Norway will narrowly avoid a power deficit the next five years despite few production additions, as the last two years' high prices led to more permanent demand cuts, the Norwegian Water Resources and Energy Directorate (NVE) predicted on Monday.
Norwegian power demand fell sharply in 2021 and 2022 as prices soared to record highs, and has not risen back to pre-crisis levels despite a drop in the cost of electricity, NVE said.
Wholesale power prices in the Nordics ENOFBLQc soared to above 300 euros per megawatt hour (MWh) last year in line with high gas prices in Europe and low hydropower reservoirs, but have since dropped back to around 50 euros/MWh.
Investments in heat pumps, insulation and energy management systems would likely lead to permanent reductions, however, demand overall should increase driven by decarbonisation efforts, the regulator added.
"We still see a considerable growth in power consumption, while we expect little new electricity production in Norway until 2028," NVE's director Kjetil Lund said.
NVE forecast a rise in demand from 136 terawatt hours (TWh) in 2022 to 159 TWh in 2028, with most of the increase stemming from electrification of oil and gas infrastructure.
This will put more pressure on Norway's supply-demand balance, which is set to fall from a surplus of 21 terawatt hours (TWh) in 2023 to just 2 TWh in 2028.
The balance could drop to zero in 2030, NVE said.
Last year, Norway's transmission grid operator Statnett warned of a power deficit by 2027.
Generation capacity additions in Norway, which relies almost entirely on hydro and wind power to cover its demand, have slowed in recent years amid growing opposition from local residents and environmentalists.
Plans to build the country's first offshore wind farms are unlikely to add new power supply before 2030.
(Reporting by Nora Buli, editing by Terje Solsvik)