An industry boom still waiting to happen

Enthusiasts have been predicting a Norwegian wind power boom virtually since the birth of the industry. Nordic neighbour Denmark, after all, is a world leader in wind technology and development; and on the face of it there are few reasons that Norway, with some of the most promising wind conditions in Europe, should not follow suit.

Norway, running short of hydro power, has a huge unexploited wind resource. But whether the government is

any closer to realising a market for that resource is hard to tell

Enthusiasts have been predicting a Norwegian wind power boom virtually since the birth of the industry. Nordic neighbour Denmark, after all, is a world leader in wind technology and development; and on the face of it there are few reasons that Norway, with some of the most promising wind conditions in Europe, should not follow suit.

Two years ago the Norwegian parliament set a target of 3 TWh annual wind power production, equivalent to about 1.3% of current energy consumption, by 2010. Long before that, predictions of massive new wind projects had been the subject of breathless news stories -- especially in local or regional media whose catchment areas stood to benefit most from such schemes -- on almost a daily basis. As long ago as 1997, it was widely and confidently reported that 40-50 wind farms were to be erected along the Norwegian coast.

Five years on, even with a huge boost thanks to the opening last month of the first 40 MW phase of Norway's largest wind farm to date, at Smøla, the latest statistics from the Norwegian Water Resources and Energy Directorate (NVE), the government licensing authority for wind development, tell another story: total installed capacity is 57 MW; annual energy production an expected 170 GWh; total number of wind development companies -- eight Norwegian and some international.

Norway's wind generating capacity is set to rise by a further 40 MW when a project using Nordex turbines, now being built at Havøygavlen, comes online in a few weeks. By then, says NVE, the country will have five operational wind farms out of 11 licensed so far. When built the 11 will have a combined capacity of 506 MW, with yearly production projected to be 0.3 TWh. Meantime, 19 projects are in the planning stage, although only two have got as far as formal licence applications.

Compared with Denmark, which aims to get 50% of its electricity from wind power by 2030, the 3 TWh goal is not ambitious. Denmark's 2450 MW of wind plant in operation today already produce about 6 TWh a year, or 17% of the country's electricity, twice that of the Norwegian 3 TWh goal for nine years ahead.

Yet a survey of coastal wind resources published by NVE last year revealed a 480 TWh wind power potential in Norway using just 12.5% of the mainland and based on wind speeds above 8 m/s -- the minimum set by NVE for wind development. Maximum permissible density is 15 MW a square kilometre, or seven turbines the size of those now being installed in the country.

Drawing an analogy with hydro resources, NVE notes in the survey that "economic and environmental considerations" mean that 140 TWh of hydro is produced today out of a theoretical potential of 600 TWh. By that reckoning, a realistic potential for wind development would be about 100 TWh. A year later, however, NVE adds: "It is difficult to say how much of this potential is a realistic one. Wind power sold in the Nordic market is not profitable today. Hence future profitability depends on factors like governmental support, the development of energy prices, construction prices and future development of a green [power] market in Europe."

Perhaps that is why energy minister Einar Steensnæs recently announced that the 3 TWh target for wind power is to be "reviewed" in the run-up to the national budget for 2003, in light of recent recommendations "to drop the commitment to particular forms of energy in favour of general targets for new renewable energy sources." He adds, however: "In purely practical terms there are no obstacles to reaching the goal of 3 TWh of wind power in 2010."

Indeed, this rather important decision appears to have been made already. The source of the "recommendation" that the 3 TWh target be scrapped is Enova, a government agency set up this year under the energy ministry to promote "energy savings, new renewable energy and environmentally friendly natural gas solutions." The agency argues that the target gives wind an unwarranted competitive advantage over other renewables competing for government funding -- and has been at least partly responsible for what Enova head Eli Arnstad describes as "a huge gap between economic expectations and reality."

Greening and saving

Nonetheless, Enova says unequivocally that Norway now aims, by 2010, to replace at least 10 TWh of power generation a year, equivalent to the annual energy consumption of Greater Oslo, with power from new renewable sources and through energy conservation. Lumping all non-hydro renewables together, the agency estimates that these will contribute 5.5 TWh, while energy conservation will account for the remaining 4.5 TWh. According to the energy ministry, "one kWh of conserved energy is comparable to one kWh of new eco-friendly energy." For the time being at least, the ministry is treating the 3 TWh target for wind as part of the 10 TWh total.

But even NVE -- while insisting that "the 3 TWh target has not been abandoned" -- has very publicly questioned its feasibility. Hailing last month's opening of the Smøla wind plant as "a milestone in the history of Norwegian energy," the agency still managed to throw cold water over the proceedings by enumerating "several factors [that] make us doubt if such rapid growth is achievable."

NVE head Agnar Aas continued: "Even when a licence has been granted, the developers have problems securing the necessary capital for investment. Uncertainty as to electricity price developments and unstable framework conditions also put a brake on the will to invest." Other obstacles listed by Aas included objections by the military to some projects (on the grounds that turbines might interfere with radar surveillance) and "weak capacity in the regional and central grid."

Meanwhile, NVE has turned over to Enova responsibility for subsidising wind development. The energy ministry says it expects subsidies for capital investment in new wind plant, previously averaging around 20-25%, to dwindle as the new agency "considers new measures and support mechanisms to get more energy per crown of subsidy." Production subsidies for "development of wind power technology" equivalent to 50% of the electricity tax (currently NOK 0.0465/kWh or EUR 0.006/kWh) have been mooted.

Enova also administers an "energy fund" for investment in new and alternative technology which is expected to distribute about NOK 5 billion (EUR 681 million) over ten years. The fund is financed by national budget allocations supplemented by a surcharge of NOK 0.03/kWh (EUR 0.004/kWh) on the grid tariff. This year's fund totals NOK 479 million (EUR 65.2 million), of which the surcharge accounts for NOK 200 million. Current funding applications for wind projects alone are reported to total at least NOK 600 million (EUR 81.7 million).

A few fund clues

Enova declines to say how much of this year's fund budget will go to wind, or how it will distribute the money. "Enova has set aside a sum for [investment in] wind, but we do not wish to comment on the size of this sum and how it is intended to be used. We are in a phase of deliberation as to how we shall reach the wind target of 3 TWh," states the agency.

It appears, however, that Enova believes it can fund a technological breakthrough: "We have an agreement in principle with NTE [energy supplier Nord-Trøndelag Elektrisitetsverk] and Scanwind on the development of more efficient equipment as one possibility, but contract negotiations are not complete," it says. Scanwind, a Norwegian-Swedish company, was linked to plans for a 3 MW wind turbine incorporating ABB's supposedly revolutionary "Windformer" technology. The plans were abandoned earlier this year as not viable (Windpower Monthly, March 2002).

Neither does Enova make it clear, in view of the country's huge wind potential, why official policy is for production of no more than 3 TWh. "The wind target of 3 TWh is based on analyses conducted by NVE, which was responsible for this area before Enova was established. The analyses are based on knowledge in the market of what is sought or likely to be sought by the developers. We are comfortable with the target, which will be tough, but not unobtainable," states the agency.

Curiously, Norwegian environment minister Børge Brende has not entered the renewables debate. Indeed, the environment ministry has consistently avoided comment on wind or renewables. "The minister is very busy, and I think that this... would not get on the priority list," was the official comment of the ministry. "Such is life," added spokesperson Ingun Larsen helpfully, "hard and cynical!"(sic).

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