Norway has one of the most secure power supplies in the world. Statnett's CEO Auke Lont is not worried that new technologies will upset the balance in the national grid. "We'll fix this," is his mantra.
At one time Statkraft and Statnett were one company. But in 1992 a new energy law was passed deregulating Norway's power market and splitting Statskraftverkene (Directorate for State-owned power plants) into two entities. The Siamese twins were gradually assigned their respective responsibilities. Power generation was given to Statkraft and the national grid to Statnett.
Auke Lont, originally from the Netherlands, became CEO of Statnett in 2009. He bears the heavy responsibility of ensuring that electricity is available in Norway day in, day out, all year round. It is a formidable task, even for a man who has held management positions in the power industry for almost his entire working life.
Not only must he ensure balance in the national grid; he must also balance a multitude of different demands and expectations.
Auke Lont, head of Statnett, and Statkraft's press spokesperson Knut Fjerdingstad in converation about the Fosen wind power project and the future power supply.
Lont's approach is to keep a cool head and think long-term. This was also his strategy when Statkraft proposed the Fosen wind power project in central Norway. A new power line to transmit the power from the wind farms to the national grid was a key requirement. The Statnett CEO never felt pressured.
"No, we have not experienced any pressure. We did this based on a clear vision of providing a strong grid and a 24/7 power supply. We need more north-south capacity. It is weak today."
So it was not a difficult decision?
"The overall situation supported the development. A new north-south connection will be established and local security of supply strengthened. The project will increase production, which in turn changes our long-term planning. If we can help ensure that the wind farms are developed and that they generate economic value, we want to be part of it. I don't need politicians to push me into it. It also represents a large regional development in an area that needs capacity. That's brilliant!"
However, more production increases the power surplus, and price-conscious producers want more cables to Europe to sell their power. Statnett's CEO still keeps a cool head.
"I'm a great supporter of cables. We will almost double our exchange capacity between Scandinavia and continental Europe and the UK over the next five to six years. But we need to gain experience before moving forward. We can't just go from zero to 1 400 MW in one day. Since we are responsible for the entire system, we must be sure that it works. This is part of Statnett's DNA."
But don't the power producers want results faster?
"But they don't pay for the cables, right? So it's fine for them to ask for more cables. I see these cable projects stretching over 50 years. We'll connect ourselves to neighbouring countries because we see a likely surplus that makes sense to sell at good prices."
So, there will be more cables. Can the Nordic countries continue to serve as a battery for Europe?
"Yes, but we must take it one step at a time. The system can provide major opportunities, although costs can have a limiting effect, because there must be a willingness to pay for the flexibility our hydropower represents. There must be mechanisms that allow you to be handsomely paid for being able to adjust production in a matter of minutes. Producers must be assured of getting a return on the investments they've made in upgrades and increased flexibility."
Statnett is working hard for markets that bring out the willingness to pay.
"Then we'll see if it is actually competitive. This is not certain, with technological changes that will give consumers greater influence and opportunities for less expensive solutions. This may challenge profitability."
Solar is a technological challenger. Should solar power be subsidised?
"No. The market is our best friend, so using public funds is not a good approach. I fully support an electric future that includes solar power. We see that unit costs are going down, which makes the electricity produced quite inexpensive. Then you can use it for all sorts of purposes."
How is the balance in the power grid challenged by variable power sources such as solar and wind?
"We clearly have a challenge to balance, but at the same time we have an opportunity to steer consumption in a completely new way, and probably have some market mechanisms that will give signals to large consumers, which will also have an effect. We'll fix this."
So you are not afraid of a breakdown?
"I'm not one of those who believe that wind and solar will lead to a system breakdown. It's worked fine in Germany. There have been systems, infrastructure, cooperation models and market mechanisms developed that allow this to function in an excellent manner. The Germans say they have better security of supply now than ever."
But will it be straightforward to produce your own power?
"We can't have a situation where 'free-riders' can just dump their excess power and leave others to pay the bill. The markets must be structured so that they provide the right signals to the right participants in order to keep the security of supply up and costs down. We will need a good national grid and a technology that allows all this to work together in a positive way. I'm totally convinced that we'll fix this."
> POSITION: CEO of Statnett.
> AGE: 58 years.
> COUNTRY: Born and raised in the Netherlands, but has lived in Norway since 1981.
> BACKGROUND: Joined Statnett in 2009 after having been CEO for analysis and consulting firm Econ in Norway. Previously held senior positions in Statoil, worked in South Africa and served as CEO of Naturkraft AS. Has more than 30 years of experience in the energy sector.
> FAMILY: Married, three children.
What do you think of the power market; is it completelydistorted by all the subsidies?
"I'm a little worried that the market has been slightly damaged by all these support schemes and by an emissions trading system that doesn't work. Different support systems that contradict each other have created a lot of uncertainty."
That said, Auke Lont still believes that the green shift in Germany was a kickstart that sped up development. But now enough is probably enough. However, he is not a fan of using capacity mechanisms as compensatory measures – this is where owners of coal and gas power plants get paid to keep their plants on stand by in case the fluctuating wind and solar power do not deliver enough power to the grid.
"It contributes to diluting market forces. But power is so important to society that no politicians will accept responsibility if it all suddenly stops working one day."
According to Statnett's CEO, independent national grid operators like Statnett are best qualified to determine what kind of market mechanisms we need to secure an around-the-clock power supply in the best possible way.
"Here the market is our very best friend, and our message to politicians is to keep their hands off."
Text: Knut Fjerdingstad
Photo: Morten Brun
The article has also been published in Statkraft's magazine People & Power no. 2/2016
28. Jun. 2016
Statkraft's internal magazine People & Power brings interesting stories about the energy sector and the company's business activities. Some of the feature articles in the magazine are presented here on the Stories web page.
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