Good signs for future framework

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The Swedish wind industry is optimistic that the government is now ready to commit to a long term horizon for its renewable energy certificates system. Introduced in May 2003, the system is undergoing its first year review. The industry's major gripe has been the government's reluctance to extend the obligation on customers to buy green power certificates beyond 2010. This short time span for wind plant to pay back their loans has made it difficult to obtain project financing.

"We are primarily concerned with improving the long term aspects of the system and resolving the issue of penalty prices," says Gunnar Fredriksson of the association of wind power producers, Vindkraftleverantörerna. Electricity retailers who fail to acquire the required number of certificates pay a penalty to the state.

The Swedish government is due to publish its response to the proposals for change shortly. Members of Vindkraftleverantörerna are happy with the tweaks rumoured to be in place. "We are hopeful the government has taken onboard our wishes and acted on them," says Fredriksson, suggesting a commitment to extend the obligation period to 2020 or even 2030 is expected. "This is very good news for us, because it helps the long term planning and viability of the industry," he adds.

Whether the issue of what happens to income from penalty payments has been resolved remains unclear. The original plan was for the money to go back into the state's coffers, but the industry is calling for it to be ploughed back into renewables.

The level of the penalty payment after 2004 is the other key issue up for debate. So far, only penalty levels for 2003 and 2004 have been set. "There are now two options moving forward," suggests Fredriksson. One would be to fix a penalty for several years ahead. Vindkraftleverantörerna says it would like to see a penalty of around EUR 0.033-0.038/kWh, which in theory sets a minimum price for certificates and affords some kind of financing security. The alternative would be to tie penalty rates to the long term electricity price. This would make it a more market based system, says Fredriksson. "If electricity prices suddenly rise then so would the penalties." Last year certificates traded consistently above the penalty price, fetching around EUR 0.027/kWh.

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