While these opportunities may boost the value of Norwegian hydro power and also help value and place new Norwegian renewable sources in their right context, such a development also demands a system that appropriately values and allocates the requisite services and responses. Norway may be moving from a situation of abundant balancing capacity, barely rewarded, to a scenario of higher demand and scare capacity, requiring adequate allocating mechanisms. Our hypothesis is that these scenario changes will call for a redesign in current markets and pricing arrangements. This redesign is necessary to appropriately reflect the value and remunerate balancing services, as well as to ensure the security of supply for the Norwegian power market. An objective is that the market system gives appropriate incentives for efficient short-run use of the resources, thereby also conserving the need for investments in production and transmission capacity.
The project participants are SINTEF Technology and Society, the Institute for Research in Economics and Business Administration (SNF), The Norwegian Meteorological Institute (met.no), and Kjeller Vindkraft Teknologi.