Incentives: Finnish province fights exclusion

FINLAND: The government of the semi-autonomous Aland Islands has weighed in behind efforts by local wind power developers to be included in the Finnish government's support plan for renewable energy.

The provincial government is upset at being excluded from the renewable energy support scheme (RESS), particularly in light of the islands' pro-wind energy policy.

Aland is currently the biggest provincial producer of wind-generated power, contributing 18% of national output in 2009. Reports have estimated the region's potential for offshore wind to be in excess of 1.5GW.

Finland has committed to produce 38% of its energy from renewable sources by 2020, and the RESS is the government's primary capital support vehicle for renewables. The Finnish government has said that EUR200 million will be available annually to support wind and other renewables projects. Investments in wind of more than EUR1 million are entitled to a grant equivalent to 30% of the total capital cost, while larger projects can receive up to 40%. A tax refund of EUR6.9/MWh is also available under the RESS for turbines with a capacity above 1MW.

Aland Islands' exclusion from the RESS has come as a major surprise for the region, as well as to companies planning capital investments in new wind farms, says Mats Peramaa, Aland's finance minister.

"More than 25% of Aland's electricity production - or 150MW - comes from wind power plants," he states. "We have ambitions to build a good deal more, which is why we want to be treated as just another part of Finland and be included in the renewables support plan."

Aland may be fighting a lost cause. "We accept that Aland is an important producer of wind energy," says Nunu Pesu, a special adviser to the environment ministry. "But we must also recognise its semi-autonomous constitutional position. This places Aland in a different regional category to the rest of Finland."

State subsidies

The fact that Aland already receives subsidies from central government reduces its suitability for inclusion in a new state-backed support scheme, adds Pesu.

Aland's planning authorities are in receipt of plans for, or have approved, offshore wind projects with a combined capacity of 160-200MW, says Peramaa. Energy produced by new wind farms would be exported to the Finnish mainland.

"We are looking at four separate projects," says Peramaa. "The wind farms in Langnabba and Stenarna alone carry a total capital investment of EUR55 million. Most of the financing will come from investors in Aland. Not being a part of the RESS will put these projects and investors at a disadvantage compared with projects and investors in other parts of Finland."

Aland's exclusion from the RESS will inevitably reduce the commercial attractiveness of investing in wind power projects in the province, says Henrik Lindqvist, managing director of Alands Vindenergi Andelslag, the islands' biggest wind power investor. Its wind farm portfolio includes six 2.3MW projects in the municipality of Lemland.

"We need access to the tariff system," insists Lindqvist. "If and when we get it, we will be in a position to produce up to 10% of Finland's commitments for 2020.

Our exclusion would result in a much lower level of capital investment in wind power in Aland."