, are experiencing their own production problems. Output from France’s large nuclear reactor fleet has hit multi-decade lows owing to problems including corrosion at older plants.

The prospect of electricity export curbs from Norway will raise further questions over the security of power supplies in several countries this winter, including the UK. A subsea power cable between Britain and Norway opened last year with a possible export capacity of 1.4 gigawatts, the equivalent of 2 to 3 per cent of expected British demand this winter.

Analysts at Aurora Energy Research, a UK-based consultancy, said Britain might have to fire up coal plants that were due to be retired next month to make up for a shortfall in Norwegian imports — a move that would probably lead to even higher prices for consumers. — Copyright The Financial Times Limited 2022