Norway to increase small-scale hydro
by the Norwegian Water Resources and Energy Directorate

The 140 kW p ant at Sogn og Fjordane

In Norway, the introduction of competition and third party access to the electricity grid has made electricity production from small-scale hydro schemes more economically viable. After being closed for many years, some small plant are now re-opening and farmers owning the resource plan to start producing electricity.


Owing to Norway’s favourable climate and topography, hydro power is one of the country’s major natural resources, providing 99% of total electricity production. Micro- and mini-hydro power plant are important locally, as they contribute to their owners’ long-term income and, if connected to the local grid, strengthen and optimise use of the grid. This may, in the long-term, contribute to maintaining Norway’s rural settlements. (From a controller’s viewpoint, small-scale hydro power contributes to the energy balance, but not the power control due to limited regulation of the water.)

The Norwegian Water Resources and Energy Directorate (NVE) defines small-scale hydro power as follows:

Micro-hydro power plant Below 100 kW

Mini-hydro power plant 100–1,000 kW

Small-hydro power plant 1,000–10,000 kW


Hydro power development in Norway began in 1885 in Skien, where a wood processing plant that ran on hydro power began supplying neighbouring properties with electricity. The economic optimism of the late 1910s, coupled with an enthusiasm to share the benefits of electricity, led to a wave of local initiatives.

The planned industrialisation of the country after the Second World War increased the demand for electricity which, in the 1960s and 1970s, created a boom in large-scale hydro power construction. During this period, electrification of the country had a high political profile, which resulted in construction of interconnected transmission systems. As a result, most of the power plant of less than 1,000 kW were closed down because they could not compete with cheaper power from the interconnected grid.

From 1970 onwards, opposition to large-scale hydro power grew, resulting in four conservation plans and a master plan for the remaining resources. The last conservation plan was approved by Parliament in 1992, with around 35 TWh of economic potential included. Today, hydro power production is about 113 TWh/year. The table below illustrates the trend towards fewer and larger power generating plant.

This 450 kW plant at Ostfold produces power for light industry.

Present situation

A report completed in May 2000 charted existing micro- and mini-hydro power plant and examined the barriers inhibiting the establishment of new ones. In total, there are 98 mini-hydro plant and 74 micro-hydro plant connected to the grid. Total annual electricity production from these is about 245 GWh and the total installed capacity is 53 MW. In addition, there are a number of micro- and mini-hydro plant not connected to the grid. In the last few years, the NVE has received more than 100 applications for licences and so the number of operating plants is expected to grow significantly, if considered economically viable by the owners.


Some of the barriers that potential owners face include:

  • Complex regulations. Three authorities are involved (NVE, the local council and the regional authority) and, because of conflicting interests among different pressure groups, such as environmental lobby groups or landowners, this situation is difficult to simplify.
  • Uncertainty about the value of the electricity, which affects the payback period and future income. Construction costs are often underestimated, or are calculated with higher electricity prices than can be expected from the market.
  • Finding and negotiating funding, and arranging to sell power to the grid.
  • The need for greater technical competence (this includes equipment suppliers).

In addition, many watercourses, or parts of  watercourses, are protected for environmental reasons or because of their special natural beauty. However, in some places, a small-scale plant that does not intrude on the watercourse is acceptable. All investment in electricity production equipment is taxed at 7%, but since 1999, micro- and mini-hydro power plant have been exempt, as are other renewable energies.


Norway’s government is generally positive towards the development of micro- and mini-hydro power plant because they usually have little impact on the environment and use a local energy resource. An NVE study from 1992 shows that about 700 GWh could be available by improving old schemes and constructing new plant smaller than 1,000 kW.

Representatives of owners, utilities, municipalities, technical research units and the NVE have started a project with a total budget of around NOK 3 million (where NOK is the Norwegian krone) to assess:

  • the technical and economic constraints on implementing and operating small-scale hydro power plant;
  • the need to develop an information service centred on micro- and mini-hydro power plant;
  • the development of a new manual for economic evaluation of potential/actual projects;
  • the potential for micro- and mini-hydro power plant using electronic maps (GIS) of waterfalls (partly under a new programme being developed at NVE);
  • the development of a centre that will establish minimum standards for electrical and mechanical equipment.

The project started in March this year and will last for 12 months, with options for further activities which may be identified as the project progresses.


Hydro power will remain Norway’s principal resource for electricity production for the foreseeable future. However, gas-fired thermal plant are also expected to be introduced. A few large-scale hydro power sites can be developed and a number of existing larger plant can be upgraded. However, there are many small sites with hydro potential and, as the demand for electricity rises and the concern about carbon dioxide (CO2) emissions grows, the development of these will become more attractive.

New micro- and mini-hydro power plant are usually initiated by private property owners, so a clear understanding of the economics of such plant is important. The constraints related to lack of experience in construction and operation and knowledge of the energy market must be taken seriously if such private schemes are to succeed. The on-going NVE project will help to identify means and measures to enhance the exploitation of this renewable resource.

For more information contact the CADDET Norwegian National Team in Rud.

The CADDET Renewable Energy Newsletter is a quarterly magazine published by  the CADDET Centre for Renewable Energy at ETSU, UK.

The articles published in the Newsletter reflect the opinions of the authors.  They do not necessarily reflect the official view of CADDET.

Enquiries concerning the Newsletter should be addressed to Pauline Toole, Editor, CADDET Centre for  Renewable Energy, ETSU, Harwell, Oxfordshire OX11 0RA, United Kingdom. Tel: +44 1235 432968, Fax: +44 1235 433595.