Norway Seeks to Quit Joint Renewable Subsidy System With Sweden

Norway is seeking to leave a joint system with Sweden to subsidize renewable energy when the program closes to new entrants in 2020 and 2021.

Norway joined the Swedish market-based electricity certificates system for subsidies in 2012 with the joint goal of adding 28.4 terawatt-hours of renewable generation by 2020. Since then renewable units with an average annual production of almost 14 terawatt-hours has been built in the two countries, 84 percent of them in Sweden.

With prices in the certificates market dropping to a record low earlier this year and Nordic year ahead power prices falling 56 percent below 20 euros per megawatt-hour since 2012, not only renewable investors are struggling in Norway also it’s dominant hydro producers is facing shrinking margins. By ending subsidies, promoting more export cables abroad and simplifying administration for new permits government seeks to improve market conditions for all producers.

“The government wants to prevent the value of our existing renewable production to weaken and will not introduce any new targets under the certificate system,” it said e-mailed statement.

Sweden wants to continue to subsidize growth of renewable generation beyond 2020 and has asked its energy agency to look into if it can extend the current system without Norway, energy minister Ibrahim Baylan said by phone on Friday. A report is to presented in October and enter into the discussion with other political parties about Sweden’s energy future, he added.

“Compared with Norway’s power system dominated by hydro generation, Sweden is in a different situation with 40 percent nuclear generation that needs to be replaced,” Baylan said.

Norway’s electricity mix is made up of 96 percent hydro and 3 percent wind, according to data from Bloomberg New Energy Finance. Sweden got about 47 percent of its energy production from hydro last year, 34 percent from nuclear and 10 percent from wind, according to lobby group Swedenergy.

Exports from the Nordic region grew 37 percent to 15.9 terawatt-hours in 2015, the majority of which came from Norway and Sweden. Norway plans to build two new inter-connectors to U.K. and Germany by 2021 to further increase exports.

Under their renewable energy agreement, Norway and Sweden give tradable certificates to renewable energy producers for each megawatt-hour they generate for the first 15 years of a unit’s lifetime, so Norway will still support renewable units already in the system until at least 2035.

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