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Norway

Norway

Rush of concessions fuels promise of major market -- Norway sets sights on green certificates

Expectations of a shared market with Sweden for trade in green electricity certificates and a healthy flow of applications for concessions to build new wind plants over the past twelve months means Norway is increasingly confident of becoming a much bigger player in the European wind power market. The country has a good wind resource, a government keen to exploit the industry and pro-active producers launching large scale plans.

Lack of grid capacity, however, remains a barrier. It could take ten years to develop the wires needed to take serious advantage of the national wind energy resource. No decision has been taken on when new transmission lines to take wind power to the customer will be built, or who is to pay for them. The proposal for a joint market for green certificates with neighbouring Sweden complicates the grid issue. To ensure a level playing field, both countries must agree the same rules for how the cost of transmission is to be filtered down to the customer -- through the owners of the networks or through the owners of power plant connected to them, or even across the tax base. A year of delicate negotiations is expected through 2005.

Norway, which would dearly like to be a greater wind power producer than its larger neighbour, Sweden, intends to launch its green certificates market in January 2006. Whether or not a fully functioning market will be ready so soon is debatable since participants remain in short supply. So far, the country has just 160 MW of operating wind plant, compared with Sweden's 440 MW. Of that, just 48 MW was installed during 2004, a year in which Norwegian wind power had been expected to more than double.

Total wind power production in 2004 was 0.48 TWh, a long way behind energy gency NVE's target of adding 3 TWh of production each year to reach 10 TWh annually by 2010. Reaching the targets will require an annual installation of around 1000 MW. To date, state energy agency has approved concessions for 14 projects with an installed capacity of 600 MW. It is now looking at applications for 19 concessions for a total capacity around 1100 MW.

The market's most active player by far has been utility Statkraft, with plans for 250 MW waiting approval and two major plant built. Stage two of the 150 MW Smøla development is due for commissioning in the autumn and will add 110 MW to the current 40 MW. And Statkraft's 55 MW Hitra project came fully online in October.

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