Unions fear Norway export drive will end era of cheapest power

A drilling tower structure stands aboard the Oseberg A offshore gas platform operated by Statoil ASA in the Oseberg North Sea oil field 140kms from Bergen, Norway, on Friday, Jan.
A drilling tower structure stands aboard the Oseberg A offshore gas platform operated by Statoil ASA in the Oseberg North Sea oil field 140kms from Bergen, Norway, on Friday, Jan.

Norway’s vast resources of Europe’s cheapest and greenest electricity has helped its energy-intensive industry gain an edge and produce everything from aluminum to chemicals and tankers.

But now the nation’s powerful unions are objecting to plans by grid managers and utilities to get in on the act by spending more than $6 billion on cables to profit from selling electricity abroad where prices are as much as 30 percent more expensive. Industry Energy, part of the Norwegian Confederation of Trade Unions, says this will hike Norwegian prices, cost jobs and curb investments.

Norway is already exporting electricity to its Nordic neighbors and the Netherlands and is building new cables to Germany and the U.K. to sell even more. That’s enough, say the unions and want the government to halt plans for a cable to Scotland and the adoption of new Europe-wide trading rules set by the region’s regulator ACER.

“It will bring us from being one of the countries in Europe with the lowest power prices to become one with the highest,” Roar Eilertsen, chief executive officer of union think tank De Facto in Oslo, said by email.

Norway gets 99 percent of its electricity from running water through turbines, one of the cheapest ways to generate power. German and U.K. prices are partly decided by fossil-fuel costs, which can swing widely. The unions are concerned that if Norway exports its surplus, it could be forced to import at higher rates to meet demand at other times.

Industry Energy, with close links to the Labor Party, staged a protest outside the Parliament last week to try to influence policy makers. Bills will be examined in the energy committee next month, with a vote planned in Parliament for March.

Claims of significantly higher prices from more cables are “drawn from thin air,” said Oyvind Stakkeland, director of regulatory affairs at Agder Energi AS, a utility that’s part of a group planning the cable to Scotland. Their analysis showed only small increases of at most 6 percent of last year’s average price.

“We want to build the cable because we believe that a more closely integrated market is the right way to go,” Stakkeland said. “We are already a part of the European power market, joining ACER will not change that.”

While Norway isn’t a member of the European Union, it enjoys access to the single market through the European Economic Area agreement and not joining ACER and the energy union could ultimately spark a conflict with the EU.

But joining the energy union wouldn’t have a direct impact on prices, which are decided by supply, demand and grid capacity, said Christian Haugen, a political adviser at the Norwegian Energy Ministry. Norway would still rule over its policies, he said.

The Labor Party, the country’s biggest political group, has “a positive view” of the changes although it hasn’t fully decided its position, Espen Barth Eide, its top energy lawmaker, said by phone. A jump in prices is a legitimate worry, he said, but it would have been a bigger issue in the past when rates were higher before the renewable energy revolution.

Center Party opposition lawmaker Sigbjorn Gjelsvik, a member of Parliament’s Finance Committee, supports the labor unions and said his party will vote against the bills.

“Norwegian energy policy should be run from Norway,” he said. “It’s a clear waiver of sovereignty.”