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How to create solid decision bases for investments in the power grid?

13.02.2023 - Resources and sustainability

The consumption of electricity in Norway is expected to increase rapidly and significantly. Norway also needs a substantial increase in renewable power production. However, there is uncertainty about how much and where in Norway this should occur. In the midst of it all is the power grid, which is responsible for safely and cost-effectively transporting electricity from producers to consumers. Currently, the capacity of the power grid is highly utilized, and new investments are expensive and often involve interfering with nature. At the same time, it is necessary to reduce the time it takes to increase the capacity of the power grid.

The Norwegian Official Report 2022: 6 recommends the development of a sector guideline for socio-economic analysis of measures in the power grid. The purpose of this guideline is to improve the quality of the power grid companies’ socio-economic analyses, provide increased verifiability and transparency, make it easier for the companies to know the expected level of detail in the analyses, and hopefully reduce the processing time for concession applications. Oslo Economics will now assist the Norwegian Water Resources and Energy Directorate (NVE) in developing this sector guideline for socio-economic analysis.

The guideline will be based on the Ministry of Finance’s circular on the preparation of socio-economic analyses R-109/2021, the Directorate for Financial Management’s (DFØ) guideline on socio-economic analysis, and the Guidelines for Studies and Reports. A reference group consisting of the Ministry of Petroleum and Energy, the Ministry of Finance, and DFØ will follow the work of developing the sector guideline.

The sector guideline for socio-economic analysis will be important for those involved in analyzing the development of the power grid in power grid companies, decision-makers in power grid companies, authorities, and stakeholders in the power and grid industry.

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