Wind power in Scandinavia took a big step forward on Monday by streamlining costs and operations through an important merger. Norwegian Havgul Clean Energy will merge with Swedish Triventus Wind Power to form a new entity, Havgul Nordic, that will have $3.5 billion of onshore and offshore wind developments with a total capacity of 1.55GW.
Norway and Sweden launched a joint cross-border renewable market and support scheme in 2012 that uses tradable “green certificates” for each megawatt-hour of renewable energy produced. These are bought by suppliers and consumers who match up the power they provide or use. Encouraged by its positive results, the two neighbors agreed earlier in March to increase their joint 2020 renewable energy target by almost 8%, from 26.4 terawatt-hours (TWh) per year to 28.4TWh. It will come under a subsidy scheme that is financed by electricity end-users, since the costs of the certificates are added to electricity bills. While this could lead to higher energy prices for consumers, the Nordic wind industry welcomed the target’s increase and the prospects of another 2TWh worth of contracts to fight over.
However, the wind power playing field has been uneven between the two countries, largely due to more advantageous tax rules in Sweden. Additionally, most of Norway’s new investment in renewables has gone to hydropower, which already generates 97% of the country’s electricity. (Sweden’s electricity is more diverse, with roughly 40% from hydropower, 40% from nuclear power, and around 8% from wind.) As a result, under the joint certification system, Sweden has seen a far greater amount of wind power investments (adding a capacity of 6.6TWh/yr) than Norway has (adding just 0.3TWh/yr). However, in February Norway announced it will harmonize its wind power tax depreciation rules with those of Sweden, meaning that investments can be recovered faster and as a result the sector will be much more enticing. “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,” said Andreas Thon Aasheim, an advisor at Norwegian wind power association Norwea.
This is the new business environment in which Havgul Nordic will build wind farms across Scandinavia. By itself the firm cannot even out the huge gap between Sweden and Norway, but the net balance of the roughly 15 projects it has on the drawing board does move in that direction. Five projects amounting to 865MW of renewable energy have been planned for Norway, while seven projects totaling 504MW will be built in Sweden, and three projects in Finland are likely to supply 185MW. The new entity is not the only firm making inroads, either. In January, Danish wind turbine manufacturer Vestas Wind Systems signed a letter of intent to supply wind turbines for six planned wind farms to Norway’s state-owned energy group Statkraft.
Financial details of the merger creating Havgul Nordic have not been announced yet, although it is likely to be completed by May. The deal should benefit both business and the Nordic countries. While wind is volatile, more wind farms will be good for Scandinavia’s energy security by making up for dry years. And now Scandinavia’s goals of completely eliminating fossil fuels for electricity generation look more attainable than ever.