The IEA’s latest analysis of Norway’s energy market has concluded that the country plays a key role in global energy security thanks to its significant hydrocarbon reserves and hydropower capacity.

The Paris-based agency has recognised Norway’s sustainable management of its oil and gas resources as well as its position as a reliable global supplier, and has also noted the importance of the country’s large-scale hydropower resources to the European electricity market.

The IEA said that Norway’s hydropower resources are a “valuable energy asset” that could play a key role at a time when European electricity markets are integrating and variable renewable energy generation is growing. “More cross-border connections are coming online and will help realise the full potential of hydropower for balancing variations in demand and supply in the regional market,” IEA said. “They will also improve electricity security in Norway in times of low hydropower availability.”

The IEA has also welcomed Norway’s efforts to increase its oil and gas production because it “expects that substantial volumes of oil and gas will still be needed for years to come”. It estimates that only a third of the country’s estimated discovered and undiscovered gas resources, and half of its oil resources, have been produced.

The IEA report on Norway also looks at how market-based investments in low-carbon generating capacity can be boosted by improvements in taxation and subsidy systems. It recommends that Norway and the other governments in the Nordic electricity market area should co-ordinate and harmonize their renewable energy incentives and policies to avoid creating oversupply of electricity.