Norway's Statnett sees decarbonisation drive boosting power prices and demand

A windmill stands next to the ocean in Utsira, a North Sea island of just 6 square kilometres (2.3 square miles) and home to 210 people who already get most of their power from two onshore windmills, in this photo taken April 22, 2008. REUTERS/Wojciech Moskwa

OSLO, June 30 (Reuters) - Norway's power grid operator Statnett (STASF.UL) on Wednesday raised its long-term forecast for power demand and prices, partly to reflect increased electricity consumption needed for decarbonisation projects, such as batteries and hydrogen.

Statnett's updated forecast projected a European carbon price of 70 euros per tonne in 2030, up 35 euros compared with its last report published in October. The benchmark carbon contract currently trades at around 56 euros/tonne.

"Higher CO2 prices result in higher marginal costs in fossil power plants and thus also higher power prices both on the continent and here in Norway," Statnett said.

The impact in Europe would be stronger than in Norway, where power is largely supplied by hydropower and onshore wind.

The European Union's more ambitious climate goals and a doubling of European carbon prices this year provide greater incentives for electrification and the creation of new green industries, Statnett said in a statement. read more

Higher power prices also meant Norway's first offshore wind farms anchored on the sea bed would be profitable without subsidies by 2030, Statnett said. read more

Statnett said it was updating its strategy to meet its most ambitious 2050 demand forecast of 220 terawatt hours (TWh), a near 70% increase from current annual demand of 130-140 TWh.

It would need to build more grid, increase efficiency and reduce the time taken to implement new solutions to meet the challenges of the energy transition, Statnett said.

Statnett forecast a 2025 average Norwegian power price of around 40 euros per megawatt hour (MWh), up by 10 euros compared with its October estimate. For 2030, its Norwegian price outlook was increased by some 5 euros to around 42 euros/MWh, according to a presentation.

Reporting by Nora Buli. Editing by Jane Merriman

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