Roller coaster ride hits bottom

Sweden's tortuous debate over its energy future--in particular the future of nuclear power--continues to delay a new policy structured towards use of renewables. Meantime wind power is left at the mercy of government handouts. When subsidies are available, wind development is fast and furious. When the cash runs dry, the growth curve plummets at breathtaking speed.

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Swedish wind energy development has come to an abrupt halt after its most hectic year ever in 1996. State subsidies ran dry six months ago and with a new market programme still to materialise it looks as if no more than 9 MW of wind turbines will go in the ground this year. Wind proponents are warning that government inaction on a new energy policy could also force wind company firings or closures.

Still, Swedish wind power passed the 100 MW milestone in November and by the end of last year over 300 turbines were turning. Capacity additions amounted to about 36 MW in 1996, compared with 29 MW in 1995, and the average size of wind turbines installed was 500-600 kW, though a small number of turbines in the 250 kW range were also installed. The end of year total was 105 MW of installed wind power capacity.

Danish manufacturers continue to dominate the market, Vestas and WindWorld in particular. German Enercon, however, has also gained a foothold with 12 turbines on line -- nine of them installed last year. In October, Danish Micon installed its first three 600 kW turbines in Sweden and Bonus, also from Denmark, secured its first major Swedish order through a tender organised by NUTEK, Sweden's energy authority (Windpower Monthly, September 1996).

Market patterns

Small-scale grassroots development -- the hallmark of Swedish wind power -- continues, with new wind co-operatives forming, even in areas with relatively little wind. Private developers associated with the Swedish wind power association (SVIF) are responsible for initiating most projects, but others are being started by local "green" politicians or environmental activists. Investors clearly want locally produced green power and most frequently opt for buying just enough of a wind turbine for their share of its generation to meet their own consumption. Most wind turbines in Sweden are still installed singly or in small groups, or added to existing groups -- often leading to a confused mix of types and sizes of turbines at any one location.

Another development model, emerging among the farming community on Sweden's windswept plains, allows for excess power to be sold to the local utility. About a dozen medium sized wind turbines, from 150 kW to 500 kW, now feed power directly to the farms on which they are installed. Any surplus power is sold to the utility -- usually at a price higher than that offered by the main electricity distributor.

Meantime, independent wind power development companies were more active in 1996, with some of them now owning up to 15 turbines. Project investors are mainly wind enthusiasts and local citizens. The commercial opportunities of wind development are also attracting entrepreneurs into the field who are being offered attractive financing packages from banks.

Major utility involvement in wind development also took off last year, with Vattenfall and Sydkraft both increasing their wind plant ownership. They are set to become major players in the wind business. Sydkraft's flagship project is a wind farm of 12 Vestas 600 kW machines on Gipsön, outside Landskrona, which it bought last year from an independent developer. Vattenfall has also bought completed projects as well as developing some of its own (Windpower Monthly July 1996). Alongside the big boys, several local utilities are investing in wind power, led by Göteborg Energi, which has installed ten turbines in Gothenburg harbour.

Another major market influence has been the deregulation of the Swedish electricity market in early 1996, when customers were given the right to choose their electricity supplier (Windpower Monthly January 1996). A number have already elected to buy wind power -- a choice strongly encouraged by Sweden's nature conservation association, Naturskyddsföreningen (SNF). It administers a much sought after "green power" certification for companies anxious to label their products as environmentally friendly. The most notable wind energy customer to date is hamburger-chain McDonald's (Windpower Monthly May and July 1996).

To meet this customer demand for green electricity, utilities are being forced to buy wind power from commercial wind power companies. Vattenfall has agreed to buy all the commercial wind power generated on Gotland at a premium price and it was the need to meet demand which drove Sydkraft to buy the Gipsön wind plant. Sydkraft is also negotiating to buy more power from independent wind energy generators. Furthermore, wind power association SVIF is now negotiating with utility Stockholm Energi, for a deal similar to that secured with Vattenfall on Gotland, where the utility will pay a premium price for wind power in order to meet green power demand.

Sudden death

But while 1996 was a good year for wind energy in Sweden, the 1997 market is so far non existent. All projects installed last year received a 35% government subsidy -- subsidies which are no longer forthcoming. Firm support of renewables in the years to come has been promised by government, but the promise has yet to be backed by any concrete plans, leaving the wind industry facing sudden death in 1997.

NUTEK's order for Bonus wind turbines is the only state-subsidised project slated for the year. Meantime, Vestas Svenska AB announced it will fire its staff, foreshadowing other likely cutbacks and closings. And one of the country's most active developers, Vindkompaniet, is concentrating its efforts in Britain and the Baltic states, although it will start development of an offshore project off Gothenburg this summer. The project is supported under the EU's Thermie energy demonstration programme.

Facing a situation where wind projects in Sweden have become 35% more expensive overnight, it seems unlikely that new turbines will be installed -- especially when the market is expected to take a turn for the better as soon as the government fulfils its promise. And while wind companies are forced into retreat, utilities such as Vattenfall and Sydkraft are likely to quietly drag their heels on wind development, while keeping their nuclear power plants on line as long as possible.

Adding fuel to the fire, energy authority NUTEK is ambiguous on wind power. On the one hand it has elevated wind to a "national interest" in Sweden and demanded that sites be found for wind plant to generate 1 TWh of power a year (Windpower Monthly, September 1996). On the other hand, it claims wind power no longer needs subsidies. Basing its argument on its own Bonus procurement, the agency claims that costs have decreased by 20%. Opponents challenge this claim, which they say is based on different calculations and time frames than the industry standards. NUTEK claims prices are as low as SKK 0.28-0.30/kWh for wind generated electricity in average locations, while calculations using more usual criteria came up with SKK 0.40-0.45/kWh.

The price discussions prompted a series of leading articles in Sweden's main daily newspapers claiming that existing wind power production is far too expensive and costs SKK 0.70/kWh. Leader writers may have been bitten by a pro-nuclear campaign in which heavy industry has invested huge sums. It fears rising energy prices in a country with some of the lowest in the world.

The current nuclear campaign recalls a similar one from 1980, which began an ongoing controversy over nuclear energy that has since paralysed Swedish energy policy. That year voters passed a referendum approving the use of nuclear energy until reactors were worn out and could be "sensibly" closed down. Since then, several worn-out reactors have undergone million dollar retrofits -- instead of the voter-demanded closures. After unfulfilled government promises, negotiation breakdowns and delays, a new energy bill will be put before parliament next month. Wind power and other renewables will get no support until the bill is passed -- and if this happens in 1997 the new rules won't take effect until at least 1998.

Some light on the horizon for wind energy has come from Swedish industry secretary Peter Nygårds who says that the forthcoming energy bill firmly supports wind power and that the government is supportive of future development. Nygårds mentioned no specific proposals.

Popular support

The public, however, favours wind power. The more wind turbines installed, the more positive is the public attitude and any dissent is usually site specific and comes from weekend home owners -- not the locals. As regional authorities become more accustomed to handling new wind plant siting applications, NUTEK'S declaration of a 1 TWh/year goal for wind power and its elevation of wind to a status of "national interest" is encouraging a positive attitude. Beyond the glimmer of hope provided by NUTEK's goal, Sweden's wind energy developers can only hope the industry will avoid the sudden death with which it is threatened and use the current lull in business to prepare for a major offensive aimed at meeting 1 TWh a year of wind power before the end of this millennium.

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