Redistribution effects of Norwegian hydropower and Norway-Europe transmission upgrades

Norway's hydropower reservoirs hold about 87 TWh of storage capacity, making them a potentially valuable resource for balancing variable renewable power in Northern Europe. Beyond existing resources, there are opportunities to expand hydropower generation and pumping capacity and increase cross-border transmission capacity. While several studies highlight system-level benefits of such developments, their distributional consequences have received less attention. Here, we use a stochastic power market optimization model to explore how Norwegian hydropower and cross-border transmission expansions, individually and combined, affect producers and consumers in scenarios for 2050. The model includes a simplified but integrated electricity-hydrogen sector coupling. Our results show substantial distributional effects: In the combined expansion scenario, revenues for wind and solar power producers increase in Norway and neighbouring countries, often by 5–20%. Consumer electricity prices decline by up to 3.6% in several continental European and UK regions but increase by 17–24% in southern Norway. Price volatility decreases in continental Europe and the UK (around 15% in several regions, based on standard-deviation metrics) while increasing in Norway. Overall, outcomes shift toward greater uniformity in both price levels and price volatility. System-wide operating costs fall by 5.5%, significantly more than the sum of reductions from hydropower expansion alone (0.38%) and transmission expansion alone (3.0%), indicating a synergy between the two developments. These results highlight the importance of transmission for unlocking the full flexibility benefits of Norwegian hydropower. The results show that system-wide benefits can coincide with substantial redistribution of costs and benefits across regions and stakeholder groups.