After last week’s general election in Norway, the incumbent centre-right coalition government is expected to continue for the next four years, although negotiations are continuing between the four parties. The country’s petroleum and energy minister, Terje Søviknes, expects to continue in his role.

With Norway having an energy mix of almost 100% renewables due its reliance on hydropower, and a plan to phase out fossil-fuel cars by 2025, the country is at the forefront of the energy transition. Yet at the same time, one of Søviknes’ priorities for the next parliament is finding new oil & gas fields off the country’s long coast.

Leigh Collins spoke to Terje Søviknes on the sidelines of the BNEF Future of Energy Summit in London

Your decision for more oil exploration off Norway, particularly in the relatively untapped Barents Sea, has been controversial due to the extra carbon emissions that such oil fields would inevitably produce. Why is more oil exploration needed?

It’s needed if we are going to replace production in existing fields to develop new projects. After 2022, we don’t have any large new projects coming up, so it’s important for the industry to get access to new acreage. In all serious energy scenarios — like the International Energy Agency report they gave out with the renewables agency Irena, they predict about 30% oil & gas in the world’s energy mix in 2050, and [with that] you can still reach the 2°C goal in the Paris Agreement. So the world needs more energy and it also needs oil & gas, and the production from existing fields are declining, and we need to give new acreage to replace that.

You’ve got two new interconnections with the UK and Germany coming on line soon. How is that going to affect the electricity industry in Norway? Does it mean that higher demand will lead to more power projects, or is there enough surplus energy to meet that extra demand?

At the moment, we have a surplus of approximately 15-17TWh a year [enough to power about 2 million UK homes for a year], and we’re still developing new projects in both hydropower and wind, so we also expect surplus renewable energy in the years to come. Of course, we also want to use the power in Norway, [for] data centres, other industries and of course, the transport sector. We’re going to have 100% electric vehicles or plug-in hybrids in 2025, so we will need some power, but even then there will be a surplus.

It’s long been discussed that Norway could be the battery of Europe, with all its hydropower…

Of course, it’s possible to see with better interconnections we can import cheap renewable electricity from Europe when the wind is blowing and the sun is shining, we can export hydropower when it’s needed in Europe. It might be a win-win situation for both the hydropower industry in Norway and the consumers in Europe.

Are you pushing, for instance with the European Commission, for mainland Europe to use more of your hydropower?

No. We have the interconnections that we have at the moment and they are being well used, so there’s no need for pushing this issue.

So no plans for a new network of pumped hydro plants to help balance the European grid when the wind’s not blowing and the sun’s not shining?

No, it is always discussed a bit, but there are no plans. You can imagine it’s possible, but that would need a lot of interconnection capacity.

How is the growth of electric vehicles affecting the Norwegian grid? [There are now more than 500,000 EVs on Norway’s roads, with 42% of new car sales being electric, in a country of 5.2 million people.] Is the grid able to cope with this extra demand?

So far it’s been okay. And there are plans for a lot of investment in the grid in Norway over the next few years. So of course we have to build it out, but not only for the electric vehicles, it’s important for the whole system.

Do you need to invest in street-level distribution grids to cope with this extra demand?

There are some projects going on with one of our companies, [state-owned] Enova, which is subsidising new charging stations — also outside the cities.

With all the EVs in Norway by 2025, you’re going to need a lot of electricity. Instead of making your grid stronger, would it be cheaper and easier to use battery storage to help with the peaks?

There might be a market for local battery capacity, but as far as we have seen, there is enough capacity in the network. You have to take into consideration that we are going to upgrade the grid in this period, with a lot of investments going on during the next years.

You mentioned onshore wind as being part of the long-term plan, but what about offshore wind? Prices are coming down rapidly…

Yeah, prices are coming down. And of course the situation is still that onshore is cheaper than offshore, and we have a lot of good areas onshore for wind. The most exciting project at the moment is Statoil’s Hywind project, and the five floating windmills to be launched in October off Scotland, and for the Norwegians I think it is more interesting building up an industry for exports, especially in floating wind.

So is [state-owned] Statoil planning to be one of the big players in floating wind?

Well, there is a lot of money on this demonstration project, so it’s important for them, and I think we have special skills for this, because we have the oil & gas industry offshore and the maritime sector as well, so we can use knowledge from these sectors to develop new renewables.

Transition

Norway to build more wind and hydro despite surplus power