Norway produces about 56% of its energy requirements, including energy for transport, from renewable energy sources.
The power market, however, is dominated by hydroelectric power. Norway has the world's largest per capita hydropower production, and is the sixth largest hydropower producer in the world. In a year with normal precipitation, hydropower generation is around 120 TWh, corresponding to approximately 99 percent of Norway's total power production.
Norway was one of the first countries in Europe to deregulate its electricity market, with the adoption of the Energy Act in 1991. Since then, retail customers can change power suppliers without incurring charges. The authorities required grid owners to make transmission capacity available to others through third-party agreements and to offer equal tariffs to electricity suppliers and end users.
The Norwegian Water Resources and Energy Directorate (NVE) is responsible for the administration of Norway’s water and energy resources and reports to the Ministry of Petroleum and Energy. Its objectives are to ensure consistent and environmentally sound management of water resources, to promote an efficient energy market and cost-effective energy systems and to contribute to economically efficient utilisation of energy. NVE is also responsible for all new renewable energy and has the legislative power to issue regulations, to make individual decisions and to prepare cases to be resolved by the Ministry of Petroleum and Energy.
The Norwegian Government intends to take a number of steps to reduce greenhouse gas emissions and promote technological advances. Some of the most important are: establishing a new climate and energy fund, raising the CO2 tax rate for the offshore industry, and improving public transport.
The Government has established a climate and energy fund to promote technological advances in industry through investment support, under the existing public enterprise Enova. The aim is to develop technology that reduces greenhouse gas emissions. The fund will be increased by NOK 10 billion in 2013, resulting in a total capital of NOK 35 billion. The fund will gradually be increased to 50 billion in 2016. Enova works in close cooperation with industry, research communities, the Climate and Pollution Agency and other public agencies.
The average annual production from the Norwegian hydropower system is 130 TWh. Annual production varies substantially with precipitation levels. In 2000, hydropower production reached a record level of 143 TWh, compared with only 105 TWh in 1996.
About 88 per cent of Norwegian production capacity is publicly owned: 52 per cent by counties and municipal authorities, and 36 per cent by the central government. In recent years, the Norwegian Government has increased its efforts to develop new renewable energy sources.
A common Norwegian-Swedish market for electricity certificates was established 1 January 2012. Norway and Sweden have a combined goal of establishing 26.4 TWh new electricity production based on renewable energy in 2020. Norway and Sweden are each responsible for financing 13.2 TWh in the certificate system, regardless of the amount of production that is located in each of the two countries.
The Norwegian wind and solar markets are not developed extensively, compared to the rest of Europe.
While Norway´s offshore wind potential is only surpassed by Portugal and the country enjoys the best onshore potential in Europe the market is developing only slowly after the introduction of the green certificates in 2012. Towards, 2025, public research have estimated a potential wind development of of 5.8 GW (17,4 TWh) to 7.1 GW (21,5 TWh). Grid capacity is a limiting factor.
At the end of 2011, Norway had installed 512 MW of wind turbines at 18 sites producing ca. 1 GWh and 0,7 % of the country’s total generation. The Ministry of Petroleum and Energy is together with NVE currently researching the consequences of building offshore wind. The 15 potential Norwegian offshore wind fields could produce 18 to 44 TWh yearly.
While the Norwegian market for offshore wind is limited in the short term, the offshore industry has developed strong suppliers for offshore wind based in the competence and experience from the maritime and oil & gas industries.
The Norwegian solar industry was developed based on the access to power and the metallurgical expertise in the country. A number of solar PV materials and cell production sites were developed but the price erosion during the last years have left all such production unprofitable. Some Norwegian companies and the research units at SINTEF and IFE are developing their business to fit the new global market situation.
There is meanwhile a slowly developing market for rooftop solar PV electricity generation in Norway. Norway has no special incentive for solar PV installations.