We therefore perform socio-economic analyses and examine the socio-economic profitability of potential grid development projects to assess whether they are in the best interests of society.
These analyses are an important part of our decision support package
The first step in planning a grid project begins with identifying a need. The need is often linked to expected changes in consumption and production, the condition of existing facilities, or experiences with operating the power system.
For example, in relation to new power generation or major new industrial consumption, we must assess whether the grid capacity is sufficient to provide a proper connection.Similarly, an anticipated increase in general supply can provide a basis for analysing whether the capacity of the grid is great enough to meet the expected development. If this is not the case, we will examine alternative measures and the socio-economic profitability of these.
The socio-economic analysis is an important part of our decision support package, but it is not everything. Normally, weighing the balance between priced and unpriced effects will include significant discretionary aspects, and there may also be uncertainty and disagreements associated with the assumptions and valuation of various consequences. There may also be relevant factors that are not picked up by the analyses for one reason or another. The final decision on what project should be implemented is therefore beyond the scope of the analysis itself and rests with the decision-makers.
Analyses are updated throughout the project development phase
Our grid projects have long lead times, and we therefore perform and update socio-economic analyses several times during project development – the first time as the basis for initiating a formal project and the final time after deciding to start construction.
For the largest projects, we carry out a choice-of-concept study (KVU). The purpose of the choice-of-concept study is to evaluate general alternative approaches to address a need. As part of our choice-of-concept studies, we conduct extensive socio-economic analyses. The KVUs are sent to the Norwegian Ministry of Petroleum and Energy for consultation, as well as quality assured by an external party. The Ministry then issues a public statement regarding the need related to the power transmission system, the chosen concept and any other politically important questions.
After the concept selection, we further develop potential technical solutions and assess their socio-economic profitability. A licence application is normally submitted to the Norwegian Water Resources and Energy Directorate (NVE) after the decision concerning a technical solution has been made, and the socio-economic analysis is an important part of this application. After making decisions concerning investment and construction start, minor updates are made to the analysis to verify that the need and projected profitability are still present.