Norwegian wind industry slams retroactive tax on production

Norwegian rules introducing a production tax from 2022 on new and existing wind farms risks derailing the sector, industry body warns

by Nadia Weekes 12 May 2021

Norwea warned the new tax will damage 鈥渋nvestment security and predictability鈥 in the sector (pic credit: Fosen Vind)

Norway’s wind energy association (Norwea) has slated government proposals to introduce a production tax on energy generated from all wind farms, starting in 2022. 

The move comes on the back of a Norwegian parliament decision late last year that such a tax should be introduced, following pressure from community representatives and the wind industry itself.

The purpose of the tax is to raise “predictable income” for the municipalities hosting wind projects, the Norwegian government explained. Energy minister Tina Bru said the tax would contribute to “lowering the level of conflict related to wind power”. 

Wind projects in Norway are often delayed by conflict, partly due to local municipalities not being involved in the permitting process or benefiting financially from their development.

While the government has yet to divulge and consult on the precise details of the tax, finance minister Jan Tore Sanner said that it would be payable regardless of wind farm profitability.

The new tax will damage “investment security and predictability” in the sector, Norwea has warned, given that it is intended to apply retroactively to projects developed under a different framework.

“The government is planning an urgent process that could have serious financial consequences for investments that have taken place under completely different conditions,” Øistein Schmidt Galaaen, acting CEO of Norwea said. 

“If we are to succeed with the electrification effort and secure access to capital for Norwegian investments, we must have a predictable and long-term framework. This move is the diametric opposite.” 

Norwea argued that society at large should contribute to wind projects that bring “major national advantages but also local disadvantages”. It suggested that municipalities with wind projects in place should be compensated through a different mechanism.

The association has long supported a tax for new projects to be added to the licence conditions, and to be linked to the wind farm’s profitability. 

Norwea has pledged to work with its members to improve the proposal during the consultation process.