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Market Status: Norway - Government slow to wake up to wind potential

Norway is a perennial frustration. Even though it has abundant wind resources and rich technical and human capital for offshore development from its oil industry, it continues to perform poorly.

Currently Kvalheim Kraft is adding 18MW with eight turbines at the existing 4MW Mehuken plant. Until construction is complete, however, Norway's 2009 installed capacity remains at 2008's total, around 435MW. And 2010 may be similarly stagnant.

Right at the start of 2010, Siemens finalised a deal with Jaeren Energi and Nordkraft Vind for the purchase of 43 turbines - 11 for an expansion at Nygardsfjellet, currently at 7MW, and 22 destined for the Hog-Jaeren Energipark. Neither of these is expected to come online this year.

Norway's government has tacitly admitted that it will not meet its goal to generate 3TWh of wind electricity a year by the end of 2010, up from 1TWh a year now. And the Norwegian Wind Energy Association (NORWEA) says that the government's strategy of trying to boost wind via direct subsidies to a few selected projects through a tender controlled by the ENOVA, the renewable investment arm of the Ministry of Oil, has foundered. "They understand it's a total failure," says Oyvind Isachsen, NORWEA's general secretary. "We have four or five projects competing for NOK 1 billion (EUR121.5 million) ... and that's it."

Capital subsidies have not stimulated actual construction of wind stations partly, Isachsen says, because ENOVA's picks have a poor record of being financed and built even with the subsidies. More, he says, its scattergun selection does nothing for the rest of the 1.5GW of approved wind plant projects which remain unbuilt.

Norway has long laboured for a way to replace its capital subsidies system, but repeatedly faltered. In 2005, with a newly elected government, the former regime's plan to merge with Sweden's green certificates scheme was jettisoned. Later, an idea for a wind power purchase subsidy collapsed amid political turmoil.

Norway has said it will comply with the spirit of the EU renewable energy directive and boost its renewables share from the record high of 60% to 70% by 2020. However, it seems more eager to spend money on experimental floating turbine technology, such as state-sponsored Statoil's Hywind project, than to truly boost renewables capacity or make the required grid infrastructure investments.

Norway's leaders are not immune to the pressures of climate politics, however, and have realised onshore wind may be unavoidable in the country's quest to be carbon neutral by 2030. "(People) tell us that with our fantastic mix of wind and hydro resources we have to develop them so that we can be Europe's energy battery," says Isachsen. "Well, we're afraid of high energy prices, we're afraid of grid prices. And we're a bit slow, perhaps. It takes us a while to change paradigms. That was the case for hydro, and for oil and gas. But in the end, we do pretty well. We will provide onshore wind and hydro, sent it to Europe by cable - and we'll get paid for it, too."

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