Sweden - Grid upgrade decision will be key to continue growth

SWEDEN: The Swedish wind industry is cautious about the impact that the new common green electricity certificates scheme involving Norway and Sweden will have on the development of renewable-energy sources.

The system was launched on 1 January with the aim of boosting efficiency and cost-effectiveness in the sector.

Gunnar Fredriksson, deputy chief executive of the Swedish Wind Energy Association, however, is interested in whether the government will accept a proposal by transmission system operator Svenska Kraftnat to address the way grid improvements are handled. A decision by the industry ministry is expected by the summer.

At present, the first company that wants to connect to a grid has to bear the entire cost of any upgrades, while companies that follow pay nothing. Svenska Kraftnat has proposed a fairer distribution of costs, where developers would only pay for the part of the development from which they benefit. Svenska Kraftnat would offer an advance loan for grid developments in a particular area and eventually the costs would be split among the projects that connect to the grid.

Having so far escaped the worst of the eurozone's economic crisis, Sweden saw its wind-energy capacity grow by about 744MW last year. Around 6.1TWh of Sweden's total electricity was generated by wind in 2011, an increase of over 70% on the previous year.

Generating energy from wind in Sweden became cheaper last year due to increased competition among turbine manufacturers and a strong local currency, the Swedish krona. "In addition, the trend towards large turbines - the most common size is 2-3MW - has made the turbines more effective in Swedish wind farms," says Fredriksson. The preference for larger wind turbines and higher towers is expected to continue.

However, Fredriksson sees the falling prices of both electricity and certificates as a threat for projects that were built when both turbine prices and revenue expectations were higher. "In the long term, there's a considerable risk that we will come to a standstill when the goals of the certificate system have been reached," he says. This could happen as early as 2014-15 if the expansion proceeds at its current pace.

The long lead time for grid connections and the permit process for new transmission lines will probably be the main factors affecting how much onshore wind power can be built in Sweden by 2020. Restrictions imposed by the Swedish air force make an area the size of Denmark unavailable for wind development, according to Fredriksson.