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Arne O. Holm comments:
Power Crisis: How on Earth Could Things Go so Wrong?
Commentary: How could the nation of Norway, built upon the wealth generated by our unique access to energy, end up in a seemingly intractable energy crisis? It is incomprehensible.
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This is a comment written by a member of the editorial staff. All views expressed are the writer's own.
I do not discount the importance of either fish or potatoes to Norway’s development. However, it was the availability of, and the ability to harness, nature’s advantages that led to industrialization and urbanization.
International expertise
Large bodies of water found their outlets along steep mountainsides and through narrow valleys. By the end of the 19th century, the first power plant was completed. Sources differ as to whether this took place at Hamn on Senja in the North or at Notodden in the South.
In any case, it marked the beginning of the electrification of industry, specifically, the Senjen Nickel Works and Tinfos.
In rapid succession, a number of power plants followed, and eventually, a larger distribution network as well. This served as a source not only for industry, but also for a rather unique international expertise in the electrification of a nation.
The rest of Europe relied on coal-fired power plants, while we used clean spring water for industrial production, an advantage that has grown increasingly significant over time, and which has, in fact, provided us with an international competitive edge.
The technological expertise we built up over these years in production and distribution was carried forward into the oil age, which, in turn, turned us into that cliché: the world’s richest country.
Made us the world’s richest country.
Full control
Not only did we possess the expertise, but we were also able to offer industry-, as well as household electricity at prices that made us attractive internationally, too.
Through state ownership, we also had full political control over energy production.
Or not so much.
For it is now that things go so incomprehensibly wrong.
A week ago, NVE (the Norwegian Water Resources and Energy Directorate) and Statnett (the transmission system operator in the Norwegian energy system. Red. note) each presented a report on the future energy market in Norway.
NVE is, and I quote from its website, "under the Ministry of Energy and is responsible for managing the country’s water and energy resources."
Statnett, also owned by the Ministry of Energy, is responsible for “creating a balance between the production and consumption of electricity,” in addition to owning and developing the distribution grid.
Taken individually and collectively, the reports serve as a serious warning regarding a critical power supply situation over the next decade. It is not just that electricity prices will rise; more concerning is the fact that the so-called power balance is under pressure.
From surplus to deficit
Electricity consumption is increasing faster than production, and within just under ten years, we could shift from a surplus to a deficit in electricity. This is due both to a lack of new production and to insufficient development of the power grid.
The situation in the north of the country is particularly serious.
Electricity is purely a commodity.
When the head of the NVE, Kjetil Lund, presented the analysis, he did not mince his words in explaining the direction in which Norway, as an energy producer, was heading.
"If the current strong growth in data centers continues, Norway could face the most rapid increase in power consumption in modern times. With such a rise in consumption, absent of any increase in power generation, Norway will, within a few years, face a power deficit even in a normal year."
For Statnett, the primary issue was a lack of grid capacity, even if power generation itself were to increase, which few people believe will happen. Furthermore, building grid infrastructure takes many, many years.
Staying in the north, a number of analyses indicate that data centers and the electrification of Melkøya could lead to a fourfold increase in electricity prices by 2030.
For the country as a whole, it also involves a vehicle fleet that has been electrified in a short span of time, as well as state subsidies for electricity prices in areas where they are highest, a measure that does nothing to curb consumption.
Enormous revenues
When the electrification of Norway began, the perspective on energy was a matter of jobs and economic growth.
Today, electricity is a commodity much like any other raw material, and since Norwegian power plants are largely owned by the state, counties, and municipalities, high electricity prices generate enormous revenues, revenues that benefit us all.
It is during this transition that things have gone wrong in a very short space of time. Today, internationally owned data centers are among the electricity consumers with the greatest purchasing power. And as long as there is no politically established priority system for the allocation of power, data centers used to store TikTok videos are treated on an equal footing with centers intended for the storage of information that is critical to society.
And because we live where we live, we, as consumers, are at the mercy of the price set in the market. Otherwise, we will freeze to death.
Unable to find the brake
In many cases, the host municipalities, which use the prospect of jobs as an argument, have proven to be the best friends of data centers, regardless of the type. This is true even though they create hardly any jobs, and even though there is scarcely any available labor to begin with.
A power deficit even in a normal year.
We had full state control over the energy market.
And we had a complete overview of the forecasts for consumption and insufficient grid capacity.
Nevertheless, we now find ourselves in a situation where a political majority is racing away from responsibility, in search of an emergency brake that no one has yet managed to find.
