The three fundamental functions of the power supply system are:
- Production
- Transmission
- Trade
A reliable supply of electricity is crucial in modern society. In business and industry, the public service sector and households, reliable access to electricity is a matter of course. Almost all important public services and functions depend on a well-functioning power system with a reliable supply of electricity.
Electricity production resources are often located far from where consumption takes place. A well-developed electricity grid makes it possible to transmit power from the hydropower plants in the southwest and north to consumers in other parts of Norway and abroad.
The grid must be able to cope with both short- and long-term variability in production and consumption in order to ensure that electricity supplies are maintained. The grid system is designed to handle peaks in electricity consumption, which generally occur on the coldest days in cold years, and to allow for import of sufficient quantities of electricity for extended periods, for example in dry years. In addition, the grid must have sufficient capacity to transport electricity out of a region when consumption is low and production is high. The wide variations in domestic production and consumption make it necessary to have sufficient transmission capacity both between different regions of Norway and between Norway and other countries.
The Norwegian electricity grid consists of three levels: the transmission grid (operated by Statnett), the regional grid and the distribution grid. Both the regional and the distribution grids are considered as distribution systems, as defined by EU legislation.
The transmission grid connects producers with consumers in a nationwide system. Interconnectors with other countries are part of the transmission grid. There are specific requirements relating to transmission system operators. In Norway, Statnett is the designated transmission system operator (TSO).
The transmission grid carries a high voltage, usually 300 to 420 kV, but in certain parts of the country there are also lines carrying 132 kV. The total length of the transmission grid is about 11 000 km.
The regional grid often links the transmission grid to the distribution grid, and may also include production and consumption radials carrying higher voltages. The regional grid carries a voltage of 33 to 132 kV, and has a total length of about 19 000 km.
The distribution grid consists of the local electricity grids that normally supply power to smaller end users. It carries a voltage of up to 22 kV, divided into high-voltage and low-voltage segments. The dividing line between the two segments is 1 kV, and the low-voltage distribution to ordinary customers normally carries 400 V or 230 V. The total length of the high-voltage distribution grid is about 100 000 km.
Large electricity producers are connected to the transmission or regional grid, and smaller ones to the regional or distribution grid. Major consumers such as power-intensive manufacturing or the petroleum industry are generally connected to the transmission or regional grid. Small-scale consumers such as households, service industries and small-scale manufacturing, are usually connected to the distribution grid.
Statnett owns most of the transmission grid in Norway, and is designated transmission system operator (TSO). Statnett is a state-owned enterprise, and the Ministry of Petroleum and Energy is responsible for the state’s ownership. Regional grid companies, also engaged in production and/or electricity trading, currently own about 6 % of the transmission grid. Statnett rents these parts of the grid.
Ownership unbundling is a requirement in the certification process of transmission system operators (TSOs) in the EU third energy market package. Ownership unbundling means that a TSO cannot directly or indirectly exercise control over an undertaking performing generation or supply,
When the third energy market package is incorporated into Norwegian legislation, this requirement will apply to Statnett as the Norwegian TSO. Consequently, requirements of ownership unbundling will also apply to any grid infrastructure that Statnett rents. Regional grid companies will then be required to transfer ownership of transmission grid facilities to Statnett by a specific date.
Municipalities and county authorities own most of the regional and distribution grids, but there is also some amount of private ownership.
Many grid companies are part of vertically integrated companies, i.e. companies that are involved in both electricity generation, transmission and/or trading. By 2021, all grid companies must undertake legal undbundling and grid companies with more than 30 000 customers must undertake functional unbundling. This will make the distinction between market-based and monopoly activities clearer. At present, the requirement applies to grid companies with more than 100 000 customers. Only seven grid companies are currently subject to this requirement.
Distribution system operators (DSOs) are subject to legal and functional unbundling.
Legal unbundling means that grid operations and production and/or trading activities are carried out by separate companies. In addition, a grid company may not own or be owned by an entity that is engaged in electricity production or trading.
Functional unbundling means that nobody with management responsibilities in a grid company may be involved in the management of other company structures in an integrated company. The parent company or controlling owner is allowed to influence the financial framework for the grid company, but may not be involved in day-to-day management and operations or in investment decisions.
You can read more about regulation of grid operations here.
Statnett is the transmission system operator (TSO) in Norway. The Norwegian regulations specify that Statnett’s responsibilities include frequency regulation, maintaining the instantaneous balance of the power supply system, developing market-based solutions that promote efficient development and utilisation of the power supply system, and making the maximum possible use of instruments based on market principles. As TSO, Statnett is also responsible for coordinating the operation of the power supply system, dealing with congestion, and facilitating international power trade.
Electricity cannot easily be stored, so the amount produced must at all times equal consumption. This is referred to as the instantaneous balance in the electricity system. The power market is an essential tool to ensure balance between electricity supply and demand. Statnett uses the results of daily price determination in the day-ahead market as the basis for planning and maintaining the instantaneous balance in the following 24-hour period. The continual process of balancing the electricity system is vital for the operational reliability of the power supply system. If an imbalance arises, the transmission system operator takes steps to restore the balance, for example by adjusting production or consumption.
Furthermore, Statnett has a key role in the development and operation of cross-border interconnectors. This includes extensive cooperation with TSOs and regulators in other European countries. TSOs cooperate through the European Network of Transmission System Operators for Electricity, ENTSO-E. ENTSO-E also plays a part in developing network codes and guidelines for the internal energy market.
Various projects are planned to increase transmission capacity between the Nordic countries and the rest of Europe in the next few years, as shown in the figure below. Greater integration with European markets is resulting in more trade between Norway and neighbouring countries and changing patterns of electricity flow in the Norwegian and other Nordic electricity systems. If all the planned projects are carried out, transmission capacity out of the Nordic region may rise by 150 % from the current level. This would give a rise in theoretical transmission capacity from 50 to 120 TWh per year.
Transmission capacity into and out of the Nordic region
Transmission capacity into and out of the Nordic region, based on existing interconnectors and the TSOs’ planned projects up to 2030. Source: Statnett, Energinet (Denmark), Svenska kraftnät (Sweden), ENTSO-E, Ministry of Petroleum and Energy.
Norway’s power trading capacity with other countries is currently 6200 MW, which corresponds to about 20 % of installed production capacity. Two new interconnectors to Germany and the UK are scheduled for completion in 2020 and 2021, each with a capacity of 1400 MW. This will increase Norway’s total power trading capacity to about 9000 MW. This will give Norway a very high power trading capacity as a share of installed production capacity compared with many other European countries.