The power of the Norwegian waterfalls has been utilized to turn millwheels from as far back as the early Middle Ages. The advent of electrification towards the end of the 1800s made it possible to harness the abundance of waterways to provide power to factories located further away from the water source. Thus, hydropower laid the foundation for the industrialization of Norway.
In the early 1900s, hydropower facilitated the build-up of power-intensive industry by companies such as Norsk Hydro, which produced artificial fertilizer. Following WWII, power-intensive industries such as aluminium production and the electrochemical and electro-metallurgical industries were widely expanded in Norway as part of reconstruction of Europe. The most intensive phases of development of the hydropower industry took place from 1910-1925 and 1960-1985.
Norway entered the oil age towards the end of the 1960s, and became a net exporter of oil and gas in 1975. Although natural gas is growing in significance, oil remains the most important commodity in the energy sector.
The oil crisis of 1973 led to new international interest in renewable energy sources, both as a money-saving measure and out of concern for the environment. New forms of renewable energy undergoing development in Norway include wave power, wind power, heat pumps and new forms of bioenergy, such as different types of biomass for heat production, and biofuels (bioethanol and biodiesel). Bioenergy represents the oldest energy source in Norway, and firewood continues to serve as a major source of energy for heating purposes.
Prior to WWII, one-fifth of Norway’s population lacked electricity and in 1938 a system of state support was launched. After the war ended, the system was reinstated to provide all households on mainland Norway with access to the electricity grid.
All development of water resources must be authorized by the central authorities. The Storting (Norwegian national assembly), the Government, the Ministry of Petroleum and Energy and the Norwegian Water Resources and Energy Directorate (NVE) are formally responsible for administering licensing rounds for hydropower stations. Large-scale or controversial projects are generally presented to the Storting.
The configuration of the power supply sector reflects the manner in which the system has expanded over time. Power stations and owners were established locally to supply energy to emerging industry, to bring electricity to local areas and to provide cheaper electricity by means of transfer cables. This resulted in an assortment of different types of utilities with different types of business organization, in part owned by the local private sector and in part by the municipal, country and/or state levels of the public sector. This variegated structure remains evident today.