The European Federation of Energy Traders (EFET*) welcomes the opportunity to provide comments to the Norwegian Ministry of Petroleum and Energy conultation on the changes to the Watercourses Regulation Act, the Energy Act and related regulations.
The market already provides an incentive to keep water in reserve for when prices are expected to be highest. And market forces will do this more effectively than the strict regulation can.
However, the high price contribution, although delayed, incentivises hydro producers in Norway to sell off power when prices are either below 0.70 nok/kWh or when prices are really high after 23% taxes are recovered from the producers side. The latter assumingly correlates quite closely when reservoir levels are low, by which this suggested act is narrowing the producers ability to sell power unless adequately compensated.
Curtailing the interconnectors is also counterproductive. The most likely scenario is that the Norwegians will need to import power in a tight situation and opening up for curtailment will give other countries/TSOs a reason to retaliate, and cut supplies when they are needed the most. This will in particular be the case if the Norwegians plan to limit supply when the other countries are in difficulties. Solidarity works both ways.
We reiterate the European Commission and ACER’s call to keep the borders open to ensure security of supply for all EU/EEA and an efficient wholesale market.
This policy proposal could also become a risk of precedence that other States could follow (i.e. Switzerland, Austria) with the risk of reversing the market coupling progress. Consumers would then be affetced with distorted price signals.
*EFET promotes and facilitates European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles. We build trust in power and gas markets across Europe, so that they may underpin a sustainable and secure energy supply and enable the transition to a carbon neutral economy. EFET currently represents more than 100 energy trading companies, active in over 27 European countries, including Norway.
The market already provides an incentive to keep water in reserve for when prices are expected to be highest. And market forces will do this more effectively than the strict regulation can.
However, the high price contribution, although delayed, incentivises hydro producers in Norway to sell off power when prices are either below 0.70 nok/kWh or when prices are really high after 23% taxes are recovered from the producers side. The latter assumingly correlates quite closely when reservoir levels are low, by which this suggested act is narrowing the producers ability to sell power unless adequately compensated.
Curtailing the interconnectors is also counterproductive. The most likely scenario is that the Norwegians will need to import power in a tight situation and opening up for curtailment will give other countries/TSOs a reason to retaliate, and cut supplies when they are needed the most. This will in particular be the case if the Norwegians plan to limit supply when the other countries are in difficulties. Solidarity works both ways.
We reiterate the European Commission and ACER’s call to keep the borders open to ensure security of supply for all EU/EEA and an efficient wholesale market.
This policy proposal could also become a risk of precedence that other States could follow (i.e. Switzerland, Austria) with the risk of reversing the market coupling progress. Consumers would then be affetced with distorted price signals.
*EFET promotes and facilitates European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles. We build trust in power and gas markets across Europe, so that they may underpin a sustainable and secure energy supply and enable the transition to a carbon neutral economy. EFET currently represents more than 100 energy trading companies, active in over 27 European countries, including Norway.