Improved tax regime for Norwegian wind power

Due to different tax laws more than 80 % of the new production supported by the Norwegian-Swedish support scheme has been located to Sweden. Therefore the Norwegian government has proposed as part of the 2015 budget to change the tax law and speed up tax depreciation of wind power plants.

Norway and Sweden established in 2012 a joint support scheme to stimulate 26.4 TWh new renewable electricity production within 2020. Consumers in each country should, through the quota obligation, finance 50 % each. So far (end of June 2014) the quota obligation scheme has delivered according to plan. When the scheme was introduced it was clearly stated both from the Norwegian and the Swedish government that the system should be a technology neutral scheme stimulating new production as cost effective as possible, i.e. there was no concern about the location of new production.

After two and a half years more than 80 % of new production supported by the scheme has been located to Sweden, and now this uneven allocation of projects has become a political topic in Norway. Resources in both countries are almost the same with similar marginal costs, so the main reason for uneven distribution is differences in tax systems, especially related to different depreciation systems and tax advantages to consumers owning their own power production.

Therefore the Norwegian government has proposed as part of the 2015 budget to change the tax law and speed up tax depreciation of wind power plants. This could help Norwegian wind power industry which at the moment has no projects under construction. Hopefully this can give even conditions to new wind power plants and give the quota obligation scheme back the intention of stimulating the most cost effective power plants.

John Ravlo

John Ravlo