Is Norway Really Heading Toward a Power Deficit?

The widespread belief that Norway faces a severe power deficit and surging electricity prices in the near future is challenged by StormGeo’s long-term analysis, which paints a more balanced picture.

In a recent article published by the leading Norwegian business magazine Kapital, StormGeo’s Chief Analyst, Sigbjørn Seland, highlights the findings of StormGeo’s recent long-term analysis that shows little indication of a dramatic power deficit by 2030 despite increasing electrification and new demands for power production.

Instead, the analysis shows that it’s more likely that Norway will have a power surplus in 2030, even though the surplus will remain smaller than it is today. According to Seland, Norway’s current power surplus of 15-20 TWh will be reduced to 5-10 TWh by 2030.

In his article, Seland identifies several key drivers behind Norway’s evolving energy landscape:

• Electrification and digitalization: Electrification of the transport and oil and gas sectors, as well as the development of new data centers for artificial intelligence (AI), is expected to contribute to a 15 TWh rise in power consumption by 2030.
• Uncertain consumption growth: AI and green hydrogen stand out as uncertain regarding future power consumption. While data centers for AI may consume around 4 TWh more in 2030, the optimism for green hydrogen projects has cooled down due to high costs and low demand, with a consumption estimated at only 2 TWh by the end of the decade.
• Vulnerabilities in power-intensive industries: Norway’s power-intensive industries, which consume around 35 TWh annually, may also face challenges, being vulnerable to economic shifts. For example, the pulp and paper industry consumes only half of the power compared to before the 2007-2008 financial crisis.
• New power production: A moderate increase of 7 TWh in power production from onshore wind and solar power is expected by 2030 based on the development of projects with low development costs and high profitability.

Based on these developments, Seland expects electricity prices in the Southern parts of Norway to be just above 70 øre/kWh in 2030, while prices in Central and Northern Norway are estimated to be around 60 øre/kWh.  

While offshore wind development is expected to fall short of national targets, which would require substantial subsidies, with only 2 GW projected by 2030 from Sørlige Nordsjø II and Utsira Nord, Norway will likely maintain a power surplus in the long-term. Seland concludes that strategic investments and moderate consumption growth can prevent a dramatic power deficit, though price variations may increase.

Read more in Sigbjørn Seland’s full article in Kapital, available here (in Norwegian).