Coalition government brings market to a halt -- Trouble in Norway

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Spring might be on the way, but the picture for wind in Norway is bleaker than mid-winter weather. Energy Minister Odd Roger Enoksen dashed the hopes of many a Scandinavian developer when he declared in January that Norway was all of a sudden not ready to join Sweden in a common green certificates market. What a difference an election makes.

The main stumbling block is Norway's ruling Labour/Centre/Left coalition and its failure to agree on how much hydro to certify as green power and for how long. Sweden wants to shut new small hydro out of the system after 2010, while Norway has spoken of a "technically neutral" scheme where bioenergy, hydro and wind all have a role. Instead of trying to internally compromise first and then negotiate with Sweden, Norway's warring coalition members looked on as the first 2006 meeting between Enoksen and Sweden's sustainability minister Mona Sahlin went awry.

Power company Norsk Hydro immediately declared that all of its dozen planned projects, including the huge 250 MW Båtsfjordfjellet development and the 160 MW Snefjørd project, were now in official limbo. "Without a predictable framework it is unlikely that these wind farms will be built," says the company's Lars Nermoen.

Non government organisations such as Bellona, which has championed a market for green power certificates for years, were also up in arms. "The government handled this very badly," says Marius Holm of Bellona. "They didn't start the needed discussions. I'm one hundred percent sure if they had they could have solved this. Excluding hydro is a problem, but it's not this big a problem."

As Holm points out, even if Norway does not meet Sweden's late March deadline for putting changes in the green certificate market structure into law, all is not lost, at least not for wind power development. Installed wind power rose from 160 MW in 2004 to 281 MW in 2005, according to the Norwegian Water Resources and Energy Directorate (NVE) -- a 75% increase (table). NVE estimates that Norway sent 502 GWh of wind to the grid during the last year.

Furthermore, as much as 838 MW of wind projects is either already permitted and ready to be built while NVE says it plans to issue construction permits to a further 2275 MW this year. Norway's wind resources are formidable and the country's Enova energy agency is still handing out subsidies for building new plant.

As yet, other developers have not followed Norsk Hydro's lead, such is the belief that the coalition partners will patch up their differences and at the least come up with a timeline for the common market. Odd Sørensen of Norsk Miljøkraft has two, 200 MW projects hanging in the balance, the Kvitfjell and Raudfjell sites. Sørensen understands Norsk Hydro's position, but says he is optimistic that even without green certificates he'll find financing for the projects.

"To build the 3 TWh the government has committed to we need that state support. But we also have had to start to search outside Norway's borders in case we can't find it here," he says.

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