The world’s largest synchronous electricity network has allowed many European countries to make power trading a part of everyday grid balancing. Until now, France has usually acted as the grid’s largest exporter, thanks to its location and nuclear fleet. But in the second half of 2020, Norway rose above France to become Europe’s powerhouse. What changed in the two countries, and is this an anomaly or a trend?
Renewables threaten to revolutionise the geopolitics of power generation, but until then, location is everything. Germany consumes the largest amount of power in Europe, with most of this coming from coal-fired plants. But as the country attempts to phase out more than 20GW of fossil fuels, how will it
In the words of EnAppSys BV director Jean-Paul Harreman: “Interconnector trading has taken off in previous years. The algorithms to make the best possible use of the interconnectors to increase total welfare have proved to be efficient, even though local price differences are still frequent and significant.
“Market participants are showing an increasing interest in the countries around them as the influence of interconnectors on prices becomes more and more prominent. Looking at power markets in isolation just does not make much sense anymore.”
Wind generation has rapidly risen to become the country’s second largest fuel source. In 2019, Germany generated 126TWh from the wind, according to the International Energy Agency. On windy days, the country exports its excess power, and in 2020 Germany exported more power than any other country.
However, the irregularity of wind leads Germany to import significant amounts of power on still days. As a result, the largest net exporter in 2019 was France, which enjoys quantities of scale in its overwhelmingly nuclear-based energy market. As with many things, this changed in the second half of 2020, where figures by energy data analysts EnAppSys show that Norway exported the largest net amount of power.
New interconnectors to increase Norway’s power trading
Almost all of Norway’s domestic generation comes from hydroelectric power. In 2020, the country had more rainfall than average and eventually the country’s reservoirs reached their highest point since 2015.
This pushed down Norway’s power price, making it an attractive power option for linked countries. Harreman tells us: “The cheapest asset always gets dispatched first and if there is cross-border capacity available, this means it will also become available to export once local demand has been satisfied. Norwegian demand has not really been impacted by Covid-19 during the relevant period.
“There was, however, an abundance of hydropower available, which has a very low cost. Norway’s neighbours have a larger percentage of conventional generation, which has a higher marginal cost of production. Therefore, it was able to export huge volumes to the Netherlands, Germany, Denmark, Sweden, and Finland.”
Will this new power dynamic last?
By all accounts, 2020 was an anomalous year. So will this new power dynamic last? Harreman explains: “It will be interesting to see what happens with Belgium’s nuclear fleet and Germany’s coal closures. These events will eliminate 6GW of nuclear in Belgium and 15GW of generation capacity in Germany, both neighbours of France, over the next 5-10 years. Depending on what replaces this capacity and what happens in neighbouring countries, this may increase French exports considerably…
Source: Power Technology