Cross-border links vital to balance out surplus Norwegian wind power

Author: Tasmin Chowdhary

2019/08/29

LONDON (ICIS)--Increased electrification, interconnectors and large data centres will be crucial to balance out an expansion of wind capacity expected in the coming years, according to Norwegian power grid operator Statnett.

WIND BOOM

Within the next few years, Norwegian wind capacity will climb steadily from 1.7GW this year to a peak of 6.6GW by 2026, according to ICIS Power Horizon forecasts.

Robust hydropower supply means Norway is typically a net exporter, to the Nordic countries, the Netherlands and indirectly to the European mainland via Denmark. Hydro accounted for 96% of the power generation mix in 2017.

“If you look only at possible wind projects, these would not be valuable if you cannot export power, if electrification does not happen at the same time,” Christer Gilje, a spokesman for Statnett told ICIS.

Energy regulator NVE outlined 13 potential areas for onshore wind farms earlier this year. Due to better grid infrastructure and higher consumption, these would be located in the south.

INCREASED DEMAND

A high renewable share and cheap electricity prices are attractive for large digital companies looking to build data centres, which will inevitably lift power demand. A push for electrification, largely in transport, is similarly expected to raise demand in the next few years.

“We see a lot of different places in Norway want to get these big [technology] companies in,” according to Gilje.

“Up to 2030 we expect a growth in annual demand of around 15-20TWh. Our estimates are that data centres will give 3TWh growth,” he said.

This variability of future demand depends on when large tech companies will set up centres as well as the pace of electrification in transport and other sectors.

EXPORT OPPORTUNITIES

Norway’s cross-border capacity will expand in the next two years with the introduction of the 1.4GW NordLink project with Germany and the 1.4GW North Sea link with the UK.

Interconnectors will remain a crucial outlet for Norwegian renewable producers to offload during peak production hours. Power links under construction across the Nordic region also represent opportunities for producers to distribute extra supply.

Uncertainty still hangs over another planned cable, the 1.4GW NorthConnect link to the UK, with the regulator’s assessment of the project due in the autumn. The NordLink cable with Germany has already been delayed one year and the link will now come online in early 2021.

“You need to know you have someone to sell to, either to the Nordic market, through interconnectors [or another source],” Gilje said.

Without the guarantee of future interconnector capacity, developers may be hesitant about pursuing investments in onshore wind projects in the country.

FLEXIBILITY

Although wind production is intermittent, Norway has an advantage in that stored hydropower can act as a battery to even out generation, one analyst at a consultancy told ICIS.

“First of all, we have very good [onshore] wind, with load factors at around 35%,” they said.

Generation also tends to be higher in the winter months, when power demand for heating ramps up meaning wind producers can benefit from higher prices.

“We have hydro which acts as a battery, if you have a lot of wind you can turn off hydro production…that also dampens the effect of price cannibalisation that you sometimes see in Germany and Denmark,” the analyst added.