Renewable Energy- Norway’s next great adventure
When Åslaug Haga served as Norway’s oil and energy minister during 2007-2008, she felt there wasn’t enough focus on renewable energy in the country. But the Norwegian oil industry was booming and the EU hadn’t yet established the 2020 environmental goals. Now she is the leader for a newly created renewable energy project for the Federation of Norwegian Industries that will prepare the oil nation for this next great industrial adventure.
Haga started her new role in October 2009 as the leader of the three-year renewable energy project at the Federation of Norwegian Industries, Norway’s largest sector federation representing approximately 2,000 member companies with 110,000 employees. She comes from a background as former energy minister, leader of the Centre party, and career diplomat in New York and New Delhi.
Her job is to establish a real focus on renewable energy in Norway with associated industrial development. The primary targets are wind, water, and solar energy, but will also include bio energy.
“Norway has built its welfare model on energy resources,” said Haga in an interview with Norway Exports. “Hydropower has served the country for more than 100 years, oil and gas 40 years, and renewable energy in its full breadth can become the next industrial adventure if we want it. “
“It is not only a question of making Norway an exporter of renewable energy. It is equally about – and maybe more important in the short run – to make Norway a technology pilot and technology supplier to the global renewables market.”
Late to the Party
Norway has been lagging behind Europe in developing renewable energy, partly because it hasn’t had to. The country has a very high percentage of renewables, 60% based on the EU’s renewable energy directive, compared to 8% in the EU. It also does not have challenges related to energy security because it fills close to 100% of its energy needs from hydropower and exports about 2 million barrels of oil per day. Moreover, the need for job creation is not an issue because of the country’s relatively low unemployment: 3% compared to around 9% in the OECD.
European countries such as Germany, UK, Italy and Spain have typically created attractive financial mechanisms to encourage renewable energy and boost employment. The Norwegian industry has criticised its Government for not supporting its renewable industry, such as wind power, with similar incentives. Norway produced only 900 GWh of wind power in 2007 compared to top producers such as Germany with 39,713 GWh, according to the Norwegian Wind Power Association.
“The framework conditions for this industry are the core of what I will work with,” said Haga. “Today, the global renewables market is politically driven.”
Haga believes Norway’s challenge will be to keep up the pace with others if it is to have a competitive advantage in this industrial adventure. One of the country’s strengths is its combined maritime competence as a large shipping nation and oil and gas producer. These industries know how materials behave in rough weather and can navigate in demanding waters. This technology can be easily transferred towards the floating offshore windmill market.
Here, Norway has been a pioneer in the field. Norwegian oil company Statoil became the first to start up the world’s first floating wind turbine in 2009 with its Hywind concept. Statoil will test the wind turbine over a two-year period. The primary intention is not to generate revenues from the power production, but to test how wind and waves affect the structure and reduce costs so that floating wind power can compete in the energy market.
“The further out in the ocean, the more qualified Norway is to contribute,” said Haga.
It is also important for Norway to pick up the pace on renewables if it is to meet the EU’s goal of replacing 20% with renewable energy on average. Although Norway is not a member of the EU, it has pledged to follow the EU’s 2020 environment goals. In practicality, this could mean that Norway would have to raise its current renewable rate from 60% to 74%.
“That is going to cost big money,” said Haga. “But we must expect that. It is going to be pretty tough for the government. From an industrial point of view, it is urgent that the Government decides on a target.”
Funding Test Programmes
The Government has substantially increased the amount of funding for renewable research in Norway as a result of the parliamentary agreement in 2006 under the centre-left Government, which included Haga’s political party. Terje Riis-Johansen, Norway’s current petroleum and energy Minister, recently said the Government had increased its contribution to R&D for environmentally friendly energy by more than NOK 600 million from 2007 to 2010, an increase of more than 250%.
One of the fruits of this increase has been the Research Council of Norway’s subsequent creation of eight Centres of Environmentally-friendly Energy Research in 2009 in areas such as carbon capture and storage, offshore wind power, bio energy, solar, and zero emission buildings. Haga is happy with the recent surge in R&D spending, but says there is a “big black hole” between R&D and the knowledge transfer to commercial technology and projects.
“What we think is most important now is finding the financial mechanisms that can bridge the gap, such as funding for testing and demonstrations related to wind,” said Haga. “As long as we don’t have such funding and other countries do, it is difficult for our companies to compete.”
“The challenge for the whole renewables industry is to get prices down and that will require significant testing.”