(Bloomberg) — Norway’s plan to curb power exports to protect national supplies is drawing the ire of other Nordic nations just as cooperation is needed the most.
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The worst energy crisis in decades is testing old allegiances as power prices surge to records on an almost daily basis and more nations warn of shortages and blackouts this winter. It’s heaping further pressure on governments to accelerate plans for how to shield households from devastating bills and rising inflation.
In a blow to Europe’s cross-border solidarity, Norway earlier this month warned that refilling its hydropower reservoirs would take precedence over foreign sales as utilities in the country’s southwest are struggling with severe water shortages. The nation is one of Europe’s top exporters.
Sweden, which has in the past curbed exports to protect its grid, recently took over from France as Europe’s biggest net exporter. Sweden’s water reservoirs are about 83% full, while Norway’s stand at about 68%, according to Nord Pool data.
Grid operators in Sweden, Finland and Denmark said this week in a rare joint statement that they are “deeply concerned” by the Norwegian plan and urged Oslo to reconsider.
“If export restrictions were to be allowed under the current European electricity regulation, we fear that such a step could inspire other countries to consider similar restrictions and thus causing a much bigger negative effect on both the Nordic and the European electricity markets,” the companies said.
Norway Moves to Limit Power Exports in Blow to Europe
Although not a member of the European Union, Norway is “an integral part” of the EU’s internal energy market, the government says on its website, and that’s partly why its neighbors are reacting so strongly.
Domestic Divisions
It remains to be seen how Norway will implement its plan, with the energy ministry indicating that a final proposal won’t be presented until some time in the autumn. The spike in electricity rates has also created divisions domestically, with records reached in the south while low prices in the north have led producers to let water spill over rather than sell unprofitable power.
“It is of course worrying when nations feel that they need to or start taking these kind of actions of curbing exports to other nations,” Swedish Energy Minister Khashayar Farmanbar said in an interview on Tuesday. “We have for many, many years worked on building a system to be able to help each other out when there is a crisis.”
While Farmanbar said that there is no real risk of power shortages, Finns were this week warned that rolling electricity cuts may come into place for hours at a time this winter. The UK, which relies on exports from Norway after an interconnector cable opened last year, is making plans for organized blackouts.
Finland will for the first time in decades have to manage without exports from Russia, which accounted for as much as 10% of demand last year. Flows were cut to zero just days after the country’s plan to join NATO was announced.
Splintered national responses like Norway’s are damaging to Europe’s unity and will likely be a boost to Russia, which is using the curbs in energy supplies as a weapon in retaliation for sanctions after its war in Ukraine.
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“The Kremlin would probably be pleased with such a decision,” Finland’s Economy Minister Mika Lintila said, according to newspaper Helsingin Sanomat. “It would totally play into Putin’s hands.”
Norway “will have to weigh” protecting their national energy supply with “Nordic and European energy cooperation,” he said.
(Updates with Norway’s status in the EU energy market in the seventh paragraph.)
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