Norwegian Hydropower: Eating Away Consumer Lifestyle

(The online newspaper) The current has gone from expensive to extremely expensive this week. The price peak is close to NOK 5 per kWh, while it is reported towards the end of the week really cold weather.

The entire Nordic region has been affected by what is known as Siberian high pressure for several weeks – and there is now talk that the winter prices may continue into the summer.

There is extremely little snow in the mountains, and NVE has already begun to think about the possibility that the water reservoirs will not refill properly.

Concerned about situational awareness

The country’s best-known power analyst, Tor Reier Lilleholt in Volue Insight, has therefore needed to use ropert. Almost two weeks ago, he shouted a warning – and since then it has gotten worse.

– I have tried to be a bit early, because people don’t want to understand what this high pressure means: I have experienced these Siberian high pressures before and know that they can be quite brutal. We have seen it only 2-3 times in the last 20 years, and they stay much longer than you think, says Lilleholt to Nettavisen.

– And they eat up Norwegian hydropower! Nobody cares about that, says Lilleholt.

He says that the situation we now have is the driest since the crisis year 2010/2011.

Eastern and Western Norway particularly exposed

East and West Norway in particular may face a difficult spring:

– Our simulations give clear signals that the hydropower producers may have to stop abruptly – that is, that they have to produce significantly less in order not to run out of water, he says.

This will have a strong impact on the price of electricity.

There are three things that can get us there:

– The most important thing is that the temperature has been so low that the inflows have dropped. We only see between 10 and 20 percent of the inflows that are normal in southern Norway. I don’t think everyone can imagine that when they look at magazine filling in the future.

– Then the cold is so high that consumption is high – which means that production must be high. And at the top, much of the wind is gone, which you have to replace with water. Then it goes down very steeply with the magazines, he says.

This handles the power system. For a while.

– If this cold lasts for another month, a lot of what we have in the magazines today will disappear. Then you are in a situation where you have to make assessments – and we are already seeing a tendency towards that, says Lilleholt.

Could have been much worse

Lilleholt emphasizes that the situation could have been even worse:

The cold weather with little wind has mostly only affected the Nordic region. Germany and England have been outside the high pressure.

– In England and Germany they have produced a lot of wind, and thus we have not had the extreme suction from our neighboring countries.

The cold has settled over the Nordic region, while continental Europe and Great Britain have completely different weather.
Photo: Windy

This week there are close to full imports from England, while the cable to Germany is mostly not used at all.

– It has been somewhat of a saving grace now, but it will not necessarily last forever: We will probably see days and weeks with little wind in these areas as well – and then the comfort will return.

This is when the producers make their money

– Why aren’t there full imports from Germany today?

– It is still early days, and you should know this: If I were a producer, today is not the day I would save water. This is the highest price expected during the entire year. With that cold, you should drive as much as you can, says the analyst.

– Cynically speaking, from a producer’s point of view, now is the best time to produce. Then it may be that if they get little water left, they get paid even better for it. So they have good times, says Lilleholt.

The price, on the other hand, is not just a cynical sign: Production and exports are only governed by prices. The only way to slow down exports is to raise prices.:

– What we see tendencies towards, says Lilleholt.

Figures from Statnett show that electricity exports stopped at the beginning of February. Norway now imports more than we export.

He points out that it appears that the “water value” of the power producers has increased by around 25 per cent.

– That is part of the reason why we now get fewer exports.

Although there are some major danger signs, Lilleholt emphasizes that he is not worried about power shortages at first:

– The producers have always dealt with this in the 30 years we have had a market: When you see the danger of rationing, they adapt. But that is the price they pay to adapt, he emphasizes.