Norway has lagged neighbour Sweden in attracting wind power projects but planned changes to tax rules are expected to lure investors back.
Norway and Sweden launched a common renewable support scheme in 2012, the first of such kind in the world, to boost output from green energy sources, such as wind, solar and biomass, by 26.4 terawatt-hours (TWh) by 2020.
While Sweden has managed to erect wind turbines able to produce up to 6.6 terawatt-hours (TWh) of electricity per year, Norway has added just 0.3 TWh. Most of the new investment in Norway went to hydropower, which is already the source of 95 percent of the country’s electricity.
To change the situation and help the wind industry, the Norwegian government has decided to harmonize depreciation rules to bring them in line with Sweden and parliament is expected to approve the new tax rules in spring.
“They are basically copying the Swedish depreciation rules, which would allow investments to be recoved faster, and this is a major step for the wind industry,” said Andreas Thon Aasheim, an advisor at Norwegian wind power association Norwea.
By boosting wind power generation, Norway would be able to save water in its reservoirs and export hydropower to European countries to help them replace power generated by fossil fuels. It would increase Norway’s security of power supply in dry years, even if wind power can be more volatile.
More wind power should also lead to lower, but more volatile, wholesale electricity prices as wind power has close to zero marginal costs.
SLICE OF THE PIE
Norwea’s Aasheim said he expected the tax amendments to result in several investment decisions in Norway this year which could increase wind output significantly, when built.
“We can still add 6-8 TWh in new wind power production by 2020 (under the support scheme) as a result of these decisions, though the situation wouldn’t change immediately,” Aasheim said.
Including output from wind farms, which were built before 2012 or were not included in the “green certificate” scheme, wind turbines produced 11.5 TWh in Sweden and 2.2 TWh in Norway in 2014, data showed.
Aasheim said Norwegian wind projects could be helped if wind turbine producers cut their prices to get a slice of the market.
“There is fierce competition between wind turbine suppliers to enter the market in Norway, which still remains no man’s land in terms of wind power,” Aasheim said.
Danish wind turbine manufacturer Vestas Wind Systems signed a letter of intent with Norway’s state-owned energy group Statkraft in January to supply wind turbines for six planned wind farms.
Denmark generated 13.1 TWh in wind power in 2014, accounting to 39 percent of its total consumption, the latest data from Danish Energy Agency showed.
(Reporting by Nerijus Adomaitis; editing by David Clarke)