Forestry industry hedges its bets -- Wind in the trees

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Forest land in Sweden seems to have become one of the hottest places to prospect for new wind plant. Last month Swedish pulp and paper products giant SCA announced it would partner with Norway's Statkraft to help it build 1100 MW of new wind in SCA forest land in northern Sweden. Meantime, down south, newcomer Arise Windpower says it had leased forest land in the municipality of Laholm that would support up to 150 new turbines, which the company plans to start erecting in mid-2008. The two announcements come on the heels of news from the Södra forest co-operative in the summer that it was investing EUR 70 million in wind development at its pulp plants and forest estates (Windpower Monthly, September 2007).

The SCA partnership with Statkraft is founded on a ten year power purchase contract under which Statkraft will supply SCA with an annual 500 GWh of power at a fixed (undisclosed) price. "This is our way of hedging our bets to get the energy we need at a competitive price," says SCA's Björn Lyngfelt.

The partners aim to build new wind plant on a total of 10,000 hectares of SCA forest chosen from SCA's holdings of 2.5 million hectares. Statkraft and SCA also plan to pursue hydro projects. "It's never really been an option for SCA to try to build wind on our own," says Lyngfelt. "Statkraft knows the technology and the market."

Six of the seven wind sites chosen are located in a triangle of forest between the towns of Strömsund, Östersund and Sollefteå, with the seventh site a bit further south. Statkraft will handle financing for the project, expected to cost up to SEK 16 billion (EUR 1.7 billion), or about EUR 1.54 million for each installed megawatt. Statkraft has previously used Siemens turbines in its wind projects in Norway -- at Smøla, Hitra and Kjellefjørd -- but will open the 1100 MW to an international tender.

A new company to run the projects will be owned 60% by Statkraft and 40% by SCA, but while SCA will be entitled to revenue from 40% of the electricity produced, Statkraft's Jørgen Kildahl says green certificate revenues have been separately negotiated between the partners.

Down south

Down south in Sweden, Arise Windpower says it is preparing permit applications for five separate wind station sites and hopes to start building in March. Company vice president Peter Nygren admits that might seem like a tight timeframe in a country known for a slow permitting process. "Of course it is if everything goes as expected," he says. "But in our case, it is not as if we are starting from scratch. We've been working for a year and a half with the local authorities, adjusting our plans in accordance with their wishes."

Nygren says Arise has already reduced its desired number of turbines, moved turbines to make them less visible to tourists, and expanded distances between turbines. "But yes, I am optimistic," Nygren continues. "Local people are also generally positive. Nobody in this region has ever before offered to invest four hundred million euros in a single project. It represents new jobs and services."

Nygren says building wind plant in Sweden is not "digging for gold," but that he is banking on getting SEK 0.60/kWh (EUR 0.06/kWh) for electricity produced at Laholm. "Margins are pretty small," he says. "But we've got a good site, good wind conditions and a strong nearby grid."

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