Disappointment over low subsidy -- Norway's new wind law

Norway's new wind power market framework demonstrably fails to live up to its pledges of support for the EU's climate change aims, says the recently formed Norway Wind Energy Association (NorWEA). The government is offering a production incentive of NOK 0.08/kWh (EUR 0.0096/kWh), or just under one euro cent per kilowatt hour to supplement the average market price for electricity sales. During Septemer, the average price on Nordpool was EUR 63/MWh. The new wind power subsidy is to kick off in 2008 and continue through 2023.

The level of subsidy is a bitter disappointment, says NorWEA. Labour prime minister Jens Stoltenberg's centre coalition party had promised the subsidy would equal or better the levels expected to have been achieved if Norway had gone ahead with Sweden and created a Scandinavian market for trade of green power certificates. Norway abandoned the plan last year.

News of the smaller than hoped for subsidy was largely lost amid debate in Norway on a newly approved combined heat and power (CHP) plant and the government's budget release for 2007. "If politicians spent half as much time thinking about wind power as they have thinking about one gas power plant we'd have no lack of electricity in this country," says NorWEA's Ane Kismul Hansdotter. Kismul is referring to the granting of emissions allowances for a long contested CHP plant in Mongstad, as well as a controversial decision to not require carbon capture from the first day of operation of the plant. After negotiations with Mongstad developers Statoil and Danish Oil and Natural Gas, the government also agreed to be primarily responsible for costs for any carbon capture eventually built at Mongstad.

Not sufficient

State utility Stakraft does not believe the wind projects it currently has under development will see the light of day under the new subsidy, which replaces a system of government grants for each project of around 10% of the eligible cost. "A fixed supplement over 15 years has the potential to provide a predictable and long term scheme in line with our requests to the government," says Statkraft's Torbjørn Steen.

"The level of support is so low, however, that is it hardly likely to trigger investments in many new power projects. We find it hard to see that any of our present projects will be realisable with this level of support," he adds. Last month Statkraft announced plans for a huge 750 MW wind station in the northern province of Finnmark, where wind strengths are some of the country's best, to be called Nordkyn.

In mid-Norway, where new electricity generation is greatly in demand and where the Mongstad CHP 280 MW plant will be located, Agder Energy has five wind power projects currently seeking building concessions from the Norwegian Energy Directorate (NVE). Øyvind Stakkeland, special advisor to Agder, says his company is disappointed with the subsidy. "It's just not sufficient for us to make any investment decisions, it's just too low," Stakkeland says. "We'll wait and see and we'll try to bring all of our projects to the concession stage because we're hoping for better conditions in the future. But I think many investors in Norway have the same opinion as us."

NVE has said it is targeting energy development in mid-Norway and the government has hinted it will make needed grid upgrades there. One other bright spot may be an improvement in application approval times, according to NVE's Lars Bjugan. With the 40 MW Kjøllefjord wind farm coming online last month, Norway's installed wind power capacity reached 320 MW. Another 800 MW has been selected by government for construction. Kjøllefjord, in Finnmark, is owned by Statkraft and consists of 17 Siemens 2.3 MW turbines.