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Sweden

Sweden

Sweden halts offshore development

Offshore wind development in Sweden has effectively been halted by the state on the grounds it is too costly for taxpayers. With 400 MW of offshore wind plant in various stages of planning, the market had been expected to boom over coming months. But a test case-involving a 10 MW offshore wind farm planned for Utgrunden off the east coast of Sweden-has been brought before the environmental supreme court. Its ruling, which could take up to a year, will set a precedent for all future development.

The sudden stop came when the Swedish coastal authority lodged an objection to the development of the Utgrunden project on January 20-the last day available for such submissions. The 10 MW wind farm is a child of Tacke Windenergie, the German wind subsidiary of American power giant Enron. With all building permits granted-except that from the coastal authority-construction was to have begun next month (Windpower Monthly, February 1999).

The appeal against the wind farm by Kammarkollegiet, the coastal authority, claims that the economic disadvantages of developing the project are greater than its gains: once public support is removed it cannot generate power at a market price. It follows, therefore, that the environment bonus and state subsidies to which the project is entitled is a misuse of public money, according to Kammarkollegiet. The project 's developer is Swedish company Vindkompaniet.

Kammarkollegiet's Gunnar Edenman argues in national press reports that because there are so many applications to build offshore wind farms in Swedish state waters, a precedent for economic criteria must be established. According to his calculations the project will turn over a large deficit. Wind industry observers note, however, that Edenman does not consider external costs avoided by the use of wind power-and that the economic viability of the project has already been thoroughly evaluated by Tacke/Enron, who will take on all the economic risks involved. Further, Edenman does not seem to be aware of the market for "green" power, where wind generated electricity is sold at a premium price.

Industry observers also point out that the government's subsidy rules already set the economic criteria for wind support in Sweden. A wind project may not lead to costs greater than SEK 4.6/kWh over a year if it is to be eligible for the current 15% state subsidy of its capital cost. This means that a project generating 1 GWh a year may not cost more than SEK 4.6 million to build. The Utgrunden project is expected to produce power for just SEK 3.5/kWh a year, clearing the threshold with a wide margin.

Behind the scenes

Vindkompaniet had moved offshore to avoid the tedious procedures for gaining building permits on land. The government, parliament, politicians and state authorities have all recommended moving wind development offshore to avoid conflicts with other interests. The Utgrunden project had not been objected to by any other interests, including the fishing industry, shipping or the military.

It remains unclear if the utility sector played any part in prompting the sudden objection from the coastal authority, or if other external pressures were applied. Utilities Vattenfall and Sydkraft have vested interests in protecting their existing plant in Sweden's already saturated market.

The halt to offshore development has been raised as an issue in parliament by the Swedish Green party. Meanwhile, the Swedish wind power association is requesting Kammarkollegiet to withdraw Edenman's appeal pending a fuller examination of all the facts, and not just some of them.

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