Finland

Finland

DEREGULATION BILL CAUSING ALARM

Deregulation of the electricity market in Finland is not a good idea, seen from the angle of wind power proponents, because it will only allow transmission access to customers with a requirement of 500 kW or more. This is a fatal threat for small investors. In Sweden a similar threat loomed last year, but was avoided by intense lobbying which secured inclusion of a special clause for wind power.

Finland, like its neighbours Norway and Sweden, is deregulating its electricity market. The plan, to come into effect from July 1, 1995, is alarming wind power proponents in the country. "Its like turning a lamb to the wolves," writes Gustav Tallqvist of the Finnish wind power association in its magazine, Vindögat. Small producers will be in no position to negotiate with the huge utilities and power companies who offer no more than FIM 0.10/kWh for wind power, argues Tallqvist. The deregulation bill also restricts transmission access, until 1997, to customers with a requirement of 500 kW or more. This rules out ownership of wind turbines by small investors, a model already tried and tested in Finland's Kemi wind farm of three, 300 kW turbines, installed last year.

The Kemi project was built by the local utility and shares in it were sold to customers for FIM 2000 each. They were were then allowed to buy 1000 kWh a year of electricity at the cost price of generation from the wind plant: FIM 0.14/kWh, compared with an ordinary consumer pricefor electricity of FIM 0.39/kWh. Annual return on investment, therefore, amounts to a tax-free 12.5%. Shareholders have been granted the same terms for next year, too, making chances of greater profit even more likely; the ordinary consumer price is likely to be increased.

Tallqvist argues that on a free market wind is at a disadvantage. All its costs are included when calculating the price of wind power, but nuclear and fossil fuels power plants can exclude the cost of damaging the environment. He points out that studies on these external costs, by German researcher Olav Hohmeyer, among others, have revealed that these costs are of the same magnitude as the direct costs of production.

Sweden is to deregulate its power market in January. When its deregulation bill was first published, the Swedish wind power association faced the same problem last year as the Finnish association is facing now. But by intense lobbying it managed to secure some special clauses for wind power in the bill, thereby ensuring a fair free market. In Sweden the power distributors are obliged to buy all wind generated electricity at a percentage of the consumer price. This percentage has not yet been fixed, but will probably end up at 70-80% of the consumer price.

This is a good solution which should be applied in Finland as well, says Tallqvist, who on behalf of the Finnish wind power association calls for action and intense lobbying to get the same amendments into the new electricity bill in Finland.

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