How NHH Researchers Influence Energy Policy

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Professors Endre Bjørndal and Mette H. Bjørndal have made long-standing contributions to the development of pricing and regulation in the Norwegian electricity market. Their research has been instrumental in addressing network challenges and shaping effective market design.
By Sigrid Folkestad

21 May 2025 09:39

How NHH Researchers Influence Energy Policy

Congestion management and regulation of the electricity market are challenging but essential tasks. At the forefront of addressing these issues were Endre Bjørndal and Mette Bjørndal.

Professor Endre Bjørndal, Department of Business and Management Science, NHH.
Professor Endre Bjørndal (1966-2024), Department of Business and Management Science, NHH.

What happens when academic research moves from theory to actionable policy?

In Norway’s electricity market, it has led to fairer pricing, smarter regulation, and greater efficiency, partly due to the long-standing contributions of Professors Endre Bjørndal (1966-1924) and Mette Bjørndal, both at the Department of Business and Management Science.

A pivotal question in the electricity market has been how to handle congestion in networks.

Earlier studies by the two NHH Professors compared the Nordic zonal pricing method with nodal pricing benchmarks. This research used conceptual and simplified models to highlight the differences, trade-offs, and potential inefficiencies inherent in these two pricing methods.

The OptFlow model

In 2012, the Bjørndals played a leading role in developing and applying the OptFlow model - a computational tool used to analyze and optimize electricity network flows, particularly in the context of congestion management and market design in wholesale electricity markets.

Professor Mette Bjørndal, Department of Management and Business Science, NHH.
Professor Mette Bjørndal, Department of Business and Management Science, NHH.

It was developed as part of research commissioned by NVE. The model made it possible to compare different congestion management methods in a more realistic network, using historical real data from Nord Pool.

Further, this model informed discussions on wholesale pricing and congestion management, directly contributing to expert committees and guiding the Ministry of Energy[1].

Transforming Regulation of Network Companies

Since the Norwegian electricity market reform in 1991, the regulation of network companies has been an ongoing focus. The Bjørndals’ research supported NVE in choosing and refining a DEA-based yardstick regulation model introduced in 2007[2].

Their work addressed implementation challenges like data calibration, adjusting for efficiency biases, and compensating for reporting lags—solutions that were later implemented by NVE.

References:

The two NHH researchers have an extensive publication record in academic journals, but the most important contributions to the development of practice are the following:

[1] Bjørndal, Endre, Mette Bjørndal and Victoria Gribkovskaia (2012): Congestion Management in the Nordic Power Market – Nodal Pricing versus Zonal Pricing, SNF report 15/12.

[2] Bjørndal, Endre, Mette Bjørndal and Trond Bjørnenak (2004): Nettregulering DEL 1: Effektivitetskrav og kostnadsgruppering, SNF-rapport 23/04.

Bjørndal, Mette and Thore Johnsen (2004): Nettregulering DEL 2: Nyverdibaserte nettrelaterte kostnader, SNF-rapport 24/04.

Bjørndal, Endre, Mette Bjørndal, and Kari Anne Fange (2010), “Benchmarking in Regulation of Electricity Networks in Norway: An Overview,” in Bjørndal, Endre, Mette Bjørndal, Mikael Rönnqvist, and Panos Pardalos (eds.), Energy, Natural Resources and Environmental Economics, Springer, 317-342.

These improvements ensured fair revenue caps and maintained profitability in the capital-intensive electricity distribution industry.

Long-Lasting Industry Collaboration

Through commissioned reports, industry collaborations, and the Elbench project (launched in 2015), the researchers provided continuous input on productivity, innovation, and market design.

Their work on marginal loss pricing, documented in a 2010 SNF report, was followed by changes implemented by Statnett in 2015, improving pricing practices.

By bridging theory and practice, NHH researchers have shaped both regulatory frameworks and operational strategies, helping regulators like NVE and industry players like Energy Norway navigate complex market challenges.

The legacy of this work continues to resonate - in Norway and internationally, offering tools and perspectives that help electricity markets function more efficiently and fairly. 

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