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As a wind power market, Norway remains an enigma. The country harbours a massive wind resource, it has plenty of space for using it, electricity is in short supply where winds are good, the Norwegian people say they want more renewable energy, and the government is using considerable resources to process applications to build hundreds of megawatt of wind plant. That same government, however, is replacing a six-year old program of grants for up to 25% of a wind project's capital cost with a purchase price subsidy of just EUR 0.01/kWh, albeit to run for 15 years. In view of the price that electricity fetches on today's Scandinavian power market, more support is needed, say potential wind power producers. Until it is forthcoming, the prospects in Norway are dismal.

Before even asking for subsidy, all wind projects must apply to the Water Resources and Energy Directorate (NVE) for a building concession. NVE has so far granted concessions for 1.5 GW of wind development, of which just 30% has been realised (“uåX˜äŠÊ˜·³Ç, March 2007). The directorate is now trying to speed up the permitting process. Since December it has granted concessions for ten wind plant. There is a distinct possibility, however, that none will be built.

Despite the bleak outlook for turning a concession into a viable investment, NVE's Bjørn Wold says the directorate is still working its way through a backlog of applications. "We have about 70 preliminary applications and 30 full applications," Wold says. The work is hampered by insufficient human resources. "I'd say about 30-40 of that total are in process and moving along." In 2006, NVE got a 20% increase in manpower, but "wind power has the least priority," says Wold. The application process -- which favours projects proposed for energy deficient mid-Norway and near Bergen -- should take around two years, he says, though with current resources he predicts four to five years.

Even though a project has a concession, that is not the end of the permitting gauntlet. Appeals have been lodged by individuals or non-government organisations (NGOs) against all ten of the recent concessions. Until they are settled by the ministries of energy and environment a project remains in limbo. "We've seen a huge increase in resistance," Wold says. "At this point all projects, offshore and onshore, are controversial. It doesn't mean most people in Norway are against wind, far from it. But many NGOs are making their protests heard."

Lukewarm

NVE is just doing its job, says Arne Jakobsen, a wind power proponent at Greenstream Networks in Oslo. What is lacking is any real commitment to wind development from the current government, an alliance led by the Centre party. "I think the government is making it look like they are making environmental policy when in fact it is just a sham, a political story," he says.

Despite a much lauded NOK 20 billion renewable energy fund, Jakobsen points out that the government conveniently forgets to mention that only interest from the fund is being used to subsidise renewables. "I'm getting bored with it. You can't keep banging your head against the same old wall." Jakobsen says these days small-scale hydro is looking more viable than wind for Greenstream, which has its core business in emissions trading,

Once a wind project has won a concession, its sponsor may apply for subsidy to ENOVA, an agency set up under the energy ministry in 2001 with a budget of NOK 5 billion to administer grants to renewables projects. In January, the government added NOK 10 billion (EUR 122.7 million) to the budget, with another NOK 10 billion promised for 2009, creating the EUR 20 billion fund.

Viggo Iversen, team manager of ENOVA's renewables power program, says revenues from the fund amounting to NOK 1.1 billion (EUR 135 million) are available for projects selected in 2007 for capital grants of up to 25% -- the last year in which such grants will be made. Iversen declines to say what proportions of the NOK 1.1 billion will be allocated to wind, energy efficiency and district heating projects. Since 2004, six wind projects have received a total of NOK 504 million (EUR 62 million), but just one is in operation (table).

From 2008, the wind market flips to a production subsidy of NOK 0.08/kWh (EUR 0.009/kWh). Any wind power producer in receipt of ENOVA money before January 2008 must pay the original grant back if it wants the NOK 0.08/kWh, which ENOVA will also administer.

With so many newly permitted projects under appeal, Iversen predicts only three might meet ENOVA's criteria for possible 2007 funding: Norsk Miljøkraft's Kvitfjell (200 MW), Jaeren Energi's Høg-Jaeren (80 MW) and an unspecified expansion of Nord-Trøndelag's Ytre Vikna project, 70 MW of which has already won support. Only the most cost effective projects with solid financial backing and a short term development schedule get chosen for ENOVA money, he adds.

Still optimistic

Not everybody is as pessimistic as Iversen. Asgeir Andreasson, manager of the 160 MW Andmyran project in the Norwegian north, one of the largest NVE concessions granted in December, says he is optimistic it will be built: the 8 m/s average wind speed at the site makes it a prime location, he says. Budgeted at NOK 1.7 million (EUR 230 million) for about 60 turbines, the project is still assessing its economic feasibility and seeking financing, says Andreasson. He already has a list of waiting investors, including a branch of the Swedish real estate company Wallenstam.

"Key question number one is what are the turbine prices going to be?" Andreasson says. "Question two: will there be anything happening around the feed-in price?"

The production incentive Andreasson refers to as a feed-in subsidy must be larger if there is to be any major development of the Norwegian market beyond this year, say industry players. As Robin Borgert, Enercon's sales manager for Norway puts it: "For the long term we have to be optimistic that the government will improve the currently proposed support," he says. "Considering the ambitious goals, the growing energy demand, the great wind conditions, the ready-to-go projects and the utilities' willingness to invest it is hard to imagine the government will take no further actions."

As the international market is currently so competitive, Borgert says he believes the government is "putting its young wind business in the firing line." For while Enercon still considers Norway to be a viable long term market and just recently sold 25 E-70 turbines to Trønder Energi for the 57.5 MW Bessakerfjellet project, Borgert says: "It appears to me that some turbine manufacturers have, or are about to pull the trigger and retreat."

All are starting to agree that Norway's aim of generating 3 TWh of wind by 2010 is a fast receding goal. "Not by 2010, that's fairly sure now," says NVE's Bjørn Wold. "Even if sufficient projects got permits and then in addition got financing, it would be hard simply to get the equipment in place by then."