Norway has developed more than half of its hydropower potential. But there is still about 37 TWh that can technically be exploited. Statkraft sees great potential in small-scale projects at home and pumped storage to help balance Europe’s energy needs and meet the EU’s 2020 renewables goals.
Norway has an abundance of hydropower with 50% of Europe’s reservoir capacity. It has been a net exporter on average over the past ten years. As of January 2009, the country had developed 122.7 TWh of its 205.7 TWh annual generation capacity, 20% of which is protected under the Water Resources Act, according to the OECD economic survey on Norway.
The OECD report estimates that if Norway produced and exported one half of its remaining hydropower capacity and replaced carbon-based generation in Europe – assuming electricity consumption did not increase – it would be equivalent to about 0.15% of the EU’s 2010 Kyoto target.
Small-scale hydropower plants like Ytre Alsåker will
help Norway exploit its remaining hydropower potential.
The question though is how much of the 37 TWh is it reasonable to expect to be developed. The country has the potential in the next 10 years to develop about 7 TWh through small and big-scale projects, according to Steinar Bysveen, Statkraft executive vice president general and industrial ownership. That means that the number of big projects in the coming ten years is limited.
“A substantial part is small-scale hydro done by smaller developers other than Statkraft,” said Bysveen. “What one would call big would have been considered small 30 years ago. A 100 GWh (project) now would be several TWh in the old days.”
Statkraft co-operates on average fifty-fifty with landowners around the country through a business model called Småkraft, whereby Statfkraft develops the project and splits the profit with the landowners. One example is Ytre Alsåker in Ullensvang, situated in western Norway, which is expected to produce 19 GWh annually and power 970 homes. Statkraft has about 200 such cooperation agreements via Småkraft and ten projects running at any given point in time.
At the end of 2010, Småkraft had 24 power plants in operation with an expected annual production totalling 285 GWh and ten power plants under construction that will give a production capacity of 114 GWh. It holds waterfall agreements that could yield an annual production of 2.3 TWh when the projects are completed.
The other potential for increasing Norwegian hydropower production could come through pumped storage, the process whereby the capacity from the lower reservoir is pumped up into the main reservoir and used to create additional energy.
Statkraft estimates that the general technical potential for pumped storage in southern Norway consists of about 10,000-20,000 MW. The company currently does this on a small scale for seasonal variations, but not to the extent that it could be used for export and balancing the European market for when the wind is not blowing at wind farms.
“We are exploring the potential for pumped storage,” said Bysveen. “One of the key challenges is to have a good view on how the market will develop for the rest of Europe in wind and solar. So far the potential is very big, but it is quite tough to foresee on the market side.”
The biggest limitation is not the technical part. Norway has 40-50% of the total reservoir storage capacity in Europe. The problems lie on the commercial and cable side, says Bysveen. Because there is an energy loss of about 25% from pumping the water back up, there needs to be a price differential of at least 25% to offset the cost. The prices in the Nordic market are not volatile enough to exploit this difference. Therefore, there need to be cables built to the UK and the Continent dedicated for this purpose.
“Norwegian hydropower has been the backup system for (wind power) investments in Denmark,” said Bysveen. “The same concept can be done for Germany, the UK and the rest of Europe. It needs excess capacity. We can increase that with pumped storage. Today, the maximum level we can deliver for one year is limited by the rain and snowfall. But if we can pump, we can produce what we want.”
The biggest growth for Statkraft, however, will come from abroad. Statkraft’s main focus for its NOK 70-80 billion investment plan for 2011-2015 will be on international hydropower projects outside Europe through SN Power, its 60% owned joint venture with Norfund, as well as offshore wind parks, such as Sheringham Shoal in the UK. The rest will be spent on flexible power production and upgrading facilities in the Nordic countries, Germany and the UK.
The company recently approved the construction of the NOK 2 billion Kargi hydropower plant in Turkey. The power plant will utilize Turkey’s longest river, Kizilirmak, which runs into the Black Sea. Once complete by 2014, the power plant will have an installed capacity of 102 MW and an expected annual production of 470 GWh, enough to power 150,000 Turkish households.
Statkraft is also looking at possibilities in France, where it recently opened up an office in Lyon. France is regarded as an exciting new market because the country must increase it share of renewables from the present level of 12% to 23% by 2020. The country’s annual hydroelectric generation is about 70 TWh, just over half of Norway’s. A fifth of France’s installed production is expected to be out for tender by 2020 and an even greater share between 2020 and 2030. Bysveen expects that the size of projects there will be in the range of 4-5 TWh.