Power supply and the electricity grid

In business and industry, the public service sector and households, reliable access to electricity is considered a matter of course. Almost all important public services and functions are critically dependent on a well-functioning power system with a reliable supply of electricity. The electricity grid provides one of the basic functions of the power supply system, and constitutes key infrastructure in any modern society.

In Norway, an extensive electricity grid has been developed. The function of the electricity grid is to transport electricity from producers to consumers, in the volumes and at the time requested by consumers. Electricity must be generated in the same second as it is consumed. Consequently, a vital feature of the power system is the maintenance of a balance between total generation and total consumption of power at all times, called the instantaneous balance.

In 2013, the electricity grid in Norway amounted to 131,000 kilometres, in three different grid categories. The distribution grid consists of the local electricity grids that normally supply power to end users such as households, services and industry. The regional grid is often the link between the central grid and the distribution grid, but may also include production and consumption radials carrying higher voltages. The central grid constitutes the “highways” of the power system, which link producers and consumers in a nationwide system. The central grid also includes interconnectors, which provide links to other countries’ networks and make it physically possible to export and import power as needed.

Statnett is the transmission system operator in Norway, and is responsible for maintaining the balance between generation and consumption of electricity at all times. Statnett is also responsible for the sound economic operation and development of the central grid.

Building electricity grids is expensive, but the average cost per unit transported declines as the degree of utilisation of the grid increases until it approaches maximum capacity. This means that it is inefficient for society to build parallel power lines if the existing lines provide sufficient transmission capacity. Parallel lines may also result in undesirable land use patterns and be unnecessary eyesores. The power grid is therefore a natural monopoly, and grid operations are therefore not open to competition.

Because the grid is a natural monopoly, users are tied to their local grid company. The authorities have established extensive control of monopoly operations to prevent the grid companies from exploiting their position and to regulate their activities. The goal is to ensure that users do not pay too much for the grid and at the same time ensure that investments in the grid are sufficient to ensure capacity and quality. Grid operations are regulated using a combination of direct and indirect policy instruments.