Clean and reliable energy in Norway – the way forward

'check against delivery'

Introduction

Thank you very much for the invitation. I will start by commending SELLICHA and the organizing committee of the Conference for taking such a positive initiative.

I am pleased to see so many representatives from industry and utilities, from various countries. It is you who will spearhead the renewable energy development.

Norway is an energy nation!:                                                                                
Norway is a large exporter of oil and gas. We have been so for four decades, and we will continue to be so for a long time to come. In addition, we are also a large producer of renewable energy, and in particular hydropower. Our history in this field goes back more than a century.

Norway has half of Europe’s reservoir capacity, and a larger renewable share than any EU country – roughly 60 per cent of our total energy use is renewable energy. Our electricity is produced almost exclusively by renewable and clean hydropower.

This is a result of our unique resource base. It is only fair to say that Norway has been blessed by nature, but our position is also a result of a successful national energy policy, industrial entrepreneurship and a well-functioning market.

We see a number of Norwegian renewable companies entering international markets, both in Europe and in emerging markets. I am proud of Statkraft, which has become the biggest renewable energy company in Europe.

I look very much forward to 27 September, when I will attend the official opening of the wind farm Sheringham Shoal.  Statoil and Statkraft have joined forces to develop this project off the coast of England.

Through INTPOW – The Norwegian Renewable Energy Partners – the Government and the industry are working together in order to promote Norwegian energy capacities in international markets. This is a win-win situation because we strengthen both our own industry capacity and knowledge base. A study commissioned by INTPOW named ”The Norwegian Cleantech Industry - statistics 2010” shows a  growth in the Norwegian renewable energy industry since 2005, both in turnover, value creation, as well as growth in number companies and employees.

With 30 000 Megawatt installed in Norway, we need a strong and vibrant supply industry in order to maintain existing production capacity, but also to meet future demand.  A strong national supply industry is not only a question of industry policy but also a question of energy security.

Looking into the future

In the years to come we will see a large increase in renewable energy projects in Norway. I would like to emphasize that the government shares the EU’s ambitions regarding a strong focus on renewable energy. To fulfil Norway’s EU obligations, we have committed to increase our renewable energy share substantially by 2020. Norway’s target of 67.5 percent reflects our ambitious policy in this area. In comparison, the EU’s target is to increase its renewable share to 20 per cent by 2020.

A major instrument for achieving this is the Norwegian-Swedish electricity certificate scheme, which started operating this year. Through the joint Norwegian-Swedish electricity certificates market, we will have in place 26,4 Terrawatt hours of new production at the end of 2020 in our two countries. This will be an increase of 10 per cent from today.

 This is the first cross-border support scheme for renewable energy. This certificate support scheme is technology-neutral and market-based. And this is important: it means that the most efficient and least costly technologies and resources, the so-called “low-hanging fruits”, will be utilized first. The new scheme will be in operation until the end of 2035. This gives a stable and predictable framework for the industry. The scheme is an important tool to unlock the large potential for renewable electricity production, be it hydropower, wind power or bio energy.

Due to our natural resources base, I expect to see more hydropower and wind power in Norway, and more wind power and bio energy in Sweden.

However, it is for the market to pick the winners, not the Governments.

The Offshore Renewable Energy Production Act entered into force 2 years ago. This important new piece of legislation secures that the legal and administrative framework is in place for those who want to develop offshore wind farms or other types of marine energy, like wave or tidal..

Additionally, the Norwegian Government presented a national strategy on offshore renewable energy. As part of the strategy, a process of identifying sea areas suitable for future development of offshore wind power has been initiated. The Norwegian Directorate for Water Resources and Energy has identified 15 areas which may be suitable. These areas are now undergoing a strategic environmental assessment which will be finished this year.

When it comes to the electricity grid, major investments are needed, both for upgrading of existing infrastructure but also for facilitating access for the new power projects. A prerequisite for more renewable energy use is a better and more integrated grid. Most people agree with this view. However, we frequently see that people are supporting renewable energy – in principle, but simultaneously protest against new grid developments. These are some of the issues we discussed in the White Paper on grid development, which we presented to parliament this spring. This White Paper presents the Governments views on development and investments in the electricity transmission system.

Research and piloting

As pointed out in IEA’s recently published report on Energy technology Perspectives, it is necessary to do more on technology research, development and demonstration. If new energy technologies are to be viable in the long run we need to increase efficiency and reduce production costs. But there are also a lot to gain from further development of mature technologies, like hydropower.

The government has more than tripled the budget allocations for energy research in the last five years. A lot of work has already been done, but we want to do more. Recently, we presented a White Paper on the government’s climate policy. The public enterprise Enova is to administer a new initiative to promote technological advances in the industry that will reduce greenhouse gas emissions long-term.

Challenges

One of the potential bottlenecks for renewable energy development in the Nordic region is probably the capacity among suppliers, consultants and constructors. To attract enough skilled people may be a bottleneck both for the industry and for the Government in order to reach our goals. The sectors expansion coincides with a booming petroleum sector, both sectors competing for the same engineers and technicians. For many countries, this is a “luxury problem”, but we must not underestimate the challenge of human capacity.

I therefore encourage the industry to take advantage of this opportunity and to start a recruitment initiative. To me, a sales pitch should be based on the opportunities of interesting work on new projects nationally and internationally. To most young people, it will be interesting to be involved in the development of climate friendly and renewable energy. Often this takes place in developing countries where the need for energy is high.

Opportunities for the industry

There are tremendous opportunities for the industry to expand in the in coming years.

To reach the Government’s ambitious targets, the industry must play a  major role! This is an opportunity for utilities, suppliers, consultants, and all other professionals needed. From around 1900, renewable energy, namely hydropower, was the catalyst in developing Norway from a poor agrarian country to an, industrialised nation. We developed an industry built on cheap and abundant electricity.

Based on our topography, we developed certain areas of expertise in hydropower, especially connected to high head and underground plants. Companies, like Kværner, was part of this adventure and grew to become one of the leading suppliers of turbines internationally. I am very pleased that Rainpower now continues this work.

Experience with an electricity market since 1992 has given us a competitive edge when it comes to power market and grid operations. I mentioned these few examples because I hope that the industry enhance your competitive edge in the years to come.

Local content is an important issue. There is often a discussion about the best contract strategies. Should there be fewer and bigger contracts, which may make the logistical life easier for the developer? Or should there be several, smaller contracts, which give smaller companies the opportunity to participate?

In my view, it is important that the large players secure that also small, local companies are given the opportunity to compete. This will secure more competition and more accept locally. In the long run, this will lead to the development of a broader local capacity. It should be part of the “social contract” when the host municipalities give access to their natural resources.

Industry standards set by the developers, and qualification tools such as SELLICHA, can help raise the competence level of small companies and giving them the opportunity to compete in the market.

I want to commend Statnett, Statkraft and Innovation Norway for their initiative LeverandørUtvikling til Energisatsing i Nord (LUEN), which aims to develop companies in northern Norway, so that they can be qualified to become part of a broader supplier base in this region.  This is positive both for the region and for the developers who will have the benefit of broader competition for their new projects. With expected investments in the range of 20 Billion NOK, or more than 3 Billion US dollars, there are tremendous opportunities for the national and regional industry. 

A home market is important, as we have seen in our petroleum sector. We had no industry with experience offshore. Today, the petroleum industry has become very competitive internationally. Last year, the export value of the Norwegian petroleum industry as amounted to 152 Billion kroner, or about 25 Billion US dollars!

I hope you find inspiration from your colleagues in the petroleum sector. For the big utilities, I find it important that you bring with you local suppliers and give them the opportunity abroad.

Conclusion                                                                

There are no easy solutions to the world’s energy challenges.  We need to do several things in parallel.

We must increase our renewable energy production, we must strengthen the grid and we must continue our efforts in technology research, energy savings and energy efficiency.

Some have voiced concerns about an energy surplus in the Nordic countries in the future. I do not share this concern. More electricity production does not represent a problem. It represents opportunities, as stated by Minister Borten Moe at the ONS Conference two weeks ago:

It represents a possibility for new – and green – industry to be further strengthened and established in Norway. It makes it easier to increase the use of electricity in the petroleum sector, as well as in the transport sector.

With new inter-connectors being built, Norwegian hydropower can function as back-up for intermittent renewable energy in some parts of Northern Europe.

The coming years presents unique opportunities for all of you!

I wish you all the best for an interesting conference and thank you for listening!