Norway’s role in the European Energy Transition

Abstract

The EU has high ambitions for its clean energy transition. Reducing yearly CO2 emissions by 80% until 2050 requires large-scale implementation of renewable energy technologies and likely a large-scale electrification of non-energy sectors such as transportation. A major challenge imposed by renewable energy supply is the uncontrollable and intermittent nature of generation. Large flexibility volumes and capacities are needed to manage an energy system with high shares of renewables. Norway, with a large hydropower base and flexibility potential in its offshore natural gas transmission grid, can support the EU clean energy transition by providing much needed flexibility and controllability. This will require expansion of hydropower production and transmission capacity as well as altered management of gas export pipelines. To make these flexibility options available, market participants must be incentivized by new market designs and instruments that place higher value on flexibility and controllability.