June 29, 2018 / 10:43 AM / 4 months ago

Planning a wind farm in Norway? Connecting to grid from 2019 may cost you

OSLO (Reuters) - A Norwegian plan to force big power consumers and producers to pay for grid upgrades and extensions could disrupt new projects from wind farms and data centers to ventures in the oil industry, companies told Reuters.

FILE PHOTO: A windmill is seen in Utsira, a North Sea island of just 6 square km (2.3 square miles) and home to 210 people who already get most of their power from two onshore windmills, April 22, 2008. Picture taken April 22, 2008. REUTERS/Wojciech Moskwa/File Photo

Beginning in 2019, Norway’s water resources and energy directorate (NVE) wants firms benefiting from grid additions to pay up to half the investment cost, often a major sum in remote regions seeking to attract industry and jobs.

NVE, which by Monday will issue an amended draft of its plan, aims to cut overall costs and distribute them fairly by encouraging big consumers and producers to build their facilities in locations that already have strong grids.

Investments of around $17 billion are planned to take place between 2016-2025, the regulator said, and companies consuming or producing power fear they would have to foot a significant part of the bill.

“Grid cost is important for future investment opportunities. Seen in connection with proposed higher tariffs for the industry in Norway, total grid cost is becoming a challenge,” said metals firm Norsk Hydro, the country’s largest power consumer.

Hydro argued that the change, if imposed, should be accompanied by cuts in the fees paid to stay connected to the grid, but such a reduction was not part of the plan, NVE section head Torfinn Jonassen said.

Power producers Statkraft [STATKF.UL] and Agder Energi [AGDER.UL] said that while the plan may benefit society, it could raise the costs for future renewable energy projects.

“This can be a discouraging factor for power production investments located in areas with a weak power grid,” an Agder spokesman said.

The projects that are most likely to be affected are wind power plants, he added, but big consumers, such as data centers that Norway aims to attract, will have to reassess where to build their facilities as well.

Last week Microsoft announced plans to build two new data centres in Norway, in an agreement with the country’s largest firm Equinor.

“The regulation will have an effect on where companies will want to build wind farms, data centres or factories and their cost,” said NVE’s Jonassen.

Microsoft declined to comment on the regulatory change.

Norway’s Oil and Gas Association said the rules could raise the cost of supplying electricity to offshore oil platforms, as well as for grid upgrades planned at onshore facilities, such as the Nyhamna gas processing plant.

A transitional regime, taking into account binding commitments made before January 2019, will be included in the plan, NVE said. The regulator has the authority to unilaterally impose the changes.

Editing by Terje Solsvik and Jan Harvey

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