Case Study

Statnett: Building a power line isn’t always a straight line

9 pages
December 2023
Reference: IMD-7-2359

This case is about the dilemma faced by Elisabeth Vardheim, a C-level executive at Statnett, Norway’s transmission grid operator. As a result of its participation in the Paris Agreement, Norway decided to greatly accelerate the national energy transition. An increased reliance on electricity, however, brings with it a pressing need for more high voltage power lines. As executive vice president for construction at Statnett, Vardheim must choose between two ways of increasing Oslo’s electricity transmission capacity: string power lines on 40-meter-high towers or bury them underground. However, although the upgrade is indispensable, neither solution seems to have any chance of being approved. Vardheim has to contend with powerful stakeholders. There is the local population, which opposes overhead power lines due to their impact on the landscape – the “not in my back yard” effect. There is also the regulator, who must act in accordance with regulations that favor the most cost-effective solutions to keep electricity prices low for all Norwegians. The case is not just about choosing between two solutions. Obtaining the construction license also means having a good understanding of the forces involved, the licensing process and the applicable regulations. The student is taken on a journey that includes stakeholder management analysis, the decision-criteria perspective and real option valuation. Students are subsequently divided in two groups, each attempting to win the other over to their chosen option. This usually creates a stalemate and a lack of consensus which is then solved by an “Aha!” moment thanks to the use of an embedded option, an approach that will solve the case and lead to the attainment of the construction license.

Learning Objective
  • Resolving difficult dilemmas through the use of embedded options.
  • Using standard tools (power/interest grid for stakeholder analysis, SMARTER for decision analysis) to compare the alternatives.
  • Appreciation of the value of embedding an option.
  • Ability to identify similar cases in students’ own environment.
Keywords
Electric Power Utilities, Power Generation, Infrastructure, Stakeholder Management, Decision Analysis, Real Options, Embedded Options, Transmission System Operator, Woman Leadership, Affordable Energy​, Clean Energy​, Industry Infrastructure, Industry Innovation, Sustainable City, Sustainable Community, Responsible Consumption, Responsible Production, Climate Action
Settings
Europe, Norway
Statnett, Energy, Power Generation
not specified
Type
Published Sources
Copyright
© 2023
Available Languages
English
Related material
Teaching note
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