Norway has a small coal sector, producing only 3.2 million short tons (Mmst) and consuming just 1.5 Mmst in 2004. State-owned Store Norske Spitsbergen Kulkompani controls the sector, which includes two production facilities in the Svalbard Islands (Spitsbergen and Svea Nord). Much of the coal mined fuels a coal-fired power plant there, the only such facility in Norway. In 2004, Norway generated 108.9 billion kilowatthours (Bkwh) of electricity while consuming 112.8 Bkwh. Almost all of Norways electricity generation comes from hydroelectric facilities. Norways peak electricity usage occurs in the winter, as many rely upon electricity for climate control and heating water. Norway has fully deregulated its electricity sector, and there is free and open access to the sector. However, state-owned actors still play an important role, as many generating and distribution companies are partially or wholly state-owned. The largest power producer in Norway is Statkraft, which controls about one-third of total generating capacity. Regional companies control most of the rest, though Statkraft has begun to acquire many of these in order to increase its market share. State-owned Statnett owns and operates Norways national electricity transmission network and international interconnections. Small, local companies control most of the electricity distribution market, with these companies also controlling their respective local electricity grids. Norway is also a member of Nordel, the Nordic power exchange. Nordel is an integrated electricity market consisting of Norway, Sweden, Finland, and Denmark, featuring a spot market, financial markets for hedging and risk management, and an information clearinghouse.
As mentioned above, Norway is highly dependent upon hydropower for its electricity needs. In 2004, the country generated 107.7 Bkwh of hydropower, or 99 percent of total electricity generation. Norways hydroelectric infrastructure consists of many small plants. The largest, Kvilldal, has an installed capacity of 1,240 megawatts (MW), or 4 percent of national installed capacity. Norways reliance on hydropower does leave the country vulnerable to climatic fluctuations, which requires imports to meet seasonal shortages, but also opens the possibility of exports during wetter conditions. Norway still has the potential to increase hydro-generated power, through refurbishing existing facilities, as well as constructing new hydropower plants. However, most of Norways waterways have been developed and any new facilities would likely consist of small developments. In addition, many waterways are protected from further development as a result of environmental concerns. As an alternative to hydroelectricity, the Norwegian government has tried to encourage the diversification of the countrys power sector by granting permits for the construction of natural gas-fired power plants. Naturkraft, a joint venture of Norsk Hydro and Statkraft, plans to complete construction by the end of 2007 on a 400-MW gas-fired plant near the gas terminal at Karsto. In 2006, Norways Water Resources and Energy Directore approved plans by Statoil to build an 860-MW gas-fired power plant in Tjelbergodden. Despite these developments, the future of gas-fired generation capacity in Norway is in doubt, due to government regulations concerning carbon dioxide emissions and resistance from environmentalists.
Norway has also looked towards wind power as a way to supplement hydroelectric capacity. Havgul, a consortium of Norwegian energy companies, has proposed building a 1,795-MW, offshore wind farm in More & Romsdal, western Norway. The project would consist of four wind parks and would be one of the largest such projects in the world. However, Norways Water Resources & Energy Directorate told the company in April 2005 to cancel one of the planned parks, representing 395 MW of capacity, due to opposition from local municipalities. Norway has transmission lines that connect its power grid to Sweden, Finland, Russia, and Denmark. The Norway-Sweden line is the largest, with a capacity of 2,800 MW. There are plans to connect Norways grid beyond the immediate Nordic vicinity. In 2004, Statnett and Dutch transmission company TenneT applied for regulatory approval for the 600-MW NorNed line, which could connect Norway with the Netherlands. Statnett has proposed building a connector to the United Kingdom along with UK grid operator NGT, which would be the longest subsea electric cable in the world. However, the Norwegian government cancelled plans for the line in 2003, stating that the plan was not economical.