Historical archive

Renewable Energy Seminar

Historical archive

Published under: Bondevik's 2nd Government

Publisher: Ministry of Petroleum and Energy

State secretary Brit Skjelbred, Norwegian Ministry of Petroleum and Energy - Gelsenkirchen, November 4th,

Renewable Energy Seminar

Ladies and gentlemen!
It is a great pleasure and honour for me to open this German-Norwegian seminar on renewable energy.

The topics which will be discussed in today’s seminar are of great importance in order to develop an environmentally sound and sustainable energy supply. To meet the challenges we are facing, actions have to be taken in many areas on regional, national and international levels.

In my introductory speech I will focus on a few topics in the Norwegian energy policy:

  • hydro power
  • other renewables
  • the renewable directive and a future green certificate market.

The energy situation inNorway
Firstly, I will give you a very brief overview of our energy situation.

Norway is a country with vast energy resources. With a population of only 4.5 million, the potential per capita is among the highest in the world. Norway ranks as the 6 th> largest hydropower producer in the world. It is only Canada, China, Brazil, USA and Russia that produces more.

We are in a unique situation with more than 99 per cent of the produced electricity coming from hydropower. There are also large unused potentials when it comes to other renewable energy sources.

In the petroleum sector, Norway is the world's 7 th> largest oil producer and the 3 rd> largest exporter of oil. Only Saudi-Arabia and Russia export more.

Furthermore, Norway is the world's 8 th> largest producer of natural gas and the 4 th> largest exporter.

Our total production of energy is about 6 times higher than our domestic consumption. But as almost all of our domestic consumption is based on hydropower, we are a net importer of electricity in years with average inflow to the hydropower plants.

The hydropower potential
Norway's hydropower potential is the amount of energy in the river systems that are technically and financially feasible to use to generate electricity. This potential is calculated to 187 TWh/year.

Of the total potential, about 36.5 TWh/year is protected against development due to environmental reasons. About 15 TWh/year is open for development now.

Today, a potential of about 199 TWh/year is developed. In rough figures, we have an installed capacity of 27.6 GW (GigaWatt), and 740 power stations larger than 1 MW of capacity.

Our very high share of hydro power in the electricity supply is advantageous since hydro power is a clean energy source. But it is also a mixed blessing since it makes us more vulnerable in years with low precipitation. At the extreme, the annual production can swing 25 TWh above or below the average of 119 TWh.

Legislative and administrative tools
When a watercourse is used for hydropower development, conflicts may arise between a number of user groups and environmental interests.

It has therefore been necessary for the authorities to develop an extensive legislation relating to hydropower and water resources management. This legislation is intended to secure many important interests connected to the use of a natural resource as important as the water courses. The legislation has laid down requirements to obtain licences for various purposes.

During the last decades, the public in general has taken a key interest in securing vital environmental issues, and protecting the natural environment against excessive and unsustainable development.

Because of this, the licensing authorities pay great attention to the importance of having a licensing process that involves all interested parties and user interests. To secure a democratic and open process, it is important that this is done in a transparent way, giving open access to all the important information.

Other important elements of the framework for hydropower development, besides the legislation, are the Protection Plans for Water Resources and the Master Plan for Water Resources.

The Storting (the Norwegian Parliament) has through the years adopted four protection plans. These plans are binding instructions to the administration not to issue licenses for regulation or development of the rivers included in the plan. Further watercources are now being considered for protection to supplement the protection plans.

The Master Plan for Water Resources dates from 1992, and sets out an order of priority for the consideration of individual hydropower projects. It is intended to ensure that those rivers which can provide the cheapest power and where the environmental impact of development is smallest, are developed first.

The current hydropower policy
The awareness of the environmental aspects affected by hydropower developments has increased during the last two decades, and the importance of preserving remaining nature areas in Norway means that the era of large hydro-power development is over. Future generations and their opportunities to experience nature have to be considered, and this means we have to take a restrictive stand to further hydro-power projects in order to protect most of the remaining watercourses. That is why the Government is reviewing the protection of water courses.

In the future the existing hydro-power structure must be used more efficiently, and we must increase the use of mini hydropower plants. Through the last 6 years, almost 400 small-scale hydro power projects have been licensed by the authorities (below 5 MW). The Government is now preparing changes in the concession laws and the tax law with the aim to improve the framework conditions for small-scale hydropower.

Upgrading and extension of existing plants will also be a major task, since several of our plants date from early in the 20 th> century. In both these ways we can increase our hydropower production considerably in an environmentally acceptable way.

New renewable energy sources
Compared with other countries Norway has a large unutilized renewable energy potensial from different sources. Those who are nearest to achieve a full market breakthrough, are wind power and bio energy.

Norway has large wind resources, especially along the coast and in northern Norway, and a significant bio energy potential in the inland. The high wind velocity and the large open areas in Norway make wind power particularly favourable for renewable electricity.

Last year two large wind power parks where opened and resulted in a total Norwegian wind power production capacity of 300 GWh/year. In our policy, we prefer to gather the wind turbines in parks, on a limited amount of locations.

Norway is a small wind power nation compared with Germany and Denmark, but we have a goal of reaching a production capacity of 3 TWh/year in 2010. Already we are well under way towards reaching this target.

There are also future possibilities for more untraditional renewables such as tidal power and salt gradient – and solar power too, even though we don’t have the same amount of sun as more southern countries. Next week our first tidal power station will be opened. This will be an important step towards developing a more mature technology in this field, enabling us to use the energy from our strong sea currents and malstroems.

Norway’s large access to different renewable energy sources gives us many opportunities, but we are also facing several barriers. Hydropower has a very dominating role in the energy market and it is difficult for other, more untraditional solutions to "get a foothold" in the market.

Our large heat demand is to a great extent covered by electricity. Enhanced use of bio energy may require costly investment in new infrastructure as district heating. On the other hand, such investments might be necessary in order to increase the flexibility on the demand side, and hence make us less vulnerable in years with low inflow to the hydro power plants.

Environmentally friendly change of Norwegian energy sector
On this background we initiated the environmentally friendly change of the Norwegian energy sector, a couple of years ago. The long term goal for this change is to develop a market for new and alternative energy solutions.

The authorities' role is to push the market and arrange the necessary framework for the market development. It is now necessary to give financial support to new energy solutions so that they can be offered as competitive alternatives in the market.

That is why the Storting (The Norwegian Parliament) approved the establishment of a new public enterprise responsible for promoting energy savings, new renewables and environmentally friendly natural gas solutions. The name of the new enterprise is Enova and it is situated in the city of Trondheim. Enova has been operating from 1 st> of January 2002. Enova is owned by the Government of Norway, represented by the Ministry of Petroleum and Energy, which also defines their tasks and goals.

Enova – goals and financing
The central task for Enova is to reach the energy policy objectives and natrional targets that were approved by the Storting in the spring of 2000. These are:

  • to limit energy use considerably more than would be the case if trends were allowed to continue unchecked
  • to increase annual use of central heating based on new renewable energy sources, heat pumps and waste heat by 4 TWh/year by the year 2010
  • to increase wind power production capacity till 3 TWh/year by the year 2010.

These objectives imply that Enova will focus both on energy demand and energy supply.

For the purpose of financing Enova's activities, the Energy Fund was established in January 2002. The administration of the Energy Fund is regulated by an agreement between the Norwegian State and Enova. The purpose of the agreement is to ensure that Enova manages the Energy Fund in line with the objectives and intentions embodied in the Storting's decision. According to the agreement, Enova shall trigger off savings- and new renewable production projects which by 2010 sum up to 10 TWh/year.

The Energy Found is financed by a levy on the transmission tariff for electricity and from ordinary grants over the State budget. In sum this has been approximately 500 mill NOK annually over the last years (approx. 60 mill Euro). For the year 2004 the Government has proposed to increase the financial support to 600 mill NOK (approx. 70 mill Euro).

Enova – important principles
Enova is given the freedom to establish different kinds of financial support-schemes. The most important criteria for project selection will be kilowatt-hours new capacity installed in proportion to the amount of support. For energy saving projects the criteria is kilowatt-hours saved in proportion to the amount of support.

Another important principle for Enova's activities, is to play by the rules of the market, which means that the different solutions and technologies must challenge each other to create a sound competition and motivation for creativity and cost reduction. This implies that Enova will work in a pro-active manner, towards market participants. The long term goal is to make the new solutions capable of living without financial support.

This guidelines aim to secure a cost effective use of public funding, so that new renewable energy production and energy savings may have a real impact on the Norwegian energy balance.

Enova's financial support to projects is given as investment aid. We consider investment aid as an efficient and predictable system for supporting environmentally friendly energy projects.

Progress reports are being submitted to the Ministry every year, and the different activities and results of Enova will be evaluated in 2006. So far, Enova seems to be well on its tracks.

Renewable directive
In the renewable (RES-E) directive the European Union has set out ambitious targets for the promotion of electricity from renewable energy sources. In 2010, 22 per cent of all electricity consumed in the EU shall come from renewable energy sources. Reaching such a target will require a substantial effort from the member states, and many countries already have far-reaching support schemes in place.

This is a path that coincides with the Norwegian policy. The Norwegian government recently decided that Norway will start the process of implementing and adopting the renewables directive. We are initiating a dialogue with the EU-commission, and our belief is that an adoption of the directive will follow shortly.

Renewable directive – challenges
Norway is in a special situation compared to most European countries. As already mentioned, almost all of our electricity production comes from hydropower. We are extremely vulnerable to variations in rainfall, and production can vary greatly from year to year. The events last winter made it increasingly clear that Norway is in a precarious supply situation – all the more so, because Norway is more dependent on electricity-based heating than most other European countries.

This calls for an effort to reduce the consumption of electricity, but also to increase the use of central heating, to make the consumers’ use of energy more flexible. Enova is currently managing support programs in these areas.

Because Norway needs a more diversified energy mix. We need more legs to stand on. The Government’s strategy to increase the use of new renewables is a major step towards such a diversification. But Norway is also a major produser of natural gas, and so far we're using only about 1% of our production for domestic purposes. Therefore natural gas is also an issue in the Norwegian energy mix discussion.

And while other countries may reduce their CO2 emissions by changing from coal-fired to gas-fired power production, Norway is in quite another situation because of our starting point of 99 % hydropower generated electricity production. Therefore the Government has an active policy of promoting natural gas-fired power plants with CO2 sequestration, encouraging the development of environmentally benign technology in this field in a number of international partnerships.

So you see, several considerations have been important in setting targets for renewables from a Norwegian point of view. The EU goal of 22% seems rather irrelevant when you start with a comparative percentage of 96. Just maintaining the renewables share of 1997 would require that renewables cover the whole consumption increase in Norway. This is almost double the average in the EU, where renewables should cover roughly 53 % of the consumption increase.

But this does not keep us from having set ambitious timebound targets for increased production of energy from renewables, as I have told you earlier. And every year the Government is giving a considerable financial support to this end, through the Energy fund.

Green certificates
A mandatory market for green certificates is an important step in the Norwegian policy of promoting renewable energy. A market consisting of 4,5 mill Norwegians only would, however, be too small to reap the benefits that a certificate market may give. We need to be part of an international market. In March of 2003 the Storting (the Norwegian Parliament) asked the Government to initiate a mandatory marked for green certificates, preferably in cooperation with Sweden.

As you may know, Sweden introduced a market for electricity/green certificates in May this year. A common market could give increased liquidity in certificates and a more effective allocation of resources. Both factors would contribute to a better functioning market for certificates.

It would also be in line with the main idea of a green certificate market, namely to build the least costly renewable production capacity first. Norway is currently discussing with Sweden the possibilities of a common market, and we have great hopes of good results.

Sweden and Norway have good experience cooperating on electricity matters. The common Nordic electricity market functions well, and it ties together the electricity sectors of the countries involved. Policy initiatives taken in one country will have an effect in another country. While support schemes for renewable energy have traditionally been a national matter, they do not have an exclusively national effect.

The Nordic power exchange gives a good basis for expanding cooperation. We have proved that cooperation is not only possible, but can also give benefits for all involved. A common mandatory market for green certificates is in fact a common support scheme for renewable energy. Such a common support scheme would give the market more influence upon in what country new production plants, like a wind park, would be established.

Green certificates – challenges
Introducing a mandatory market for green certificates is a matter of deciding how much production we want to finance. In a common market the discussion will also be about how much of the financing each country shall provide. However, our talks with Sweden are very positive. We are convinced that the challenges can and will be met.

While the level of ambition and the allocations of financial resources are some of the more important issues for a common mandatory market for green certificates, it is important not to lose sight of another main issue: investments in renewable production require investors' confidence. When the market has been established, it is the investors who have to drive it forward.

Research and development
Enova – and a green certificate market – mainly supports technologies that are quite close to a market break through. The Norwegian state also supports Research and Development on more immature technologies, and further development of existing technologies. I believe that it is an important challenge to be aware of the need for support throughout the value chain, especially the last part before commercialisation.

The Research Council of Norway is responsible for the administration of most of the public funding available in this field. Most of the funds are allocated to user driven research programmes. The Council also provides support for longer term basic research and the development of expertise at research institutes and universities, which provides a basis for other, commercially promising projects in cooperation with industrial and other users.

The State also provides funding for various EU-programmes within R&D, and is represented in their steering committees. The support for research activities covers a wide range of areas within renewables, efficient use of energy, CO2 capture and sequestration, and hydrogen.

It is a special goal for the Government to increase the efforts on the development of hydrogen related technologies and hydrogen as an energy carrier. In this relation, the Government this summer established a public committee which shall examine and propose a national strategy and a national programme on hydrogen, within next spring.

Summing up
To sum up our main policy on renewables:

  • The Government is encouraging the development of small scale hydropower plants, as well as upgrading and environmentally friendly extension of existing plants.
  • We have definite goals for an environmentally friendly change of the Norwegian energy sector with timebound targets for increased production from new renewables, and a new body – Enova – is established to meet the goals.
  • Norway intends to adopt the renewable directive, and we expect the process to be concluded in the near future.
  • We are discussing with Sweden the possibility of a establishing a common market for green certificates. Talks are going well, even though there are challenges which still have to be solved.
  • The Government is actively supporting research and development. Currently a public committee works out a national strategy and programme on hydrogen.

The development of renewable and environmentally friendly energy sources does not solely rise challenges. It also brings along chances to develop new, forward-looking and profitable businesses in different areas.

It is my hope that the seminar will give a significant contribution to cope with the challenges, and to utilize the chances for business development.

Thank you for your attention.