Go North, Young Man (or Young Woman)
That is where the electricity comes from
Go North, Young Man or Young Woman!
In 1854, Horace Greeley gave Josiah Grinnell some advice, “Go West, young man, and grow up with the country.” Horace Greeley was a newspaper editor in New York, and Josiah Grinnell was a young man who followed his advice.
This conversation may not have happened exactly as reported. However, the phrase “Go West, young man” is part of American folklore because it fits the 19th-century view of American History, the idea of Manifest Destiny.
Meanwhile, in our day, I say “Go North, young man or woman.” I am not trying to encourage people to escape from climate change. I say “Go North” because that’s where the electricity comes from. Although, honestly, “Go North” fits this century’s version of history. “Climate Change as Destiny.” Or perhaps I should say “Go Norway.”
Norway and the EU
Norway is not a member of the EU, but it cooperates with them in terms of electricity. According to the Observatory of Economic Complexity, Norway was the fifth largest electricity exporter in the world, earning $4.7B from those exports in 2022. Norway also imported $1.8B of electricity, making it the 23rd largest importer in the world. Norway exports far more electricity than it imports.
However, in recent months, when Norway looks at the EU, Norway thinks something like “We gave them an inch and they took a mile.”
In the fall of 2023, I gave an OSHER course on electric grids world-wide. One class concentrated on Norway. The graphic above is a screen capture from my presentation. It shows the local marginal prices in Europe, including Norway, on September 9, 2023. The slide comes from Statnett, the Norwegian grid operator. If you want to see today’s prices, you can see them at this link.
Looking at the electricity prices on the slide, we see that the prices in southern Norway are much higher than those in the northern part of the country. My slide shows a rather dramatic day, with NO2 (the area of Norway closest to Denmark and Germany) having electricity prices of about 81 Euros/MWh. The areas directly north of NO2 (NO5 and NO1) have prices of 3.1 Euros/MWh. Why such a huge difference? I guess it’s time to look at the history….
Geography, History, and Politics
Norway is a net exporter of energy. It has huge reserves of natural gas, and it also has abundant hydropower. Much of Norway’s hydropower is in the north, and much of its industry is in the south. It seems that the connections between North and South are inadequate, or the prices in the south would not be so high.
But before we tell Norway to solve its problems by building more North-South transmission lines, let’s look at a few international transmission lines that just recently went into service. Once again, I quote my presentation to the class.
The North Sea Link to England (NSL) carries 1400 MW, and the NordLink to Germany carries the same amount. If you look at my September 2023 slide from Stattnet, you can see these numbers in light blue. NSL heads into northern England, where the prevailing price is 138 Euros, and the NDL heads into Germany, where the prevailing price is 158 Euros. With such high-priced competition for electricity, the price in the southern part of Norway was sure to rise. Many people in Norway realize that part of their price rise is due to Norway’s increased exports.
Statista.com tracks these things. One chart, “Exports of Electricity from Norway from 2008 to 2022,” shows that Norway exported between 8,000 GWh and 22,000 GWh, each year from 2008 to 2019. In 2020, the exports rise to 25,000 GWh. Exports crept higher in 2021 and 2022.
In fairness, the new transmission lines were only part of the story. France is generally an electricity exporter. In 2022 and early 2023, France had many nuclear power plants offline for repairs and upgrades. The French situation at that time helped Norwegian exports to rise. France has repaired its nuclear plants, and it is once again a major exporter. Final numbers aren’t in, but France expects that it will have exported close to 85,000 GWh in 2024.
Norway reacts
The southern tier of Norway faced very high electricity prices after those two transmission lines were built in 2021. Several analysts raised an alarm. In 2022, Kathryn Porter at Watt-Logic wrote “Why Norway’s views on energy security should ring alarm bells across Europe.” It is also worthwhile to follow Morten Frisch on Linked In. He posts insightful analyses of natural gas and electricity in the Scandinavian countries.
Frisch has been angry that the export transmission lines frequently supply energy to England and Germany at less cost than the Norwegians are paying. For example, if you look carefully at my screenshot above, you can see the NSL (North Sea Link) to Britain is exporting at 79.03 Euros, while the NO2 wholesale cost in Norway is 80.97. Of course, this is just a snapshot of a single day, but Norway takes this sort of thing seriously.
Election promises
On December 12, Norway’s energy minister told the Financial Times her opinion of the inter-connectors. As Javier Blas tweeted:
Norway is (very) unhappy that its electricity prices are soaring due to demand from Denmark, UK and Germany via inter-connectors when the wind isn’t blowing. “It’s an absolutely shit situation,” said Norway’s energy minister Terje Aasland.
Norway is having an election soon, and two of Norway’s biggest political parties say that they plan to renegotiate the contracts for sending power to Denmark. (The currently ruling Centre-Left party, and its coalition partner the Centre party have announced these plans.)
Much of the power sent to Denmark is sent from there to Germany. The Danish contracts with Norway come up for renewal in 2026, which is not very far in the future.
Scandinavians have noticed that the Germans have shut down nuclear and the British have blown up many of their coal-fired stations. Both Germany and Britain seem to be counting on Scandinavia to supply them when they have low wind and poor solar.
Norway takes action
Norway has already begun to act. Two years ago, Norway announced that it will have electricity export restrictions in times of shortages. This is allowed by the EU rules (which Norway abides by), but perhaps the announcement pushes the issue up a notch. Previously, Norway planned to restrict exports only if Norway itself was rationing electricity. Now, the criterion for restricting supply is “where there is a prospect that reservoir filling may reach low levels.”
On December 12, 2024, Oil Price published a brief but clear analysis of the situation. Norway Wants to Scrap EU Power Links amid Surging Prices.
Doomberg points out that Sweden is also annoyed with the interconnectors. Doomberg quotes this Euractive article. Swedish Minister Open to New Measures to Tackle Energy Crisis, Blames German Nuclear Phase-Out.
A brief quote from Euractive, from Swedish Energy Minister Ebba Busch:
“One main reason Busch cited for the surge in electricity prices is Germany's decision to dismantle its nuclear power plants, saying it also has detrimental effects for Europe.
"I'm furious with the Germans," Busch told Swedish broadcaster SVT.
"They have made a decision for their country, which they have the right to make. But it has had very serious consequences," she added.”
People in Europe and the U.S. are often accused of exploiting people in the Global South. Clearly, some parts of the Global North are also feeling exploited.
Polonius was right, for once
Polonius, the irritating older man in Hamlet, was full of bad advice. But he was right about one thing. “Neither a borrower nor a lender be.” An ordinary American tends to ignore this advice because we usually borrow and lend through banks, and the process feels anonymous. Why not borrow? Why not lend?
But nations are more like people than banks. People know with whom they are working. Defaults between people don’t get you a letter from a banker. Defaults between people get you in trouble with your friends and neighbors. Polonius advice is correct.
In my opinion, the EU is more likely to break apart from problems with energy than problems with the single currency. If Germany depends on Norway, but Norway isn’t ready to have prices rise to its consumers in order to please Germany, this is a much bigger threat to European unity than whether the Greeks pay their share of taxes.
The Fatal Trifecta Strikes Back
In my Fatal Trifecta, the third leg of problems for a grid was depending on the neighbors. If local grids are stressed, they will take care of their own customers first. They will stop exporting to the neighbors. In Shorting the Grid (page 136 ff), my example was that frigid weather caused Quebec to cut back its exports to New England. This is a straightforward example. In some ways, it’s even rather sweet. Everybody is doing their best for their people.
In comparison, when Norway or Sweden see Germany shutting down its nuclear plants and choosing to depend on Scandinavian hydropower, the situation is not sweet. Resentment can build, and you can see that it has. “A shit situation.” “I am furious with the Germans.” Ministers don’t usually talk this way.
My conclusions:
1) Don’t depend on the neighbors
2) Don’t shut down your baseload plants until you have built something to replace them
3) Nuclear is more reliable than solar plus wind, even adding batteries.
4) Nuclear is far more reliable than depending on neighbors.
5) If you have a large reliable power plant in your own country, treasure it.
A few notes for further reading:
I encourage you to read this post if you can. (It is behind a paywall.) Control Alternate Delete by Doomberg.
I also encourage you to download Kathryn Porter’s recent white paper on why Great Britain should not put too much faith in inter-connectors. It is excellent. You can access it here.
https://www.thegwpf.org/publications/interconnectors-and-their-impact-on-the-gb-electricity-market/