New market subsidy leaves industry deflated

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Norway's wind power industry remains in the doldrums after the government announced its plan to replace capital grant support to wind power projects with a fixed power purchase subsidy of NOK 0.08/kWh (EUR 0.009/kWh). With market prices for electricity running at around NOK 0.35/kWh (EUR 0.04/kWh), the subsidy brings the industry short of the NOK 0.5/kWh (EUR 0.06/kWh) developers say is necessary to make projects profitable (Windpower Monthly, November 2006). As a result, the developers of the flagship Ytre Vikna project in energy hungry mid-Norway, Nord-Trondelag Elektrisitetsverk and Hydro have reduced its size from 249 MW to 70 MW. The Norwegian Wind Energy Association warns other companies are likely to do the same. While some 850 MW of wind projects have been granted construction licences, the association predicts that just a fraction of that will now be developed. Norway's parliament is yet to make the subsidy law and could still increase it.

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