[LINK] "Norway Losing Out to Sweden in $6 Billion Wind-Power Boom"

[rfmcdonald]

Bloomberg's Jesper Starn suggests that Norway is losing out unnecessarily to Sweden in the quest to develop its wind energy resources.7

I do wonder whether Norway sees a pressing need to develop it. As the article notes, it's already largely self-sufficient in electricity production, and oil exports are ever abundant. Electricity generated at wind farms might be a welcome additional source of capital, but is it needed?

Norway and Sweden are jointly seeking to add 26.4 terawatt-hours of new annual renewable energy production by 2020, or about 9 percent of all output last year from all energy sources in the region. Before joining, Norway expected to build half the system’s wind power, or about 3,000 megawatts of capacity, requiring investment by developers of at least 36 billion kroner based on an average cost of 12 million kroner per megawatt, according to Norwea.

Sweden’s wind output rose 38 percent to an unprecedented 9.9 terawatt-hours last year, according to its energy agency. That compares with the 9.4 terawatt-hours generated at EON SE’s Oskarshamn-3, the biggest nuclear reactor in the Nordic market. One million megawatt-hours is one terawatt-hour.

While Norway gets 97 percent of its electricity from hydropower, it joined the system to boost security of supply when cold, dry weather draws on water reserves and to help meet renewable energy targets. It adopted European Union goals the year before, committing it to meet 68 percent of all its energy needs including transport and heating with green sources by 2020 from 58 percent in 2005.

What Norway and Sweden didn’t foresee was how a drop in power prices would force renewable energy developers to scrutinize project costs, such as the countries’ treatment of asset depreciation, according to Peter Chudi at brokerage Svensk Kraftmaekling AB in Stockholm. Year-ahead Nordic electricity prices have fallen 21 percent since 2012.

“Those in Norway were surprised that the margins for new projects got so squeezed that it came down to the different tax rules for write-offs,” Chudi said Sept. 4 by phone. “If prices for power and green certificates were higher, the tax difference wouldn’t have got the same focus it has now.”