Norway’s record-high electricity rates have prompted calls by some politicians to cut off exports of the country’s hydroelectric power. They want to preserve electricity supplies and bring rates down, but experts warn it could backfire badly and may not even be allowed.
Analysts and other critics have also likened the calls for export cuts to “energy nationalism,” with newspaper Dagens Næringsliv (DN) editorializing over the weekend that it won’t serve Norway’s interests in the long run. Almost all countries are suffering under high electricity rates and record costs for all forms of energy, they note, and this is not the time for Norwegians to keep all their electricity to themselves.
Energy analysts scoff at claims that electricity exports to the UK and European continent are behind today’s ever-soaring rates. Politicians’ attempts to blame state power distributor Statnett also smack of “lots of populism,” analyst Tor Reier Lilleholt told DN on Monday. He and other analysts attribute today’s high electricity rates almost solely to Russian President Vladimir Putin and his war on Ukraine.
“If we hadn’t had a war in Europe, electricity rates would probably be around NOK 0.50,” Lilleholt said, not the nearly NOK 6 seen last week. NOK 0.50 is also high compared to years of low rates, Lilleholt noted, but he defended how the power cables that can both export and import electricity were “built after a thorough democratic process” in which several of the national politicians now keen to cut off exports took part. They include Ola Borten Moe and Per Olaf Lundteigen of the Center Party and Trond Giske of the Labour Party. All three men now claim the cables were “a mistake,” but they all share responsibility for them.
In today’s “serious situation,” Norway is “not well-served by more populist rhetoric,” claims another analyst, Knut Kroepelien of Energi Norge. “Instead of concentrating on the actual challenges lying ahead of us, we’re seeing an undermining of the most important professional energy organizations in Norway on energy.” Kroepelien doesn’t think the cables are behind today’s extreme rates either, while also noting how some of the politicians now wanting to halt electricity exports have also blocked construction of new wind energy turbines on land.
NVE: High rates aren’t enough to halt exports
Earlier this month, Norway’s Oil and Energy Ministry asked state energy directorate NVE to offer its professional evaluation of electricity exports, and whether they can be regulated or even stopped. The government has been under huge political pressure to halt or at least reduce exports of Norway’s hydroelectric power, in the hopes of bringing Norway’s currently high electricity rates back down to more “normal” levels.
On Monday state broadcaster NRK reported that according to NVE, high rates aren’t enough to allow the government to halt electricity exports via cables abroad. NVE determined that securing energy supplies can be a valid reason, but not high prices alone.
NVE reported that according to Norway’s trade agreement with the EU, export restrictions can be put in place when relevant. “In our view, securing energy supplies can be relevant but protection against high prices is not relevant,” stated NVE director Kjetil Lund in a press release. Export restrictions can only be legal if they would improve supplies, but only more rain filling up mountain reservoirs could really do that.
Any halt in exports must be in line with the EU/European Economic Area regulations, NVE stressed, and they must also be agreed by neighbouring countries. Nordic neighbours, meanwhile, have already warned Norway against imposing export restrictions in the midst of all the energy market distrubance caused by Putin’s war.
As analyst Lilleholt put it, “right in the middle of attempting to restructure the energy system in all of Europe (to further the shift away from fossil fuel and towards more renewable energy) Putin goes to war. No one predicted that. In a war situation, natural resources are put into play.”
Prime Minister Jonas Gahr Støre also stressed during a party leader debate last week that electricity rates have soared almost entirely because of Putin’s war, not because of electricity exports. Analyst Lilleholt added that without cables, Norway would be even more vulnerable to the weather, which this year left the southern part of the country with its driest year in more than a century. He noted how electricity in Northern Norway, where it rained a lot this summer, is much cheaper than in the south.
Electricity exports are therefore not the major reason for today’s high rates, Lilleholt claims, and cutting exports is not the solution to bringing down rates. Export cuts may also fuel resentment against Norway, which has profited greatly on its oil and gas exports since the war began, and raise questions about Norwegians’ solidarity with Ukraine.
“Europe is also very clear over who is earning on the energy crisis,” DN cautioned in its editorial, reminding politicians that “in a turbulent period, we can very quickly come to need the goodwill of our neighbours, allies and trading partners. Portraying ourselves as lacking solidarity in today’s extreme situation will not serve Norwegian interests.”