Could solar power generate enough energy in Norway to become a real contender to hydropower and wind power in the Norwegian energy market?

At the beginning of 2021 solar power installations in Norway generated around 160 MWp of electricity, of which 40 MWp was installed in the year 2020 alone. This amounts to a solar power production capacity in Norway of around 0.14 TWh. In comparison, wind power generated approximately 4,000 MW of electricity and hydropower approximately 33,000 MW of electricity in the same period.

The reasons why solar power is not further ahead in Norway, are many and somewhat complex. One prominent reason is of course the fact that the Norwegian landscape favours hydropower. Another, somewhat less straight-forward reason, is perhaps based on the misconception that solar power would be less effective in Norway since Norway benefits from less sun than warmer nations. However, it is the angle of incident sunlight that determines the intensity of the solar energy that strikes the ground in any one place and hence, contrary to popular belief, Norway does in fact benefit from a similar amount of solar ray intensity as for example Germany (a self-proclaimed “solar power nation”).

In any event, photovoltaic systems are more effective at lower temperatures, with its maximum effect being reached at around minus 5 degrees Celsius. Similarly, the effect of the photovoltaic systems are reduced to 65 % of its total effect if the temperature rises above 25 degrees Celsius. In other words, a photovoltaic system in Norway may very well function better energy-wise than one installed in the Sahara desert, although the latter admittedly benefits from more sun.

Currently, almost 90 % (which corresponds to approximately 7,000 photovoltaic systems) of the total installed solar power in Norway is connected to the Norwegian power grid. This means that there is only a small portion of solar panels in use in Norway, which operate on a stand-alone and independent basis.

The statistics in Elhub (the central data hub for handling metering data and market processes in the Norwegian electricity market), shows that 95 % of the photovoltaic systems have a capacity of less than 15 kWp. The 5 % of photovoltaic systems which exceed the 15 kWp threshold do, however, make up half of the total production capacity of solar power installed in Norway. The Norwegian Water Resources and Energy Directorate (NVE) reports that larger systems on roof tops are currently the biggest contributor to the production.

Accordingly, it is predicted that Norway will see an increase in solar power development generating up to 7 TWh per annum by year 2040.

Regulations, permits and legal requirements

If installing solar panels onto a building, a permit from the municipality where the building is located is normally required before the installation can commence. The processing time for the application and permit is normally three weeks. However, whether an application is required and how long it will take to process it, will depend on the applicable zoning plans and the land-use part of the municipal master plan in question. If the installation of solar panels: (i) does not conflict with said plans; (ii) fulfil all technical requirements; and (iii) are established within one unit or fire cell, an application is not necessary. If this is not the case, an application is required and the processing time will depend on whether or not the investor/developer needs any additional dispensations from the applicable requirements, i.e. dispensation from local rules on how the facade of a building shall look like.

If planning to design and/or install solar panels, specific rules and requirements will apply both to the design of the said panels and the installing phase of the panels, in the form of technical requirements and applicable industry standards.

If an investor establishes an independent solar plant, the electricity produced may have to be sold through separate power purchase agreements. The price for the electricity will to an extent depend on the terms of the agreement negotiated, but will normally follow the spot price. Any variations to the spot price regulated by the power purchase agreement is aimed at addressing typical scenarios that may arise during the sales process of electricity, including but not limited to, the efficiency of the solar plant, how the solar plant may deal with any interruptions to its production, and whether a certain quantity of electricity can be guaranteed pursuant to the notified capacity of the solar plant in question.

If an investor establishes solar panels on a rooftop as a consumer and wants to sell the excess electricity produced by doing so, he/she can enter into an agreement with an electricity retail company and obtain the spot price when selling the excess power to them.

Solar power plants for the production and sale of electricity are also subject to licensing pursuant to the Energy Act. Solar power plants subject to a license are furthermore governed by the Planning and Building Act’s regulations on impact assessments. However, solar power plants with a voltage of 1,000 V AC/1,500 V DC or less, do not need a license according to the Energy Act.

Furthermore, all companies that conduct business related to solar power and/or solar power energy harvesting, are subject to a trading license (Nwg. “omsetningskonsensjon”). This means that an application must be submitted for a sales license for any company that will carry out the production and/or sales of electricity in Norway.

Solar cell panels must be installed by a registered electrical company to ensure that the system is installed and connected correctly to the power grid. This means that solar cell companies that are not registered in the Electricity Business Register must outsource this type of work to registered circuit installers. Hence, it is recommended to either: (i) hire such specialists and register the company as an electrical company; or (ii) join forces through a joint-venture agreement with an electrical company, if considering investing in solar power energy in Norway.

Financial support available to investors/developers

There are several subsidies and government grants available to an investor/developer of solar power energy in Norway, in line with Norway’s aim to promote a nationally environmental-friendly production and consumption culture:

  • ENOVA (Norwegian government enterprise responsible for promotion of environmentally friendly production and consumption of energy) support: ENOVA offers limited subsidies for residential buildings. There is no formal ENOVA subsidies for commercial buildings, but ENOVA has granted subsidies in such cases in the past.
  • ENOVA has a separate (limited) subsidies scheme for sunlight collectors on commercial buildings through a programme called boiler plant (Nwg. “varmesentraler”). They also have a separate subsidies scheme for agricultural heating installations.
  • Local municipality support: Some municipalities have local subsidies for solar panels. However, often the ENOVA support or the local subsidies scheme will cancel each other out, and the investor will thus have to choose which one to apply for (one or the other).
  • Electricity certificates (Nwg. “El-sertifikater”): Electricity certificates are a support scheme for power produced from renewable energy sources. Electricity customers finance the scheme through their electricity bill. Electricity certificates can be a good option for larger solar panels, but are not relevant for small producers as the fee structure for joining the scheme are high (minimum NOK 15,000). This scheme is also due to be phased out soon.
  • Plus customer scheme: A plus customer is an electricity customer who at times of the year produces more electricity than he/she consumes. The surplus power is then sold back to the power supplier. As a plus customer you register status with your network company and the network company sets technical requirements for the connection. To get paid for the power delivered to the grid, the customer needs a meter (an AMS meter) that registers the energy exchange in both directions.
  • There is an exemption from electrical charges for solar electricity produced and consumed by oneself on a solely independent basis. The exemption currently only applies to small houses and small commercial buildings.
Why solar power could be successful in Norway

Despite the fact that Norway is not a country one would normally associate with solar power, the developments seen nationally in the form of investments in new solar power technology (i.e. solar panels floating on water), combined with the approach taken by the Norwegian government to promote the use of energy derived from renewable energy resources, suggests that solar power is going to grow as an energy source nationally.

Solar power is already in use by many private consumers, and any future growth is likely to be seen in relation to the use in industry and in connection with commercial buildings. Solar power will also assimilate well into the Norwegian energy market, where consumers are already accustomed to being reliant on other renewable energy sources like hydropower and wind power.

Finally, the expected changes to the constraints and rules regulating the energy business (i.e. the el-certificates), suggests that the time may now be ripe for investors/developers for pursuing the continued development of solar power energy in the Land of the Midnight Sun.