Under Sweden's green certificates system, wind has so far lost out to cheaper combined heat and power (CHP) plants fired by biomass. But that is about to change, Rapp says, as the potential for further district heating or for "fuel switching" to burn biomass alongside conventional fuels in power stations becomes limited. "The CHP era is coming to an end in 2012 with no more CHP capacity available. Now is the time for wind to take the lead and set the price for certificates," he says. "Already we are seeing quite sharp increases in capacity." After a sluggish build rate in recent years, he expects close to 250 MW of wind to be built this year in Sweden with more than 300 MW in 2008. "And it is going to increase even more."
The renewables industry has become accustomed to Sweden's green certificates system, he says. "Overall, it has been extremely successful and at very low cost." This is thanks to the careful setting of the market share that must be filled by renewables combined with a stiff penalty for non compliance that stands at 150% of the average certificate value for the year.
With Sweden's excellent wind resource, developers will want to build 100% of the country's renewables target--and more besides, he says. "We do want to export our system and have more countries join in to get more liquidity in the market," Rapp says. Opening borders to allow foreign producers to supply between 10% and 20% of national targets would give sufficient liquidity to allow the European market in renewable credit trade to work, he believes. He sees trade in Guarantees of Origin (GoO) bringing costs down and increasing investor confidence. Rapp supports mandatory opening of national borders to allow renewables producers to sell GoO to electricity retailers or customers in other countries who are charged with meeting legal targets. But countries should be free to choose whether GoO purchased abroad can contribute to meeting their national targets, says Rapp.
Rapp is concerned with some of the opposition to the Commission's proposals voiced by European renewables organisations, including the way in which the European Wind Energy Association (EWEA) has been positioning itself. He is concerned that an EWEA document demanding the answers to 20 questions before the Commission proposes opening borders to green certificate trade may reflect badly on the association. "Some of the questions may be relevant but some are not," he comments. "Free trade is a cornere stone in the EU and it would probably be more constructive to accept the move towards opening borders and work alongside the Commission to try to influence the outcome," he argues.
Meantime, things may be looking up once again for a system of cross border trade in renewables with Norway after the Norwegians appointed a new minister in charge of energy. Rapp and Sweden's renewables community hope that discussions between the Norwegian and Swedish governments will start again to pave the way for trade between the two countries. An earlier attempt at extending the Swedish system into Norway failed when the Norwegian government suddenly pulled out of the talks. The Swedish wind lobby is currently working on a new structure for the country's green certificate trading system aimed at making it permanent and locking in mandated market shares for renewables.
