Power Generation, Transmission & Distribution 2024 Comparisons

Norway’s power market is a cornerstone of its economy, characterised by a comprehensive regulatory framework that is aimed at ensuring efficient operation and sustainability. The Norwegian power sector is distinguished by its significant reliance on renewable energy sources, particularly hydropower, which accounts for a substantial portion of electricity generation. As of 2023, approximately 87% of the energy mix derived from hydropower, while wind power contributed around 11% (see more in 2.2 Electricity Imports and Exports).

Notably, more than 75% of Norwegian hydropower production is flexible, thanks to the presence of reservoirs that account for half of Europe’s total reservoir storage capacity. This not only underscores Norway’s commitment to sustainable energy, but also influences the structure and regulatory approach of the industry.

The Norwegian ownership structure of the power industry influences operation, efficiency and strategic direction, and is characterised by a mix of state, municipal and private ownership. The public sector owns approximately 90% of the production capacity for electric power in Norway – mostly due to requirements for a minimum of two-thirds public ownership for hydropower (see more in 1.4 Law Governing the Sale of Power Industry Assets). The largest producer is Statkraft SF, which is wholly owned by the state and Europe’s largest generator of renewable energy. The Norwegian mixed ownership model, combined with a robust regulatory framework, supports Norway’s objectives of maintaining a reliable, efficient and sustainable power system.

Statnett SF, also a state-owned entity, owns almost 100% of the Norwegian transmission system, as well as a significant portion of cross-border cables, including subsea interconnectors. It is mandatory for all grid companies to be legally unbundled, and grid companies with more than 100,000 customers must also be functionally unbundled, as specified in the Energy Act Sections 4-6 and 4-7. Most grid companies are primarily owned by municipalities and counties, although some are privately owned as well. There are no requirements for public ownership for wind power plants, solar power plants, and transmission or distribution facilities.

The governance of ownership and operations within the various segments of the Norwegian power industry is underpinned by several pivotal statutes, notably the Energy Act (“Energiloven”). This Act lays down the foundational legal framework for structuring the electricity sector in Norway, addressing aspects such as market regulation, system responsibilities, and fostering a competitive market landscape. Ownership of hydropower plants is regulated in the Waterfall Rights Act.

The Norwegian Water Resources and Energy Directorate (“Norges vassdrags- og energidirektorat” or the NVE) plays an instrumental role in regulatory oversight of the energy sector. The NVE handles licence procedures, ensures adherence to legal standards and monitors the energy sector to promote efficient and sustainable operations. The Norwegian Energy Regulatory Authority (“Reguleringsmyndigheten for energi” or the NVE-RME) is the regulatory authority for the electricity and natural gas markets.

Other central authorities include various Ministries within the Norwegian government, with the Ministry of Energy (“Energidepartementet”) at the forefront, having the overall responsibility for the energy sector.

Production

As mentioned in 1.1 Law Governing the Structure and Ownership of the Power Industry, about 87% of production comes from hydropower, and 90% of hydropower resources are owned by public entities. The following players are at present the largest in Norway in the production segment:

• Statkraft AS (100% state-owned);
• Hafslund Kraft AS; and
• Å Energi AS (previously Agder Energi, now merged with the Glitre company group).

Transmission

The transmission grid owner and operator/TSO is Statnett SF, which is 100% state-owned.

Distribution

Most grid companies are completely or partly owned by one or more municipalities. The following are at present the largest in Norway among grid distribution:

• Elvia AS;
• Tensio AS;
• Glitre Nett AS;
• BKK Nett AS; and
• Lede AS.

Electricity Suppliers

Electricity suppliers are mainly private-owned companies, with some public ownership added to the mix. Among the largest in this segment, are Fortum AS and Fjordkraft AS.

Public Ownership Hydropower

To utilise water resources for electricity production, the power producer must acquire the necessary property rights for the waterfalls and pertinent rights: see the Waterfall Rights Act. The Act does not apply to small-scale hydropower plants under the limit of 4,000 natural horsepower.

Licences under the Waterfall Rights Act are exclusively granted to public entities. These entities may be Norwegian state-owned enterprises, municipalities or county authorities, as well as companies where public bodies make up at least two thirds of the capital and the votes. Private entities are permitted to own up to one third of a company that possesses a licence under the Waterfall Rights Act.

A licence application under the Waterfall Rights Act shall be filed to the Ministry of Energy.

According to the Energy Act Section 4-8, only the TSO (Statnett SF) can own transmission grid facilities.

The Security Act

Foreign investments may be subject to ownership screening under the Security Act. This ownership screening requirement applies to entities that fall under the purview of the act, as well as suppliers of goods or services involved in classified procurements. Following amendment to the Security Act in 2023, a ministry has the authority to determine that Chapter 10 (which covers ownership screening) should be applicable to businesses determined to have significant importance for national security.

When acquiring a qualifying holding in an entity that is subject to Chapter 10 of the Security Act, the acquirer is required to notify the Ministry. Currently, this requirement applies to only a limited number of entities within the energy sector.

No Special Protections or Incentives

The regulatory framework governing licensing is applied equitably to investors, irrespective of whether they are domestic or foreign.

There are no special protections that apply to foreign investors, or special incentives or protection to encourage foreign investment in the Norwegian power industry. Foreign investors may obtain the same property rights and will have access to domestic courts.

The principal laws governing the sale of power industry assets and transactions are the Waterfall Rights Act and the Energy Act.

The Waterfall Rights Act

The Waterfall Rights Act regulates waterfalls that have the potential to yield 4,000 natural horsepower or more. A licence for such waterfalls can only be issued to public entities, such as state-owned enterprises, municipalities and county authorities, or to companies where these entities hold at least two thirds of the capital and voting rights. Private entities can own up to one third of the capital and one third of the voting rights in such companies. These requirements apply to sales of assets or businesses in companies holding waterfall rights pursuant to the Waterfall Rights Act, as well as in amalgamations and mergers.

Additionally, the transfer of regulation facilities or shares in regulation facilities can only occur simultaneously with the transfer of waterfall rights, as described in the Watercourse Regulation Act.

The Energy Act

According to the Energy Act, all grid companies must undergo legal unbundling, meaning they cannot engage in activities other than grid development and operation. Grid companies with more than 100,000 customers must also undergo functional unbundling, operating independently from other companies within a vertically integrated company group.

Transmission grid facilities can only be owned by the TSO (Statnett SF) and cannot be sold to others.

Furthermore, owning and operating an energy facility requires a licence under the Energy Act. In cases of amalgamations and mergers, the parties involved must ensure the transfer of the licence by applying to the NVE.

The energy authorities are responsible for processing licence applications and issuing licences for grid and production facilities. Most of the licences are given by the NVE, which is also the supervisory authority.

NVE has been designated as the emergency management authority by the Ministry of Energy (see the Energy Act Chapter 9 and the Regulation on Security and Emergency Preparedness in the Power Supply System). The Directorate co-ordinates emergency response work and appoints the overall management of the Power Supply Preparedness Organisation (KBO). NVE supervises that provisions given in or in accordance with KBF are followed.

Statnett is the Norwegian transmission system operator nationwide, and is tasked with always ensuring a reliable security of supply. This responsibility requires the maintenance of a power grid with sufficient transmission capacity. Additionally, Statnett manages peaks in electricity consumption and oversees the import of the necessary volumes of electricity to meet demands.

NVE has been designated as the rationing authority by the Ministry of Energy. NVE shall ensure that the necessary plans and procedures for notification, implementation, execution and termination of power rationing are always prepared.

Onshore Wind – Local Planning Decision Required

As of July 2023, the Energy Act and the Planning and Building Act was amended with an aim to improve the licensing process for onshore wind projects. Prior to NVE’s handling of a licence application pursuant to the Energy Act, an onshore wind project would need a positive local planning decision from the hosting municipality that allocates the planning area for onshore wind. The objective of the law amendment is to strengthen the role of municipalities in the licensing process for onshore wind, to reduce the level of conflict, and thereby laying the foundation for further expansion of wind power, including strengthening the power balance and achieving national climate goals.

The Norwegian government has furthermore, to accelerate the processing time of onshore wind projects, adopted new criteria for NVE’s handling of licence applications for onshore wind. According to the new criteria, large onshore wind projects, projects with approved zoning plans in the local municipality and onshore wind projects in Finnmark country will be prioritised. Additionally, according to the wind power message issued in 2020 by the Norwegian government, licence applications containing documentation of involvement from reindeer husbandry in the assessments and an agreement on mitigating and compensating measures will be prioritised in the licensing process over applications lacking proper documentation of these aspects.

Unbundling Requirements

In 2023, amendments were also made to the Energy Act that extend the exemption from the functional separation requirement for grid companies. The requirement now applies to grid companies with 100,000 or more grid customers (before amendments: 10,000).

New Prosumer Scheme for Local Solar Power

By amending the regulations, the government has made it possible for electricity customers in housing co-operatives, multi-family dwellings and commercial buildings to share self-generated electricity. The changes to the regulations mean that grid customers on the same property can avoid grid rent and fees for consumption of electricity they produce themselves, for example with solar panels. The legislative changes entered into force on 1 October 2023.

Amendments to Strengthen Security of Supply

From 1 July 2024, the so-called “governance mechanism”, amending the Watercourse Regulation Act, will enter into force. The purpose is (see Prop. 33 L (2023–2024) p. 5) to establish instruments that will collectively help strengthen security of supply during periods of increased uncertainty in the Norwegian power system and in surrounding energy markets.

The changes consist of three main elements: a new purpose clause in Section 1a; a new Section 29a, with a requirement for a strategy to contribute to security of supply; and amendments to the Energy Act Section 6-2 (4) to provide regulatory authority to lay down regulations to avoid power rations, such as reporting of hydropower production.

Taxation

The former high price taxation on hydropower was removed with effect from 1 October 2023. The resource rent taxation on hydropower is still 45% in 2024. The taxation applies to hydropower plants with generators of at least 10 MVA.

From 2024, onshore wind power is subject to the resource rent tax at 25%, the production tax at NOK2.3 cent per kWh and ordinary income tax at 22%.

Retail Market

On 3 November 2023, the Norwegian government proposed several measures to reduce the information bias consumers experience in the electricity retail market, with an aim to make it easier for electricity customers to identify advantageous electricity contracts and help electricity customers get away from unfavourable contracts.

Solar Power Licence Scheme

On 19 December 2023, the government proposed amendments to the Energy Act and the Planning Act concerning processes for the establishment of licensable onshore solar power plants. The proposals follow up the National Assembly’s request resolution of June 2023, in which the government is asked to submit a proposal on how ground-mounted solar power plants can be included in the Energy Act.

The proposals entail a change in the decision-making processes and mainly follow the same pattern as was adopted for wind power plants in 2023 (see Prop. 111 L (2022–2023)). See further 1.6 Recent Changes in Law or Regulation. The deadline for submitting comments was 31 January 2024.

Surplus Heat

The government wishes to encourage companies planning facilities that require a lot of energy to carry out cost-benefit analyses of the potential for utilising surplus heat. On 16 May 2024, the Ministry of Energy presented a proposal for a new regulation on cost-benefit analysis of the possibilities for utilising surplus heat (waste heat).

Grid Connection

On 7 May 2024, the Ministry of Energy sent out for consultation a proposal to amend the energy legislation to require grid companies to assess whether projects seeking new or increased capacity in the grid are sufficiently mature. The purpose is to help ensure that projects that in fact will be implemented receive the required grid connection and capacity.

RME proposed, on 28 May 2024, further regulatory changes to incentivise faster grid connection of customers.

• In local distribution grids – To provide a financial benefit to grid companies that deliver increased capacity and connect more customers. The scheme is proposed to be implemented through the revenue regulation and will increase the grid companies’ total income. RME proposes that the scheme should last for up to five years.
• Higher grid levels – Grid companies should be reimbursed for the costs of early grid studies. This reduces the grid companies’ financial risk in connection with the assessment of grid development. It gives the companies the opportunity to have more “ready-made concepts” when customers request connection.

Nuclear Power

On 21 May 2024, the government announced work on a Norwegian Official Report (NOU) about nuclear power. The government also submitted for public consultation notification of a proposal for a study programme for nuclear power plants in Taftøy Næringspark in Aure and Heim municipalities. The government is committed to establishing a solid foundation of knowledge on nuclear power in Norway. Although this does not currently result in any material changes, this signifies a shift in the government’s policy.

Offshore Wind

Offshore wind is on the move in Norway as the Norwegian Continental Shelf is “going green”. The regulatory framework is still under development: for updated information and the latest news about the Norwegian offshore wind development, see Offshore Wind Insight (haavind.no).

The Norwegian energy sector is unique in several ways, particularly due to its geographical, climatic and legislative characteristics. Some of the distinctive features are as follows.

• Hydropower dominance– Norway’s energy mix is heavily dominated by hydropower, which accounts for around 87% of domestic electricity production. The country’s topography, with its numerous rivers, waterfalls and mountainous terrain, is ideal for hydropower generation.
• High share of renewable energy– Norway has one of the highest shares of renewable energy in its total energy consumption in the world, largely thanks to its extensive use of hydropower.
• Energy export– Norway is not only self-sufficient in terms of energy, but also a significant exporter of electricity, primarily to neighbouring countries such as Sweden, Denmark, Finland, and the Netherlands, through interconnectors.
• “Europe’s battery”– With its vast hydropower storage capacity, Norway acts as a sort of “green battery” for Europe. It can store excess electricity when demand is low and generate and export electricity when demand is high, thus providing grid stability and storage capacity for the integration of more intermittent renewable energy sources like wind and solar power in the European grid.
• Public ownership– A significant share of Norway’s energy sector is under public ownership. See more 1.2 Principal State-Owned or Investor-Owned Entities.
• Offshore wind power– The government has set significant ambitions for offshore wind development. By 2040, the goal is to allocate areas capable of producing 30,000 MW from offshore wind. Currently, offshore wind represents the primary focus for new energy production initiatives in Norway.

The Norwegian Wholesale Electricity Market

Norway’s electricity market is an example of a mature, liberalised energy system that has been evolving since the early 1990s. As a part of the Nordic electricity market, Norway has been at the forefront of market-based energy trading, emphasising efficiency, competition and cross-border integration.

The Energy Act is the principal law governing the structure and function of the wholesale market. REMIT, the EU framework for detecting and deterring wholesale energy abuse, is not implemented into Norwegian law. Many of the regulations that follow from REMIT are, however, implemented through the Energy Act and its Regulations as well as the Nord Pool’s (private law) regulatory framework that prohibits market abuse.

At the heart of Norway’s electricity sector is a market-based trading system. This system is characterised by its high level of hydroelectric power, making the Norwegian market highly renewable and flexible. The unique aspect of Norway’s electricity generation is its capacity to act as a “green battery” for the region, given its ability to quickly adjust production levels from its hydroelectric plants in response to market demands.

Norway’s electricity market is integrated within a broader Nordic electricity market together with Sweden, Finland, and Denmark. The integration extends beyond the Nordics, with Norway connected to the European electricity market through several interconnectors. These connections not only allow for the import and export of electricity but also contribute to the security of supply and the stabilisation of prices through increased market liquidity and competition.

The Nordic integration is facilitated through Nord Pool, which serves as a central hub for electricity trading in the region. The wholesale market in the region consists of several markets where bids are submitted and where prices are determined:

• the day-ahead market, where electricity prices are determined for the next day;
• the intraday market, where trading of electricity closer to the time of delivery is done;
• the balancing markets, where participants in the reserve market trade the power system into balance; and
• the financial market, where trading in electricity derivatives takes place.

Nord Pool operates a day-ahead market and intraday market. Nord Pool provides the physical trading platform for electricity, where the spot prices are determined. NASDAQ Commodities and EEX offer financial trading instruments that are often based on the prices set at Nord Pool, allowing participants to manage price risk. Almost all physical trading of electricity takes place through Nord Pool; however, bilateral power purchase agreements, especially long-term contracts, are also common. These bilateral agreements often use reference prices set at the power exchanges.

Price Formation

In the Norwegian wholesale electricity market, the price of electricity is determined by the interplay of supply and demand, with a strong emphasis on competitive offers from generators. The Norwegian market is liberalised without heavy regulation or state intervention. Electricity producers submit their offers to the Nord Pool market, specifying how much electricity they are willing to supply and at what price. These offers are typically based on the producers’ operational costs and the availability of resources, such as water levels in reservoirs for hydroelectric plants, which dominate Norway’s energy mix.

On the demand side, retailers, industries and other consumers submit bids indicating how much electricity they are willing to purchase at various price points. Nord Pool’s role is to match these offers and bids and calculate the spot price.

The Norwegian wholesale market consists of five bid zones due to transmission constraints and bottlenecks. Nord Pool therefore calculates zonal prices that reflect local supply and demand. Norway’s extensive interconnection with neighbouring countries helps stabilise prices by allowing excess electricity to be exported or shortages to be mitigated through imports.

Structure of the Wholesale Electricity Market

The participants in the Norwegian wholesale electricity market are generator, suppliers, traders and brokers, large consumers, the Transmission System Operator (Statnett) and Distribution System Operators. These participants participate at Nord Pool, NASDAQ Commodities and/or EEX. The market is divided into five bid zones and is also highly connected to neighbouring countries through several interconnectors.

The Norwegian electricity market is part of the Nordic and European power market. Most of the Norwegian power production comes from hydropower. Norway is a power surplus country, meaning that in a normal year Norway exports power to its neighbouring countries.

Norway’s international electricity interconnectors (all interconnectors) consist of a total of 17 cables, both overland power lines and subsea cables. Norway has a total of seven undersea power cables to other countries. Four of these go to Denmark. These are old and have a much lower capacity than the new “highways” that have been built to the UK and Germany. The total installed capacity of the interconnectors is over 9,000 MW as of 2022, according to the Norwegian Energy Regulatory Authority (NVE-RME). This gives a theoretical potential to transfer approximately 80 TWh/year between Norway and other jurisdictions. Norway has a total theoretical capacity to transfer around 30 TWh/year to countries outside the Nordic countries: the Netherlands, Germany, and the UK.

The division between import and export of electricity to and from Norway varies from year to year based on weather conditions etc. In the period 2003 to 2019, the average annual import was 8.4 TWh, while the annual export was 15.2 TWh. In 2020, there was a lot of precipitation and full power reservoirs in Norway. In total, Norway exported 25 TWh of electricity in 2020 and imported 8 TWh. In 2021, the situation was quite the opposite, especially in southern Norway in the second half of the year. There was little wind and precipitation, extreme gas and coal prices, and a doubling of CO₂ quota prices. Despite lower reservoir levels, power exports increased by 3.4% compared to the previous year.

Power exchange with other jurisdictions is handled by the Norwegian TSO Statnett. Power exchange requires a separate foreign trade licence. There is a joint licence for the Nordic countries, which also covers new connections and capacity increases. The connections to the Netherlands, Germany and the UK each have their own licence. Licences are granted pursuant to the Energy Act.

In 2023, Norway’s total electricity production was 157.8 TWh (installed capacity 40,077 MW). The supply mix was as follows.

• Hydropower– The average annual production was estimated at 137.3 TWh, of which small power plants account for 12.1 TWh. The installed capacity was 33,852 MW. In 2023, this accounted for about 87% of  total production.
• Wind power– The average annual production was estimated at 16.9 TWh, installed capacity was 33,852 MW. In 2023, this accounted for about 11% of total production.
• Thermal power plants– With a production of 3.1 TWh and installed capacity 538 MW, in 2023 this accounted for about 1.96% of total production.
• Solar power plants (grid connected) – With a production of 0.5 TWh and installed capacity of 604 MV, in 2023 this accounted for about 0.3% of total production.

There are no limits with respect to the percentage of electricity supply controlled by any one entity in the Norwegian electricity supply market. However, Norwegian competition authorities encourage competition amongst the power producers as this is an important mechanism to achieve reasonable pricing for consumers of electricity. Producers compete based on their ability to deliver electricity. To ensure well-functioning competition, it is therefore important that individual players do not have too large a share of the total power production. General competition law, which prohibits anti-competitive behaviour, applies to the electricity market.

Norway has, as of early June 2024, not implemented Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT). As regards the Norwegian implementation work with REMIT, a consultation has been initiated by the Ministry of Energy on 17 March 2023, with a consultation deadline of 28 April 2023. It is not known when REMIT will formally be implemented into Norwegian law (as of June 2024). Even though REMIT is not yet formally implemented, many of the provisions from REMIT are, per se, implemented through the Energy Act and its regulations, as well as through private law regulations in the marketplaces.

Regulation on network regulation and the energy market (“Forskrift om nettregulering og energimarkedet”, or NEM)) contains provisions on market behaviour and transparency in the power market.

NVE-RME is closely integrated with the NVE, which also oversees the physical distribution of power, as well as the neutrality of grid companies. Pursuant to the NEM Regulation, the NVE-RME oversees market behaviour and ensures transparency in the wholesale electricity market, especially concerning the trading of physical power. The NVE-RME may, pursuant to the NEM Regulation, for example:

• demand the delivery of all data, information and documentation from market participants and the TSO necessary to perform its supervisory function;
• mandate the immediate cessation of any unlawful activities;
• issue coercive fines for violations; and
• also request information and data from the concessionaire of an organised marketplace for physical delivery of electricity, including, but not limited to, information about orders and transactions taking place at that marketplace.

Violations of the Energy Act and NEM Regulation may also lead to criminal liability and can be reported to the prosecuting authorities. NVE-RME may also impose an infringement fee on anyone who intentionally or negligently violates some of the rules in the NEM Regulation.

The financial power market is monitored by the Financial Supervisory Authority of Norway (“Finanstilsynet”), which ensures compliance with financial market regulations. This includes EU financial market regulations, such as MiFID II and MAR. The Financial Supervisory Authority’s supervisory powers are similar to those of NVE-RME, allowing it to effectively monitor financial activities. Additionally, the Norwegian Competition Authority has an overarching responsibility to ensure effective competition, including in the power market, and has a broad range of powers to enforce the Competition Act. Meanwhile, the Consumer Authority is responsible for regulating aspects related to the sale and marketing of energy to consumers. In addition, private law regulations prohibiting market manipulation and insider trading apply to participants in the marketplaces for power trading.

The principal laws that govern the construction and operation of generation facilities are as follows.

The Waterfall Rights Act (“Vannfallrettighetsloven”)

The developer must have the proprietary rights to the waterfalls used in energy production. For others than the state, a licence is required for the acquisition of such rights. The Act does not apply to small-scale hydropower.

Licences under the Waterfall Rights Act can only be granted to public entities. Public entities cover Norwegian municipal, county or state corporations, and companies in which such corporations hold at least two thirds of both the capital and the voting rights, provided that such companies are clearly publicly owned. Private companies may possess proprietary rights in such companies up to one third of the shares.

Leases of hydropower plants subject to licensing under the Waterfall Rights Act are regulated in the more detailed Regulations on the Lease of Hydropower Plants Act. The regulations lay down certain requirements for the content of the agreements. Agreements must be approved by the Ministry of Energy.

The Water Resources Act (“Vannressursloven”)

The purpose of the Act is to ensure socially responsible use and management of watercourses and groundwater. Small-scale hydropower plants, not covered by the Watercourse Regulation Act, may need a licence under the Water Resources Act. There are no ownership restrictions.

The Watercourse Regulation Act (“Vassdragsreguleringsloven”)

When a regulation or transfer of water increases the quantity of natural horsepower in one or more waterfalls affected by 500 natural horsepower or more, or in the river system as a whole by 3,000 natural horsepower or more, or if the regulation affects the environment or public interests to considerable extent, a licence pursuant to the Watercourse Regulation Act is required.

The Energy Act (“Energiloven”)

The Energy Act establishes the framework for how electricity supply is organised. The purpose of the Energy Act is (see Section 1-2) to ensure that the production, conversion, transmission, sale, distribution and use of energy is carried out in a societal, rational manner, considering the public and private interests affected. The building, owning and operating of electrical facilities (including generators, transformers and transmission lines) requires a licence pursuant to the Energy Act.

The Planning and Building Act (“Plan- og bygningsloven”)

Following legislative amendments to the Act in 2023, a local planning decision is required for onshore wind plants. See further 1.6 Recent Changes in Law or Regulation. This does not apply for other generation facilities.

The Expropriation Act and the Expropriation Compensation Act

(“Oreigningslova” and “Ekspropriasjonserstatningsloven”)

All developers need to get hold of necessary rights to conduct their projects, such as land use and waterfall right. Should such rights not be obtained through agreements, the company may apply for a permission to expropriate. Expropriation is regulated in the Expropriation Act. Measuring of compensation for acquiring such rights is subject to the Expropriation Compensation Act.

The Offshore Energy Act (“Havenergiloven”)

The Act governs offshore renewable energy production. Offshore renewable energy production requires that:

• an area is opened for offshore wind by the Norwegian government;
• a company is exclusively awarded an area for offshore wind development; and
• the company is awarded a licence and a detail plan for offshore wind production according to the Offshore Energy Act.

The Application Process

The licence process starts with a notification to the NVE. The Planning and Building Act requires an environmental impact assessment (EIA) to be conducted if a project may have significant effects on the environment. The purpose of the EIA is to ensure that all possible effects of the project are taken into account during the preparation of plans and measures. Wind power plants exceeding 10 MW and hydropower plants with an annual production of 40 GWh or more, always require an EIA.

In the notification, the developer describes the technical plans and the effects known at the time of notification. The NVE will submit the notification to affected parties for consultation, including local municipalities.

When the licence application is prepared, it is submitted to affected parties for consultation. In order to be granted a licence, the advantages of the project to society must outweigh the disadvantages.

For large hydropower, NVE submits a recommendation to the Ministry of Energy. The NVE’s recommendation is subject to a (limited) consultation before the Ministry presents the case before the Royal Council, which makes the final decision. Projects that comprise more than 20,000 natural horsepower, or projects that are considered particularly controversial, must be handled by the National Assembly before the Royal Council makes the (formal) decision.

The NVE has the authority to grant licences for installations according to the Energy Act, such as onshore wind plants and solar power plants. Prior to the NVE’s handling of a licence application on an onshore wind power plant project, a positive local planning decision from the local municipality according to the Planning and Building Act is needed. This does not apply to any other power plants. The local planning decision follows the procedures according to the Planning and Building Act. A licence decision made by the NVE can be appealed to the Ministry of Energy, which makes the final decision.

For smaller hydropower, ie plants with less than 10 MW installed capacity and limited regulation, the licensing procedures are simplified. After receiving a licence application, the NVE sends out a consultation letter to affected parties. In order to be granted a licence, the advantages must outweigh the disadvantages. The decision from the NVE may be appealed to the Ministry, which in turn makes the final decision.

Typical Terms and Conditions

A licence for acquisition of waterfall rights (see the Waterfall Rights Act) typically includes conditions on licence fees and mandatory sales of power to the municipalities where the waterfalls are located.

Licences granted under the Watercourse Regulation Act contain manoeuvring regulations that establish parameters for water levels and releases. These include detailed provisions regarding the control mechanisms and procedures for reservoir drainage. Conditions stipulating minimum water flow in rivers and streams are determined based on a targeted assessment. Further, requirements for establishing a business development fund within the municipality where the development occurs may be imposed. The licences also contain conditions of licence fees and mandatory sales of power to municipalities.

Licences under the Water Resources Act and the Energy Act also state conditions and rules of operation. These conditions may include measures to secure a rational energy supply from the plant, provisions on the timing of initiation, construction, technical operations, terms of exploitation of the individual work, and conditions aiming at preventing or minimising damage to natural and cultural heritage. Individually adapted measures and conditions may be imposed if considered necessary.

The Process to Obtain an Amendment or Relaxation of a Term/Condition

The process is as follows.

• The Energy Act– In special cases, the stipulated conditions may be changed for reasons of public interest. Consideration shall be given to the costs a change will impose on the licensee and the advantages and disadvantages the change will otherwise entail. Amendments to the terms and conditions may also be made upon application by the licensee.
• The Waterfall Regulation Act– Upon application from the owner of the watercourse facility, the authorities can amend the conditions of a licence under the Act or previous legislation on watercourse regulations. An application for the alteration of previously determined conditions regarding time limitation and reversion shall be granted if the owner of the regulation facility meets the conditions of public ownership.
• Waterfall Rights Act– Upon application from the owner of the watercourse facility, the authorities can amend the conditions of a licence.

The process to obtain an amendment or relaxation in licences under regulations mentioned above follows the normal licence application procedures, as far as deemed necessary.

Eminent domain, condemnation or expropriation constitute interference with the right to property. Therefore, the proponent, in lack of an agreement, must apply for expropriation to the authorities. The authorities may only grant the approval if the legal conditions outlined in the Expropriation Act are met; the benefits of expropriation must outweigh the drawbacks.

The application for expropriation is typically submitted alongside the application for a construction and operation licence. The NVE or the Ministry of Energy will evaluate both the application for expropriation and licence application simultaneously.

Every individual or entity subject to expropriation, has a constitutional right to compensation. If an agreed-upon compensation cannot be reached, the compensation will be determined through a specific type of court proceedings. The compensation shall comprise the relinquishment of both the construction and operational work, as well as potential damage or inconvenience on remaining properties. In accordance with the Expropriation Compensation Act, the compensation is determined based on the higher value between the selling price and the service value.

In the case of rights holders being subject to expropriation, such as reindeer gazing districts, the compensation is determined based on the loss suffered, which typically includes factors such as production loss and increased workload.

Hydropower Plants

If the state does not wish to take over a regulation facility regulated by the Water Regulation Act, at the end of the licence period, and no new regulation licence is granted, the owner is obliged by order of the Ministry to remove the facility within a deadline set by the Ministry.

An owner of a watercourse facility regulated by the Water Resources Act has a duty of maintenance and responsibility for safety until the facility is shut down. The decommissioning of a watercourse facility is subject to licensing if it may cause significant damage or inconvenience to public interests. Decommissioning in any other way than removing the entire facility, is always subject to licensing.

Onshore Wind and Solar Power

A wind power plant has a limited lifespan and must be decommissioned when the licence expires. The licence holder must fund the decommissioning. The NVE requires the licensee to submit a proposal for financial security by the end of the twelfth year of the plant’s operation. The security must cover the costs of decommissioning to ensure that society is guaranteed available funds to decommission the power plant. The same conditions apply to solar power plants licences (see licence conditions).

The Norwegian grid system consists of three levels:

• the transmission grid;
• the regional distribution grid; and
• the local distribution grid.

The principal laws that govern the ownership, construction and operation of transmission lines and associated facilities are the Energy Act and the Offshore Energy Act. Additionally, there are supplementary regulations that comprehensively regulate the system based on these legal acts.

The transmission grid is a nationwide system that connects consumers and producers across state borders. According to the Energy Act, only the appointed transmission system operator (TSO) can own and operate the transmission lines and associated facilities. Statnett is the TSO in Norway.

To construct and operate a specified installation, the Energy Act states that a licence from the authorities is necessary. This requirement stems from the fact that the electricity grid constitutes a natural monopoly. The licensing process aims to prevent exploitation of the monopoly position and ensure rational development and utilisation of the transmission system in the best interests of society.

When applying for a construction and operation licence, Statnett is required to review the consequences of the construction work and the operation of the power lines and associated facilities, such as transformation stations. Environmental impact assessments (EIAs) play a crucial role in these evaluations. Furthermore, the authorities attach significant importance to the environmental impacts when reviewing an application.

The regulatory process for obtaining the necessary licence for the construction and operation of transmission lines and associated facilities is both time-consuming and comprehensive. It requires, among other things, thorough assessments of environmental impacts (EIA) and public participation and input to the impact assessment and the approval process. The process may be summarised as follows.

• Statnett notifies NVE of the project and submits a proposal for an EIA programme.
• A mandatory public consultation on the notification and the proposed EIA is conducted.
• The NVE establishes an EIA programme.
• Statnett carries out the EIA programme and provides a comprehensive EIA report.
• An application for a licence is filed along with the EIA report.
• A mandatory public consultation on the licence application and the EIA report is conducted.
• The NVE processes the licence application.
1. If power lines are below 300 kV or shorter than 20 km, NVE may decide whether to grant the licence or not.
2. For power lines exceeding these limits, NVE will process the application and provide a recommendation to the Ministry of Energy. The King in Council decides on the application.

When granting a licence to construct and operate a transmission line and associated facilities, the authorities normally impose various terms and conditions. Typical terms and conditions include the following.

• An obligation to apply for licence renewal within a specified timeframe before its expiration date.
• A requirement to complete construction, commissioning and put the power lines and associated facilities into operation within a specified timeframe.
• Being acquainted with the relevant rules and regulations.
• Responsibility for decommissioning the facilities after being granted permission by the NVE.
• The authorities may withdraw the licence if Statnett fails to fulfil the obligations set forth in the licence.
• Various requirements aimed at preventing or limiting negative environmental impacts, hereinunder impacts on cultural heritage.

The authorities may add additional terms and conditions to the approval at a later stage if deemed necessary due to fundamental interests.

The TSO, Statnett, may apply for an amendment or relaxation of a term or condition. The general rule is that the ordinary process for obtaining an approval, as described in 4.1 Regulation of Construction and Operation of Transmission Lines and Associated Facilities and 4.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities, must be followed. However, if the amendments or relaxation requested are considered minor, the authorities may simplify the process.

Eminent domain, condemnation or expropriation rights are necessary for a proponent to undertake the construction and operation of electricity distribution facilities. The process and methodology for compensating affected property owners and rights-holders are equivalent to those described in 3.4 Eminent Domain, Condemnation or Expropriation Rights.

In Norway, there is only one TSO, Statnett, which is wholly owned by the state. Statnett holds the exclusive right to construct, own and operate the transmission grid, hereinunder provide transmission services. In addition to obtaining a licence, as described in 4.1 Regulation of Construction and Operation of Transmission Lines and Associated Facilities and 4.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities, Statnett must comply with the regulations in the Public Procurement Act and the Public Procurement Regulation.

Considering the inherent nature of the transmission grid as a natural monopoly, the transmission charges and terms of service are thoroughly regulated. The NVE-RME sets an annual revenue cap for Statnett. The cap is determined so that the generated income over time covers the operational and amortisation costs of the installations, while also allowing for a reasonable return on investments given efficient operation, utilisation and development of the grid system. Further, Statnett is obligated to provide all services on non-discriminatory conditions and in an objective manner, ensuring equal treatment for all parties involved.

Since the ability to own and operate the transmission grid is exclusively held by Statnett as the TSO, all grid services must be offered on non-discriminatory conditions and an objective basis. Consequently, Statnett is legally obliged to provide transmission services to all parties requesting transmission services within the legal framework for such services. This obligation includes, but is not limited to, an obligation to invest in transmission facilities necessary to accommodate the requests.

As set out in 4.1 Regulation of Construction and Operation of Transmission Lines and Associated Facilities, the Norwegian electricity grid system is structured into three levels. The principal laws that govern the construction and operation of electric distribution facilities are the Energy Act and the regulations derived from it, hereinunder the Energy Act Regulation.

To construct and operate electric distribution facilities, the grid company must possess one out of two types of grid licences, and the licence must comprise the relevant installations.

The first type of licence is a general local area licence. Holding such a licence eliminates the need for individual approvals for each installation within the designated area. A general local area licence only applies to installations of 22 kV or lower.

The second type of licence is a licence to construct and operate specified electricity distribution facilities that are not covered by a general local area licence.

The regulatory process for obtaining these licences is similar to the application process for the transmission grid, as described in 4.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities: the public is invited to participate and give input at several stages of the process, and the grid company is obligated to conduct a comprehensive Environmental Impact Assessment (EIA).

Applications are submitted to the NVE. If the installations are lower than 300 kV or shorter than 20 km, the NVE may process the application. However, for installations exceeding these limits, the NVE provides a recommendation to the Ministry of Energy. The Ministry of Energy processes the application before the King in Council makes the decision.

The timeline for obtaining the necessary licences varies depending on factors such as the magnitude of the installations, the impacted areas and interests, and the thoroughness of the application and the EIA. Consequently, the timeline can range from a few months to several years.

The typical terms and conditions imposed in approvals to construct and operate electric distribution facilities are equivalent to those imposed for transmission grid licences (see 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities).

Eminent domain, condemnation or expropriation rights are necessary for a proponent to undertake the construction and operation of electricity distribution facilities. The process and methodology for compensating affected property owners and rights-holders are equivalent to those described in 3.4 Eminent Domain, Condemnation or Expropriation Rights.

Electricity distribution entities possess, through a licence, exclusive rights to provide distribution services within specified geographical areas. The reasoning is that the electricity distribution grid constitutes a natural monopoly, as construction and operation of multiple power lines and facilities within the same area, along with competition among the relevant distribution entities, would be inefficient.

Charges and terms of service for the electricity distribution system are regulated and established by the same provisions as for the transmission system (see 4.6 Transmission Charges and Terms of Service).

Each distribution entity is assigned an annual revenue cap, which is determined individually by the NVE-RME. The revenue cap decision may be appealed to the Energy Complaints Board.

The distribution entities set the charges consumers must pay for grid system connection. While these charges may vary among entities due to geographical, technical and operational differences, they must be objective and offered under non-discriminatory conditions.

The NVE-RME supervises and enforces compliance with the regulations. It has the authority to issue orders for compliance and impose sanctions, ie, in cases of discriminatory service conditions. Decisions made by RME-NVE may be appealed to the Energy Complaints Board.

General terms and conditions set in legislation are not subject to appeal, and can only be amended through the regular legislative process.