Energy Transition Outlook Norway forecasts demand for electricity is increasing six times faster than the development of new power. This could have major consequences for domestic industry as well as limiting Norway’s ability to be a more significant partner to Europe’s changing energy needs.
The report analyses the Norwegian energy transition towards 2060. Electricity demand will increase by 18 terawatt-hours over the next five years - equivalent to the consumption of one million households. In the same period, new power development will only provide three terawatt-hours. The result is that Norway is heading towards a power deficit around 2030, with an expected annual net import of up to five terawatt-hours in the early 2030s.
“Geopolitics, national priorities, and lack of public support are slowing down Norway’s renewable energy efforts” said Remi Eriksen, Group President and CEO of DNV. “This also hampers opportunities for electricity exports, the electrification of existing industry, and the establishment of new industry. Onshore and offshore wind power are the only mature and scalable solutions that can provide new capacity quickly and at an acceptable cost. Grid buildout has to accelerate with strengthening of transmission, distribution and system services. This is necessary to relieve bottlenecks, integrate variable production and ensure national security.”
The data centre market is growing faster in Norway than in other European countries as technology companies are drawn to its cheap electricity and cooler climate. DNV’s forecast shows that data centres will use a total of 15 terawatt-hours by 2040. That will then account for seven percent of Norway’s total electricity consumption.
“Demand for electricity from data centres, energy-intensive industry, electrification of oil and gas operations, and transport is increasing much faster than new power production” added Sverre Alvik, Research Director for Energy Transition at DNV. “This is bad news for both the industry we have and the green industry we want to establish. With the exception of electric vehicle policy, we are now lagging behind in the European energy transition.”
Europe’s energy-security concerns are sustaining strong demand for Norwegian gas, and partly oil. This locks in capital, talent and political attention to the legacy export sector. Norway is extending existing and new oil and gas fields and infrastructure, with its significant export revenue, rather than accelerating the build-out of new low-carbon export and industrial value chains, with more limited returns.
With increased competition for power, where data centres and the oil and gas industry have a high willingness to pay, and households are protected through electricity subsidies, DNV fears that the prospects for the rest of the business community, including new green industries, will weaken in the coming years.
Other Findings from the Report:
The transport sector will undergo the most extensive electrification, increasing from six percent today to 46 percent by 2060, mainly due to road transport.
European demand for oil and gas is expected to fall by about three-quarters by 2060, contributing to an 80 percent reduction in Norway’s gas exports during this period.
The significance of Norwegian hydropower increases as other countries expand more variable power production. New construction, improved efficiency through upgrades, and increased precipitation are expected to raise Norwegian hydropower production from 138 terawatt-hours in 2024 to 149 terawatt-hours in a normal year by 2060.
Norway’s targets for emission reductions - 55 percent by 2030, 70-75 percent by 2035, and 90-95 percent by 2050 - will not be met. DNV’s forecast shows that domestic emissions will fall by 30 percent by 2030, 45 percent by 2035, and 75 percent by 2050, indicating a significant gap compared to current targets.
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