High temperatures in the European energy transition

These are the main findings in the yearly market report from state-owned Statnett, who is the system operator of the Norwegian power system. They are responsible for owning, operating, and constructing the main power grid in Norway.

Europe is switching to emission-free power

The report is optimistic for renewable energy, as Statnett concludes that the European energy transition continues at a high pace. The development is driven by political goals and measures, falling technology costs, and security policies. The development is reinforced by a faster transition in China and partly in the USA.

Statnett points at a particularly high speed in the transition to emission-free power. In 2023, more than 500 GW of renewable power production was built globally, an increase of 50% from 2022. This development continues.

The forces of nature play an important part in developing renewable energy sources. The Vestland region offers wind and waves in abundace. Photo: Odfjell Technology. 

- In 2023 and 2024 alone, around 250 TWh of solar and wind power will be developed in Europe. Further development of several hundred TWh gives, in our base forecast, a total renewable share of 60 % in 2029 in the area covered by our models. This is lower than the targets for 2030 but much more than today. Together with nuclear power, this means that more than 77 % of power production will be emission-free already in 2029, states the report.

Lower prices slow down the transition

The report also forecasts a dramatic increase in the number of hours with prices close to zero in the coming years. Seems like good news for consumers but a two-faced mirror in the long run.

- More zero prices reduce the profitability of new wind and solar power and increase the payouts of financial support, Statnett points out, and continues to describe how low costs mean that it currently is mostly solar power being developed. But there is also increasing development of onshore and offshore wind. Nuclear power remains at today’s level during the analysis period, while many coal power plants are being shut down.

Norway’ surplus reduced

Norway’s energy supply is founded on hydro power and nationally we still have a surplus. The green shift is however expected to increase the demand, a strong driver for a growth in renewable energy. Electrification and new industries are expected to increase the Norwegian consumption by 20 TWh by 2029.  If all consumption that has reserved capacity in Norway is realized, this will result in a 20-25 TWh deficit in the energy balance in 2029.

Hydropower is the backbone in the Norwegian energy mix. The coming years, the hydropower facilites are being upgraded to increase the effeiciency output. Photo: Oliver Tjaden. 

Statnett is however expecting it to be little new power production in Norway in the first five years.

- In the Medium scenario, we have no new wind power and a total of just over 6 TWh growth in solar and hydropower. Thus, the surplus in the average Norwegian energy balance is reduced to 3 TWh in 2029, says the report.

Lower prices in the summer reduce the profitability of solar power and uncontrolled hydropower in Norway. At the same time, more price variation increases the profitability of capacity upgrades for hydropower.

- The possibility of extra high consumption growth reinforces the need for planned grid investments, underlines Statnett.

Great possibilities for inventive companies

The summary? The drivers for an energy transition are stronger than ever, both in terms of production, energy consumption and distribution. Greater price variation is for instance predicted to increase the profitability of developing flexibility. By 2029, battery capacity in the EU and UK will likely be up to 80-100 GW.

If your company can deliver solutions to this huge transformation, the Greater Bergen region has several interesting value chains. With policies and incentives committed to increase the renewable energy production, and well-established industries, such as aquaculture and maritime services, with ready market for new energy projects, our region is an attractive destination for several industries.

Interested in learning more about the possibilities?

Contact any of our advisors!