On Sunday, Norway, Western Europe's top oil producer, announced the creation of a €2.5 million renewable energy fund. Today, Norway's Minister of Petroleum and Energy Odd Roger Enoksen said in an opening address to the Eurelectric Convention 2006 in Oslo, that hydropower accounts for 99 per cent of the electricity generated in Norway, with an annual average production of about 119 Terawatt hours.

Improved energy efficiency, more flexibility in the energy supply and decreased dependence on direct electricity for heating, and an increased share of renewable energy sources, other than large hydropower, in the energy supply mix are key features of Norwegian energy policy.

The installed hydropower capacity is 28 300 MW. This makes Norway the sixth largest hydro power producer in the world and Norway has the world’s largest per capita hydro power production.

Norway is also Europe's leading producer of electricity based on renewable energy sources. The annual production of about 119 Terawatt hours is equivalent to almost one third of the total production of electricity from renewable energy sources in EU.

Enoksen said that Norway has a large unutilized renewable energy potential from various sources. Nearest to a commercial breakthrough are wind power and bio energy, while abundant tidal and wave power holds promises for the future. Norway’s wind resources are especially large along the coast and in Northern Norway. The high wind velocity and the large open areas in Norway make wind power particularly favourable for production of renewable electricity. The existing hydro electric power system could handle the natural fluctuations in wind power production, even in the case of a very substantial development of wind power.

The Minister said that Norway is fully committed to reach its Kyoto target, which allows for a maximum 1 percent emissions increase relative to the base year of 1990, equivalent to 50.6 million tons CO₂ per year. We have to reduce today's emissions by 8 percent to reach the Kyoto target.

Drivers for promoting energy efficiency and renewable energy

Enoksen said that the basis of the Norwegian electricity production is hydropower. This makes the electricity production emission free, but dependent on fluctuation in the precipitation. Norway needs to increase the energy production and the possibilities for new large scale hydropower production are limited.

To meet this challenge Norway must look for new renewable energy sources and more efficient use of existing resources.

The energy agency Enova is the Government's main instrument to promote the renewables  policy and on Sunday, Enoksen announced a new state fund for renewable energy and energy efficiency. The fund amounts to 20 billion Norwegian kroner or €2.5 billion. The size of the fund implies that effort in promoting renewable and energy efficiency will be more than doubled.

Today the energy fund is based on a levy on the transmission tariff for electricity. In 2006 this levy is approximately 700 mill NOK or € 90 million.  

The aim is to increase the production of new renewable energy and energy efficiency to 30 terawatt hours in 2016.

The Minister said that the new fund will give a predictable, long term framework for the industry in this field. The Ministry will explore and implement a feed-in system for renewable electricity within this framework of the fund. A new feature is that hydropower projects will get support up to 3 MW. There is no support for small scale hydropower today.