"The industry of the future needs lots of energy. Now, we see bigger and more tangible plans for establishing new industry and for the electrification of society. This challenges the power grid, but also requires new power generation. We will invest somewhere between 60 and 100 billion NOK in the transmission grid towards 2030. At the same time, we need to speed up the development of new power production," says Statnett CEO Hilde Tonne.
Statnett expects a significant growth in the demand for electricity in Norway in the coming five-year period, up from around 140 TWh today, to 164 TWh in 2027. Increased energy consumption in battery production and in the petroleum industry is perhaps most noteworthy in this regard, but other sectors will also see substantial growth. Energy consumption in households and in the service industries are not expected to grow accordingly. During the coming five-year period, consumption is expected to increase by up to 24 TWh, while there are plans to increase power production by around 6 TWh. This will result in a negative energy balance in southern Norway of 7 TWh, and 2 TWh in Norway as a whole.
"Today we see that people's power consumption is going down because of high electricity prices, but we also see that plans for industrial development and electrification are becoming increasingly developed. These plans consist mainly of projects that are not affected to the same extent by the extraordinary situation in the energy market. Elsewhere in the Nordic region, we see plans for substantial increases in power production. Norway also needs to increase power production and improve adequacy in the short and medium term," says CEO Tonne.
Great uncertainty, but expected reduction in power prices 2025-27
The European energy markets are characterized by great uncertainty due to the war in Europe and the resulting reduced supply of natural gas. This has been the main driver for the extreme energy prices we have seen in the power markets in Europe, as well as in Norway and the Nordics. We still expect high prices for natural gas in the coming five-year period, but the analyses show that prices are on a path towards more moderate levels.
Over the next five years, we expect that electricity prices will move towards normalisation. The simulations in the analysis show an average annual price in southern Norway of around 50-70 EUR/MWh in 2027. However, there is a large margin of error, both related to weather conditions and with regards to the great uncertainty in the price of, and dependence on, natural gas in the European energy mix.
"We have been going through some very special and challenging developments in the energy markets lately, and it is difficult to predict when the situation will return to normal. Still, the outlook is somewhat better for the coming years. However, we must expect to live with high power prices for a while longer. Uncertainty will characterize both the Nordic and European power markets in the years ahead," says Statnett EVP Gunnar Løvås.
There is a dramatic increase in renewable power generation in the European energy system. This will result in more variable power production, and prices that will fluctuate more between seasons, within weeks and between hours.
The power production surplus in the Nordics and the flexibility of the Norwegian energy system, combined with good capacity for exchange between regions, contribute to our expectation of an average price in southern Norway lower than that in Germany in average over the year.
"As a response to the energy crisis in Europe, the transformation of the power system is accelerating. Large amounts of renewable energy production are rapidly being developed. In Norway, we are also getting through a demanding period, and we are well equipped to meet future challenges. Still, it is important for us as a nation that we increase the pace when it comes to developing the power grid and power production, in order to retain and strengthen the competitive advantage our access to green energy gives us," says EVP Løvås.
Statnett's short-term market analysis for 2022-27 is only available in Norwegian. You can find Kortsiktig markedsanalyse in Norwegian here.