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Norway

Norway

Government promises to continue capital grants

The Norwegian government's renewables agency, ENOVA, has pledged to continue capital grant support to wind projects until a production goal of 3 TWh is reached. The goal, set for 2010, is a doubling of the 1.4 TWh estimated production from 371 MW of wind power in eight projects already granted a 25% subsidy. Norway's total wind capacity stands at 386 MW. Enova will select the most "cost effective" projects for support, suggesting some kind of competitive bidding element for the subsidy. To be selected, projects must have permits from the Water and Energy Directorate (NVE), access to the grid network and a tentative turbine supply agreement. "Enova wants to make sure if you get money from them you'll actually build," says Øistein Galaaen of the Norwegian Wind Energy Association (NORWEA). "But you need a tentative purchase agreement to get the investment money, and you need the investment money to get a purchase agreement. That's a little worrisome." Under the conditions it appears that only three projects could currently meet Enova's requirements: Høg-Jaeren (80 MW), Ytra Vikna (about 80 MW) and Kvitfjell (200 MW), or just one-fifth of permitted projects and a much smaller fraction of the 47 projects waiting for permits in NVE's backlog. Galaaen says the grant structure does not provide the forward market visibility the industry needs for long term investment. To pay for the support program, NORWEA proposes raising the current levy on electricity bills from NOK 0.01/kWh (EUR 0.001) to NOK 0.03/kWh and presumes this would be applied to 74 TWh of consumption since some heavy industry is exempted from the surcharge. Galaaen points out that all political parties have committed to a pan-Scandinavian market for renewables based on trade of green energy certificates. As a temporary measure, the proposed levy would cost about the same as the expected extra costs to consumers of buying green credits, he says. Earlier this year energy Minister Åslaug Haga promised a budget of at least NOK 500 million (EUR 62.5 million) for Enova support to renewables.

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