General annual Congress DPG Berlin March 2012

1. General annual Congress DPG Berlin March 2012 ”Hydro Electricity and Storage capabilities in Norway, can they be useful for Europe?” Prof. Dr. Wilhelm Rondeel Telemark University College

2. Overview • Introduction • The Norwegian and Nordic power system • The Continental – and specific German – situation – the challenge with intermittent renewable power • Infrastructure for power exchange • Market description – and electricity supply • Alternative options for the adaption of large scale intermittent power supply

3. Norway – a ”green battery” for Europe? Energy substitute for 2 weeks of full German wind power!

4. Norway – a large hydro power producer

5. Precipitation in Norway • The normal precipitation is given by the prevailing wind from the west. • When the humid air is pressed upwards against the mountain chain, the air becomes saturated with often heavy rain as a result. • The rain falls at high altitude, and the distance to the ocean is short. This is ideal for the exploitation of hydro power.

6. The Nordic power system The transmission grid is characterized by the fact that hydro production is normally not located in the vicinity of the main consumption! A common challenge with renewables! The connections west – east in the South of Norway, and north – south in Sweden.

7. Basic lay-out of a hydro power station

8. Different types of hydro power stations • Two main types of hydro power stations: • Run of river: • Low head with high flow • Low degree of control on output, "utilise the water as it comes". • Often long utilisation period • The reservoir type: • High head, up to more than 1000 meters • Full control on output, adjusting to demand and prices. • Often relatively short utilisation period • Some reservoirs built for a filling period (with normal precipitation) up to 3 to 4 years (dry year reserves) • The reservoir type represents ca. 60% of installed capacity in Norway (in TWh). • Hydro power, reservoir type, is well suited in connection with other types of electricity production, - thermal, wind power and nuclear. The hydro power is used for regulation to fit the demand.

9. Norwegian electric energy production – and German consumption - for comparison! TWh Absolutely every drop of rain being exploited!

10. Energy consumption in Norway Total annual domestic consumption is about 235 TWh, the renewable part is slightly higher than 60%. Agreement with the EU 20 – 20 – 20 policy - aims at 67% renewable.

11. Large reservoirs for adapting the production to demand. /consumption winter summer winter At maximum demand the precipitation is snow and not rain! Reservoirs needed to secure supply during the winter.

12. Annual variation of inflow to the production systemStatistical spread of production capacity (in present power system). Wet year Dry year The "fuel" is for free, but our supplier is very unreliable! chronological – historic 60 years ordered - wet – dry years

13. Large hydro power reservoirs are necessary • Two important • reasons for • large reservoirs:To cope with • Seasonal • Statistical • - variations in demand and precipitation. When empty – this reservoir takes 3 years of normal precipitation to fill up!

14. Status for the reservoirs spring 2012 The reservoir status has a strong influences on the market prices, partly together with high demands on cold winter days (electric heating)

15. Power exchange capacity in the Nordic market The exchange capacity between Norway and neighbouring countries amounts to about 5000 MW. This is about 20% of the maximum demand on a cold winter day.

16. Norway`s power exchange – statisticsSource: NordPool

17. Export to Germany?! Without too extreme environmental consequences

18. Environmental impact of hydro power

19. Installed capacity (GW) in Germany Future - scenario renewables Imposing wind/solar capacity – in MW – but …..

20. Utilisation time (capacity factor) wind parks Definition: utilisation time = annual production MWh/installed MW Equivalent to 1480 hours – (of 8760)

21. German solar and wind have low utilisation factors, (but very high subsidies!) in comparison with other nations.

22. German electricity generation – energy (TWh) Future - scenario renewables .. the energy contribution from solar and wind is not impressing

23. German windpower – concentration in the north. Expected for year 2020, including large new offshore wind-parks. Wind power is concentrated in the north, which is advantageous for possible power exchange with Norway. Here the wind conditions are the best.

24. Variation in wind power output is a challenge! The variations are only slightlyreduced when moving from a single turbine to a complete wind park, and even to a large area, as Denmark and Germany combined!

25. The system has to be in balance! All the time!Source: e-on

26. Consumption and generation – example Germany Supply has to follow the load!

27. Energy storage – necessity with high share renewables Goldisthal – Germanys largest pumped storage plant. Example: If 20.000 MW wind power is out of production for 48 hours, about 1000 GWh – or 1 TWh – has to be substituted. “Pumped storage” – and (may be) “Compressed air” are the only realistic technologies with reasonable efficiencies.

28. Japan - Okinawa Pumped storage, regulating power and day/night storage Most conventional usage Countries with high share of nuclear, typically have some (pumped) hydro. Tapping Pumping during low load hours, generation during peak demand Pumping

29. German pumped storage capacity Total installed capacity is about 7000 MW and storage volume about 50 GWh. There are plans for additional 2500 MW. This is substantially lower than required! The greatest challenge seems to be energy (GWh) more than power (MW).

30. Without (enough) storage you may try to get help from your neighbours!

31. “The German Dream” – 60.000 MW from Norway! Professor Olav Hohmeyer at the University of Flensburg report to German Government; – “Europe needs 200.000 MW back up by quick response hydro power (PSP) to cope with the effect of 100% renewable power in 2050. Norway may contribute with 60.000 MW”. A more “down to earth” view from the Norwegian side estimates a possible – absolute maximum – of about 20.000 MW balancing power. But, more realistic with 10.000 MW?

32. New cable(s) to Germany (NL and UK)? The present installed (MW) power capacity is not sufficient for many new cables without investments in more generation capacity in existing stations. Producing the same amount of energy in shorter time. Export MW at high prices in daytime, and import during the night low load hours, or adapt to price variations due to variable wind (solar). Investments in pumping may come in addition, when (if) profitable.

33. NorGer cable to Germany – some facts and data Cable length: ca 600 km Capacity: 1400 MW Building time: approx. 3 years Estimated cost: EUR 1,4 billion (+/- 30%) Voltage: 450-500 kV Cable weight: 35 kg/m Cable diameter: ca 11 cm Max sea depth of route: 410 m Planned as operational: 2015 Anticipated life span: ca 40 years Energy loss in cable: ca 5 per cent

34. Cable connections – existing and plansSource: Statnett Existing or in execution If all cables are realised, grid reinforcements and more installed MW hydro is needed. In planning - ?

35. The market controls the energy flow! • The energy flow, and possible power exchange, is given by market conditions, and electricity should flow from low prices to higher prices. • Power from Norway to Germany only when prices in Germany are about 0,5 € ct or higher than at NordPool. • Electricity import is not “by order”, - it may come if a there is a sufficient price difference between the market areas. Systematically export takes place at low (bad) prices and imports at high (bad) prices! • There are technical limitations to exploitation of a cable, such as “ramping” – the necessary time to reverse energy flow (approximately 600 MW/hour). Typically day/night power exchange –– short time reversing of power flow - leads to hours with a low capacity factor.

36. The market rules!

37. Power production cost estimatesPossible long term cost for CCS (not ETS) – and offshore wind? 80 øre/kWh = 10 € ct/kWh Marginal cost – fuel – and CO2 – main influences on pricing

38. What determines the electricity price at NordPool?A simplified schematic illustration! Demand NORDIC power system Single stage gas turbines Normal In accordance with economical theory the last kWh that is needed to cover demand, the marginal cost, sets the price for ALL kWh`s! Solar and wind will never “set” the price! Dry Fuel oil Wet Coal Combined heat and Power Nuclear Hydro + wind power + solar Inflow +/- hydro system

39. Historic NordPool spot market pricesAutumn 2011 futures spotprice The high volatility is to a large extent caused by variation in hydro power capacity – the inflow to reservoirs.

40. Price structure – (south) Norway and GermanySource : Statnett Average week – for the period 2002 – 2008 Incentives for power exchange – day and night

41. Power prices in Germany and Norway Historical data: 2002 – 2009 NOK/MWh Average prices – weekdays, and calculated price difference Source: Aasheim NHH Norwegian price variation are small, due to dominating (sufficient) hydro power. German prices increase during peak hours, as more costly sources are needed to cover peak demand. Based on the (historical) average price differences, a new cable is hardly profitable. If investments in new capacity, power and grid, is necessary, - the case is certainly not improved! But, there are clear possibilities that future prices may differ more. And last but not least, - there is money in the “UN-average”, especially WET and DRY years and variation in wind power output! Export and import periods will then take place over longer time periods. Germany Norway Difference Hours

42. Investments in pumping capacity? Norwegian systematic day/night price variations have to increase substantially before investments in pumping capacity is profitable! Price differences around 400 NOK/MWh (5 € cent/kWh) is necessary to make investments in pumping capacity profitable. Present – limited – pumping capacity is built for moving production from wet (or windy) periods to dry (or wind stil)l. Higher energy volumes then involved, and higher risks involved (overflow and prices). Increased exchange capacity may lead to higher systematic NordPool price volatility, but then price differences N – D may be reduced, leading to reduced profitability in a power exchange!

43. Options: Pumped Storage Plant, cable or new gas fired power? ? or Cable + Hydro - PSP (CC)GT A simple cost “comparison” of new cable to new CCGT or PSP capacity: Norwegian Grid reinforcements not included. (1 € = 8 NOK) - Cable cost pr. MW - 12/1400 ≈ 8,5 MNOK/MW- New CCGT pr. MW - 3/500 ≈ 6,0 MNOK/MW- New German PSP pr. MW ≈ 9,6 MNOK/MW - New Norwegian PSP capacity pr. MW ≈ 5,0 MNOK/MW No clear cut conclusion! Other factors may decide, - politics, environment, investment in grid and MW, market considerations, gas contracts (storage), operational differences etc. Energy – (GWh) seems to be the largest challenge.

44. So, - what is the answer? “Hydro Electricity and Storage capabilities in Norway, can they be useful for Europe?” • Most probably the answer is YES – BUT: • There are significant limitations in capacity – only a minor part of the required capacity, for example for Germany, seems realistic. • It will require large investments in infrastructure and power plants in Norway, in addition to HVDC connections N – D. • It may have a significant environmental impact in Norway • There are more cost efficient options, but these may have a substantial negative impact on CO2 emissions!

45. THANKS FOR YOUR ATTENTION! wilhelm.rondeel@hit.no