1 Nov 2012
Hydropower in Norway: a smile is his umbrella
Norwegian farmer Rolf Håland produces electricity sufficient to warm and light up hundreds of family houses. Together with his sons, Håland utilises a waterfall on their farmstead in mountainous Western Norway to run a small hydropower plant. In operation since August 2011, the plant appears to be a promising investment—thanks to newly introduced subsidies and a long-term loan from NIB via local Sparebanken Vest.
Every morning, Håland looks out his bathroom window to check on the flowing Gjesdal River. That’s a most rewarding routine, as the water flow correlates almost perfectly with the turnover of the plant company.
“When it starts to rain—we call it a ten thousand kroner shower—the plant control system will automatically open a few extra nozzles to handle the stronger river flow,” explains the 66-year-old Håland.
His ancestors’ farm is situated in the municipality of Jølster, midway between the cities of Bergen and Ålesund. In this scenic region of deep fjords, high mountains and spectacular waterfalls, the Erketunet farm lies on a valley side some 250 metres above sea level. It is a typical-sized homestead for the region with a milk quota of 125,000 litres annually, 25 calves a year and 30 winter-fed sheep.
Onledning through intermediaries
Gjesdal Kraft AS is one of many hydroelectric power projects financed by the Nordic Investment Bank through financial intermediaries.
In 2011, NIB and Norwegian Sparebanken Vest (SPV) signed a 10-year-maturity loan programme of NOK 500 million (EUR 67 million). SPV will use the loan to finance new and upgrade small hydropower projects until the end of 2013. Of this, SPV has onlent NOK 27 million to Gjesdal Kraft. The expected lifetime of small hydropower facilities is 40 years, double the life span of land-based wind mills.
Sparebanken Vest started to finance hydropower projects in 1998, and has so far lent NOK 1.3 billion, of its NOK 100 billion portfolio, to 70 small hydropower projects in its Western Norway region. General Manager Jon Arild Hellebust of SPV’s renewable energy operations says the bank plans to increase its total lending by 6 percent in 2012, with a focus on growth in the hydropower sector.
“Hydropower is the fastest growing sector in percentage, and our ambition is for this to continue as the sector has a good risk profile for Sparebanken Vest,” says Jon Arild Hellebust.
Built 280 metres above sea level
Encouraged by the Norwegian government’s introduction of subsidises for renewable energy production, the Håland family decided to apply for a licence from the Norwegian Water Resources and Energy Directorate (NVE). In 2008, they received the licence and production got underway in August 2011.
The Gjesdal Kraft dam is built across the Gjesdal River 280 metres above sea level. It allows parts of the old waterfall to run free while directing a separate water stream into a pipeline. The pipeline runs 1.1 kilometres underground down the valley to a turbine generating electricity some 150 metres below the dam.
The turbine’s capacity is three cubic metres of water per second, but most often less than half is used. That’s because the water intake at the dam is automatically adjusted to the natural river flow, which needs to be 1,500 litres per second during the period from 1 May to 1 October. During the winter time only 100 litres per second is required.
The limits are decided by NVE to preserve a part of the old river flow.
The precipitation area above the dam is about 25 square kilometres and collects rain water, melted snow and smaller rivers from smaller lakes as high as 1,200 metres above sea level. This means great seasonal and daily variations in the river flow. So far, the daily average water flow has surpassed the calculations made prior to the dam being built.
“That’s why we plan to get acceptance from the authorities to reduce the minimum water flow in the river to 800 litres per second from 1,500 litres as of today,” Håland says.
Gjesdal Kraft had annual energy sales of about 12 GWh during its first 12 months of operation. That is enough to heat, light up and serve the use of electronic appliances in 600 detached family houses.
In Norway there are some 1,100 similar small hydropower plants with a total output of 8.2 TWh annually. That corresponds to 6.3 percent of Norway’s 130 TWh annual electricity outputs, of which 95-99 percent comes from hydropower.
Gjesdal Kraft has a five-year electricity contract with Statkraft, Europe’s largest renewable energy company and fully owned by the Norwegian state. During the first three years, Gjesdal Kraft will receive a set price for 70 percent of the annual output, and market price for the remaining 30 percent. For the following two years the mix is 50/50.
For 2012, Håland estimates that Gjesdal Kraft will have an annual turnover of NOK 4.0–4.5 million. Of this, about NOK 1.5 million is expected to be made up of subsidises in the form of Green Certificates sold on the Swedish–Norwegian electricity certificate market.
A fairly relaxing undertaking
Rolf Håland typically takes one-week turns with his two sons to monitor the power plant. His third son lives in Oslo. The week on duty, he says, is not demanding as the hydropower plant is automated, packed with various sensors that monitor the process. It logs the water flows and electricity produced and a robot arm even cleans out debris from the intake grind at the dam. All data and events are displayed on the family’s mobile handsets. Being boss of your very own hydropower plant thus appears to be a fairly relaxing undertaking.
| NIB Countries share of renewable energy in gross final consumption |
Year 2010 | Target Year 2020 |
| Sweden | 47.9 | 49.0 |
| Latvia | 32.6 | 40.0 |
| Finland | 32.2 | 38.0 |
| Denmark | 22.2 | 30.0 |
| Estonia | 24.3 | 25.0 |
| Lithuania | 19.7 | 23.0 |
| EU (27 countries) | 12.4 | 20.0 |
| Norway | 61.1 | 67.5 |
| Iceland | 67.0 | 64.0 |
