Energy Consumption

The total share of renewables in the energy mix in Norway, excluding offshore oil and gas activities, is approximately 76% measured according to the Renewable Energy Directive. Fossil fuels are mainly used for transportation and industrial purposes, while the remaining energy consumption is largely based on electricity.

The share of renewable energy in the Norwegian electricity grid is close to 100%. Approximately 90% of the electricity generation is based on hydropower, with onshore wind power as the second largest contributor.

If offshore oil and gas activities on the Norwegian continental shelf are included in the total domestic energy consumption, the share of renewables in the energy mix is slightly above 50%.

The government is aiming to reduce climate emissions by 55% by 2030. This target will require increased use of electricity and renewable energy for transportation and industrial consumption.

It is estimated that the total share of renewable energy, including the oil and gas sector, must increase to approximately 80% by 2030 if Norway is to reach the target.

Hydropower

Traditionally, hydropower has been the main source of renewable energy in Norway. Even today, hydropower is the most prominent renewable energy technology in terms of electricity produced, accounting for approximately 90% of the total electricity production in 2025. According to official data, the average annual production in the existing hydropower system is estimated at approximately 137 TWh, of which small power plants accounted for approximately 12 TWh. The installed capacity is 33,947 MW.

The potential for significant increases in hydropower production is limited, except for new small hydro plants and capacity upgrades at existing facilities.

Wind Power

Onshore wind power is the second largest source of renewable energy production in Norway. Wind power currently accounts for approximately 8% of the total electricity production. Onshore wind power has a much shorter history than hydropower, and most of the installed base was constructed between 2015 and 2022. There is significant potential for expanding onshore wind power in Norway, due to excellent wind resources. However, this is a politically sensitive topic due to the impact on local communities and the natural environment.

Offshore wind power is still at an early stage of development. In 2023, Hywind Tampen commenced production as the first commercial-scale floating offshore project in Norway. Hywind Tampen provides electricity to oil and gas installations. 

The first auction round for bottom-fixed offshore wind projects was held in 2024, and competition for a floating offshore wind area, Utsira Nord, was announced in 2025. Offshore wind power is expected to have significant potential due to excellent wind conditions. The government is in the process of identifying new areas for offshore wind that will allow for the construction of 30 GW by 2040, and it is expected that several licensing rounds will be held regularly over the coming years.

Solar Power

So far, solar power is not a large contributor to Norwegian electricity production, and accounts for less than 1% of the total electricity that is produced. However, there is increasing interest in developing solar power, and by the end of 2023 slightly more than 600 MW of solar power was connected to the grid, according to the Norwegian Water Resources and Energy Directorate (NVE). Approximately half of this capacity was installed in 2023.

Heat (Thermal Power)

Heat as a source of electricity production has not been extensively developed in Norway. According to official data, the installed capacity for thermal power production in Norway amounts to approximately 540 MW. Heat is primarily used for district heating in urban areas, rather than for thermal power.

Over the past year, the Norwegian renewable energy market has continued moving towards the goal of expanding the clean energy production, while striving to reconcile environmental considerations and interests of local communities.

A key development was the introduction in 2024 of a 25% ground rent tax on onshore wind power. This tax framework ensures a long-term revenue stream for the government and host municipalities, offering more predictability for developers even as it also raises the threshold for profitability and makes investments more challenging. Norway has also enacted tax changes for hydropower. This aims to strengthen the potential for local income generation from large-scale hydropower projects.

Although hydropower remains the main source for electricity production, offshore wind is emerging as a new and promising energy source. After concluding the first licensing round for bottom-fixed offshore wind in 2024, in May 2025 the government announced a new competition for state aid for floating offshore wind project areas in Utsira Nord. The first part of this competition is expected to be completed by the end of the year. While there is ongoing debate about the profitability of offshore wind, the government’s activities reflect a commitment to achieving its target of 30 GW of offshore wind capacity by 2040. To support this vision, a broader regulatory framework is under development. This aims to accommodate large-scale offshore wind development.

There are still capacity constraints across significant parts of Norway’s power grid. As a result, regulators have introduced measures to prioritise mature projects in areas with limited grid connections, aiming to ensure that viable projects move forwards with greater speed and certainty. The relevant regulatory changes entered into force on 1 January 2025. The approach intends to give both developers and investors clearer guidelines, ultimately reducing regulatory uncertainties and encouraging further investment in Norway’s evolving renewable energy landscape.

The Energy Act (Energiloven), with associated regulations, is the principal law governing the energy market in Norway. The act applies to the production, conversion, transmission, distribution and use of energy. The term “energy” includes both electrical energy and thermal energy generated in district heating and cooling plants. Consequently, the act applies to all energy transmitted through wires and pipes, excluding petroleum oil and natural gas.

Since almost 100% of all electricity generation is renewable, there is no separate act that specifically regulates the market for renewable energy. However, there are separate legal acts for certain aspects of renewable energy production that involve natural resources, such as licensing of water fall rights, regulating the natural flow of rivers, and licensing and construction of offshore wind.

The Energy Act and the associated regulations are constantly reviewed and updated. The most important update during the last year relates to the prioritising of grid access for mature projects if there is a shortage of grid capacity. These rules allow the regulators to decline applications for new projects at an early stage if it is clear that a licence will not be granted.

The Ministry of Energy is the primary regulatory authority in Norway within the energy markets, with responsibilities that include implementing the Energy Act, preparing new regulations and developing the general energy policy for Norway.

The NVE is a directorate under the Ministry of Energy. The NVE is responsible for handling many of the administrative functions under the Energy Act in the first instance, including licensing new projects and control functions to ensure that the act is complied with. Complaints are decided by the Ministry of Energy.

The Norwegian Energy Regulatory Authority (RME) is the national regulator for the Norwegian electricity and downstream gas markets. The RME regulates areas such as:

• economic and technical reporting-related network revenues;
• market access and network tariffs;
• non-discriminatory behaviour;
• market conduct and transparency;
• customer information;
• metering;
• settlement and billing; and
• system and market operation.

The RME has the power to enforce many of the provisions in the Energy Act.

Constructing, owning and operating facilities for production of renewable energy requires a licence, with the exception of some very small projects.

The basic licensing requirement follows from the Energy Act and concerns the facility as such. The objective is generally to ensure that the facility can be safely integrated into the energy system, and that the positive effects outweigh the negative consequences. This licensing requirement is normally not linked to ownership but relates to the project as such.

In addition, there are ownership requirements for certain types of exploitation of natural resources. Most importantly, the direct or indirect acquisition of the rights to exploit a waterfall requires a specific licence that can only be given to public owners, or to limited companies with at least two-thirds direct and indirect public ownership.

Development of offshore wind is also subject to extensive ownership control, which mainly focuses on the financial resources and technical capabilities of the owners.

Ownership and operation of grid assets, and trading in electricity, also requires a licence.

Finally, land use is subject to zoning requirements and local regulations.

There is no specific system of ownership control relating to renewable energy as such. However, since production of renewable energy generally requires a permit or a licence, there are general transfer restrictions associated with such permits and licences. The main rule is that a permit or licence cannot be sold and transferred without the consent of the government body that has issued the permit. It is also assumed that a transfer of more than 90% of the shares in a limited company which holds a licence shall be viewed as transferring the underlying licence. In most situations, it will be uncontroversial to receive a consent to transfer the licence, provided that the permit or licence relates to the project as such and not the ownership. If the permit or licence relates to the ownership – as, for example, is the case of waterfall rights that require public ownership – the transfer will only be approved if the new owner meets the relevant requirements.

Critical infrastructure is also subject to ownership control under the Security Act due to reasons of national security. For example, this may apply to facilities that are of significant importance to fundamental national functions or that are crucial to national security interests. The Security Act includes notification obligations when acquiring a so-called qualified ownership stake in companies where such ownership control applies. Currently, a qualified ownership stake is defined as owning at least one third of the share capital or voting rights in the enterprise. This regulation has been amended so that the new threshold will be an ownership of 10%, but the amendment has not yet entered into force.

As a starting point, there are no restrictions regarding access to foreign investment in Norway.

However, exceptions are made, especially for large-scale hydropower plants, where at least two-thirds public ownership is required. All foreign investors are considered private investors in this context, including investments by foreign publicly owned entities.

As a result of these ownership restrictions on large hydropower plants, most private investment in Norway towards renewable energy has targeted small hydropower, onshore wind power, district heating and the electricity grid, where there is no restriction on private ownership.

Hydropower

Hydropower is the primary renewable source of electricity in Norway, accounting for approximately 90% of the electricity production in 2024. Large-scale hydropower plants are – with only a few exceptions – owned by public-owned companies. The largest owner is the state-owned enterprise Statkraft. The second largest owner is Hafslund, which is controlled by the City of Oslo and municipalities in East Norway. Ownership has remained relatively stable over a long period, except for consolidations between local and regional power companies under public ownership.

The situation for small hydro is very different, where several privately owned companies have taken a leading role in developing large portfolios of small hydropower plants. Many of these are backed by private equity and investment funds.

Wind

Wind power is a relatively new source of energy production in Norway and accounts for approximately 8% of electricity production. Most wind power plants were constructed between 2015 and 2021, and many were backed by international investors and infrastructure funds. During recent years, there have been several transactions where these investors have sold to Norwegian public utilities. There is very limited activity for constructing new onshore wind farms. This slowdown is due to market uncertainty and the legislative effort to establish a comprehensive and robust regulatory framework for future developments as well as a new tax framework. The offshore wind market in Norway is developing, and new licensing rounds are expected in the coming years.

Energy Market

Norway has traditionally produced more electricity than the domestic consumption, resulting in an energy surplus. This situation is about to change with the energy transition and new energy demands from green industries. This is putting pressure on the government to speed up the licensing process for new production of renewable energy.

Natural Gas

As part of the extraction activities on the Norwegian continental shelf, Norway has large reserves of natural gas. A very small portion of the natural gas is used in Norway, with the majority being exported. Norway is considered an important contributor to the gas supply for European countries, but the domestic market for natural gas is virtually non-existent. 

Biogas

The production of biogas is in an early phase in Norway, where the total biogas production amounts to the equivalent of 0.6 TWh, according to biogassbransjen.no. Most of the biogas facilities are publicly owned, but initiatives from private actors are also seen.

Production of heat from renewable sources is governed by the Energy Act, where Chapter 5 is dedicated to thermal power plants. According to the Energy Act, thermal power plants cannot be constructed, owned or operated without a licence. The same applies to the reconstruction and expansion of thermal power plants. The Energy Act contains specific regulations for the pricing of district heating, with a specific regulation in the Energy Act that only applies to thermal power (and no other renewable resources). During the last few years, price regulation of district heating has been frequently discussed.

There are no specific restrictions on private or foreign ownership in district heating.

Hydrogen production is in a relatively early phase in Norway, and there is currently no existing well-developed market for hydrogen. The market is dominated by two types of activities. The first is to develop production facilities for green hydrogen or ammonia, based on the high level of renewable energy in the Norwegian electricity mix. The other is to develop blue hydrogen, using natural gas from the Norwegian continental shelf as feedstock combined with carbon capture and storage. These projects still depend on various forms of state support, and few of them have reached the stage of a Final Investment Decision (FID).

The lack of capacity in the power grid is currently a limiting factor for further development of green hydrogen, combined with the declining energy surplus.

Small production plants (with voltage below 1 kV) that can be connected to existing low-voltage installations do not require a licence under the Energy Act. However, such non-licensable installations must be co-ordinated with the municipality in accordance with the provisions of the Planning and Building Act.

Transportation and Storage of Electricity

Statnett, as the transmission system operator (TSO), builds, owns and operates the central power grid. The TSO’s responsibilities include:

• co-ordinating the operation of the power grid;
• ensuring that electricity capacity is made available to the market;
• managing areas with limited capacity; and
• facilitating trade with other countries.

Statnett is owned by the Norwegian State.

Though there are no restrictions on private ownership, grid companies on a local and regional level are mostly publicly owned. These companies are subject to monopoly regulation, which affects connection obligations and tariffing. 

Batteries

Batteries are not yet rolled out on a large scale in Norway. This is partly due to the high regulatory capacity and flexibility of hydropower for markets, as well as to both voltage and frequency. Consequently, it is expected that batteries will mainly be utilised in areas with limited capacity compared to the required capacity (ie, bottlenecks), such as at construction sites and ports. In these locations, there is a need for high-voltage electricity during repeated limited time periods, making it possible to achieve the desired capacity regulation and flexibility through the use of batteries.

Grid capacity and grid congestion are increasingly becoming a bottleneck for the production of renewable energy. Since almost 100% of the electricity generation is renewable, the issue cannot be solved by giving priority to renewables in the electricity grid. Traditionally, grid access has been solved on a “first come first served” basis. There are standard contracts for conditional grid access, where the latest producers to connect accept curtailment during peak hours if needed. The above-mentioned amendment to the Energy Act is intended as a mechanism to ensure that projects which are not being built do not tie up grid capacity. The legislation gives more mature projects priority over less mature projects, and the grid companies are able to withdraw grid capacity from companies that are not using it or that are significantly delayed in developing new projects.

There is a very limited market for natural gas in Norway, and no active market for transportation and storage. 

Establishing and operating district heating plants in Norway requires a licence under the Energy Act. The licence relates to the production facility for heat, and to the transportation and distribution network. There are rules that allow for third-party access to the distribution network, but these have not been used in practice. The municipality can require that new buildings within a certain area connect to the district heating network. This is typically used for city planning.

As of the date of writing, there is no grid for the transportation of hydrogen in Norway.

Since almost 100% of all electricity generation in Norway is renewable, there is no separate market for the supply of renewable electricity. Certificates of origin are used to document that the source of the electricity is renewable. Such certificates are typically of importance to industrial users who need to demonstrate a low carbon footprint – for example, producers of green hydrogen or green aluminium.

There is no active market for natural gas in Norway, and most sales are managed bilaterally to industrial and commercial users.

District heating is sold under a licence granted pursuant to the Energy Act. Since end users can be required to connect to the local district heating network, there is also a system for price regulation. The maximum price must not exceed the gross cost of an alternative energy source, which for practical purposes is electricity. The gross price includes grid tariffs, electricity taxes, etc. The system has secured strong margins for sellers of district heating during periods of high electricity prices, but also losses in periods where electricity prices are very low. There are proposals to review the current price regulations to better reflect the market situation today. 

There is currently no liquid market. Hydrogen and biofuels are mainly produced and sold under bilateral agreements.

There is an active market for guarantees of origin, which follow the general system established by the EU.

There is also an active market for long-term corporate power purchase agreements (PPAs). Purchasers are traditionally power-intensive industries, such as producers of aluminium. The government seeks to facilitate these industrial PPAs, including through a tax treatment based on the agreed price rather than the prevailing spot price. Over the past several years, new users such as data centres, hydrogen producers and other green industries have emerged as offtakers for long-term PPAs. Most onshore wind power plants that have been constructed in the past several years have been supported by PPAs, typically for a duration of ten to 15 years.

Project development in Norway follows a similar pattern to that seen in most other European countries. Even if there are national differences in how permits are awarded and landowner rights are secured, the basic structure and concept behind project development is similar. Norwegian energy projects have proven fully capable of attracting international funding and project financing.

The market for new projects has been dominated by existing utilities and new private developers. The private developers have normally followed an approach where the project is sold to infrastructure investors after it has been de-risked, allowing for the developer to realise a profit based on the full project value.

Offshore wind projects will, as a main rule, be awarded through public auction rounds. The first auction for a bottom-fixed wind farm was completed in 2024. The licensing process starts when an area is being “opened” for offshore wind projects. Interested parties are invited to participate in an action for the right to carry out a full impact assessment and to apply for the final licence. The project is then executed and the wind farm put into operation according to the approved development plan. Material deviations or changes will require governmental approval.

Over time, the licensing of floating wind farms will likely follow the same system. However, the allocation of project and state aid for the recently announced floating offshore wind area Utsira Nord will take place in a slightly different manner. The process is divided into two stages. In the first stage, three project areas will be allocated to the actors who score highest in a competition based on objective and non-discriminatory criteria. After a maturation phase, an auction will be conducted for those actors who have submitted a licence application and are thus prepared to carry out the development of the project.

Finally, offshore wind projects are also being developed outside the ordinary system of auction rounds described above. Hywind Tampen was the world’s largest floating offshore wind farm when it commenced production in 2023, and supplies electricity to nearby oil and gas facilities. Hywind Tampen is owned by the same oil companies that will purchase the electricity. Goliat Wind is a similar project linked to an oil and gas facility in North Norway, owned by Vår Energi. 

Project financing of renewable energy depends on the ability of the financing parties to maintain the project as a producing asset in the event of enforcement. Accordingly, it is important to ensure that the relevant permits, licences, landowner agreements and PPAs will survive enforcement where the lenders take control. This has generally been possible to secure through proper structuring of the project, including through pledges and step-in rights. For some types of projects there has been legal uncertainty around which assets are capable of being effectively pledged towards lenders. For new types of projects, such as offshore wind, a legal framework has been lacking. However, these issues are being addressed by the regulators when needed, and so far it has not prevented project financing of renewable energy projects in Norway. 

Subsidies

In Norway, there are several entities offering subsidies and incentives to renewable energy projects, the most prominent being Enova, which is a state-owned enterprise. Enova is managed by the Ministry of Climate and Environment (MCE) and reports directly to the MCE. Enova provides financial support to both businesses and individuals and must act in accordance with the governance agreement entered into with the state regarding the management of the funds in the climate and energy fund. It is also possible to obtain grants from actors with a more general purpose, such as Innovation Norway.

As Norway is party to the European Economic Area (EEA) Agreement, subsidies from state-owned enterprises are subject to the state aid regulations in that agreement. 

Tax Incentives

Norway does not have any specific tax incentive schemes for renewable energy projects. However, the SkatteFUNN incentive scheme is a general incentive scheme that provides a tax deduction for costs incurred in relation to research and development. In order to qualify for the scheme, the specific project must be approved by the Research Council of Norway.

The overarching regulations for the cessation and decommissioning of renewable energy production facilities are outlined in the Pollution Control Act (forurensningsloven), according to which the owner or user of the facilities must take necessary measures to prevent pollution, including through safe and proper decommissioning at the end of the operations. So far, there are few examples of actual decommissioning. Hydropower plants have generally been rebuilt and refurbished, and are seen as an asset rather than a liability. The installed base for wind power is so new that it has not yet reached the decommissioning stage, apart from some projects that have been re-powered.

Two main factors will be the drivers for the development of renewable energy in Norway. The first is the energy transition and targets for cutting emissions, which will lead to a strong increase in the domestic demand for electricity. The other is the expected decline in Norway’s energy surplus, which traditionally has been a competitive advantage for Norwegian industry. As an example, the plans for electrification of the Norwegian continental shelf alone will use up the remaining energy surplus.

For these reasons it is expected that the market for developing and constructing new facilities for production of renewable energy will return, and that the coming years will see a strong increase in activity. This will also trigger new large investments in grid infrastructure to receive and distribute new production. Norway has excellent wind resources and access to hydropower resources, and there is a well-functioning and market-based system for electricity. The fundamental requirements for expanding the production of renewables are therefore present.

A key topic will be which sources of renewable energy to prioritise. Offshore wind is currently considered favourable in terms of avoiding conflicts with other users of land or nature preservation interests. On the other hand, offshore wind is more expensive to develop and takes many years to put into production. It is therefore believed that, in order to meet the demands of the future, it is necessary to develop all relevant sources of renewable energy in parallel, including hydro, wind, solar and heat.

Another key topic is how to develop and manage interconnectors with other countries. The main concern with interconnectors is that they can result in “imported” high energy prices, as the Norwegian market becomes connected to the continental European market. At the same time, interconnectors are also important to maintain security of energy supply in periods where Norwegian production is insufficient. Development of new interconnectors will be important for how quickly new renewable energy projects can be developed in Norway, particularly for offshore wind.

The development within the renewable energy sector is also dependent on the political situation. There is a national election in autumn 2025, and the outcome could significantly impact future prospects. As of August 2025, the second largest party is principally opposed to both onshore and offshore wind power development. Political uncertainty regarding the prioritisation of renewable energy development is therefore increasing.