EnergyWise: Integrated modelling of efficient and acceptable expansion of renewable energy in times of nature and climate crises

The energy transition to reduce greenhouse gas emissions will require a massive expansion of renewable energy production in Norway; at the same time, the nature crisis must be considered on par with the climate crisis. In addition, attempts at renewable energy expansion have stalled due to conflict and distributional impacts, demonstrating that economic efficiency cannot be separated from the acceptability and equity of policies and outcomes. Hence, a more holistic approach is required to balance climate, nature, and wider societal interests. EnergyWise is an interdisciplinary project aiming to synthesise and assess the most important impacts on society, economy, climate, and nature from the renewable energy expansion in Norway. The project will further integrate these impacts as costs/benefits or sustainability constraints in the national energy system model framework called TIMES. With the expansions of the model made in the EnergyWise project, the TIMES framework will be used to analyse trade-offs and distributional effects of renewable energy expansion scenarios and recommend efficient and acceptable policies that can achieve a better balance between different interests. The project has six work packets (WP) where WP1 syntesise the impacts of the renewable energy expansion, WP2 focuses on valuing non-market impacts of the expansion, WP3 conducts integrated energy system modelling using TIMES with additional values and constraints included for a more holistic analysis and WP4 analyses policies and regulations and provides recommendations. WP5 is focused on user collaboration and dissemination, while WP6 is devoted to project management. Researchers from Statistics Norway, the Institute for Energy Technology, the Norwegian Institute for Nature Research, and Menon Economics will implement the project in cooperation with collaborators from several government institutions, the Energy Regulator, Statkraft, private and NGO sectors, and a scientific advisory board. Regulation of wind power development in Norway has been based on a concession system. The project includes an analysis of how alternative fees and/or compensatory measures can be used in regulation. Compensatory measures (offsets) mean that the developer must finance the restoration (reclamation) of previously developed nature to compensate for the environmental destruction caused by a new power plant. A combination of environmental fees and an offset market is economically beneficial, as long as some loss of untouched nature is accepted. The analysis presents two specific completed restoration projects as examples of measures that could have been used as offsets for wind power development. Wind farms have local negative environmental effects, such as noise, ice throw, visual pollution, and shadow flicker. As a contribution to calculating the costs of this, an analysis of the effect of wind farms on the prices of nearby homes has been conducted using a hedonic valuation model. The study finds that there is a negative willingness to pay of around 15 percent of the price of an average home to live within 1 km of a wind farm, and that this effect converges to 0 at a distance of 5-7 km from the wind farm. The analysis also shows that homes near wind farms with many turbines experience a greater price reduction.

The energy transition will require a massive expansion of renewable energy production in Norway. At the same time, the nature crisis needs to be considered on par with the climate crisis. Further, attempts at energy expansion have stalled due to conflict and distributional impacts, demonstrating that economic efficiency cannot be separated from acceptability and equity of policies and outcomes. Hence, a more holistic approach is required to achieve a better balance between climate, nature and wider societal interests. We propose an interdisciplinary project that aims to synthesise and assess the most important impacts on society and economy, climate and nature from renewable energy expansion and integrate these either as monetised welfare effects (costs and benefits) or as sustainability constraints in an integrated national energy system model framework. This framework will be used to analyse trade-offs and distributional effects of expansion scenarios and recommend efficient and acceptable policies that can achieve a better balance between interests. Hence, the proposed project addresses the main topic and challenges of the call and portfolio plan: “The need for comprehensive understanding and knowledge of the issues and trade-offs we face “..” when “Development of new energy production and infrastructure puts pressure on land and biodiversity, while efficient resource management is more important than ever.” Further, we address the two priority areas of the call in an interdisciplinary way, “generating knowledge of power markets, regulations….and distributional effects” and taking head on “controversial topics involving conflicting societal interests”. Researchers from Statistics Norway, Institute for Energy Technology, Norwegian Institute for Nature Research, and Menon will implement the project in cooperation with collaborators from government, e.g. Environment Agency, the Energy Regulator, Statkraft, private and NGO sectors, and a scientific advisory board.