1. 12.1.2006 JT 1 Support schemes for renewable energy in the Nordic countries Jouni Tolonen

2. 12.1.2006 JT 2 Backround Why renewable energy? –Mitigation of CO2 and other emissions –Security of supply (self-sufficiency, diversification) –Development of new energy technology –Employment and local economic development –Sustainable development Support schemes are needed because in general renewable energy sources (RES) are not competitive in the market How the goals can be reached cost-efficiently and with mimimum market distortion?

3. 12.1.2006 JT 3 Power supply in the Nordic countries in 2004 Source: Nordel

4. 12.1.2006 JT 4 Indicative targets in the RES-E Directive

5. 12.1.2006 JT 5 Support schemes for RES Feed-in-tariffs (fixed price or premium) Quotas + tradable green certificates Investment aid Tax incentives Taxation of fossil fuels in heat production R&D support CO2 emission trading

6. 12.1.2006 JT 6 Basic features of support schemes Government paysCustomers pay Support/price level set by authorities Amount of RES set in the market Support level set in the market Amount of RES set by authorities Quotas + green certificates Feed-in-tariffs (fixed or premium) Investment aid Tendering Tax support

7. 12.1.2006 JT 7 Main RES support schemes in EU countries Many countries use different schemes simultaneously feed-in-tariffs tendering quota + green certificates investment aid, tax incentive

8. 12.1.2006 JT 8 Support schemes in the Nordic countries Denmark –Feed-in-tariff for wind (premium 13 /MWh+market price) –Feed-in-tariff for biogas (fixed 80 /MWh) –Tendering for off-shore wind farms –Support was higher before 2003 Norway –Investment aid for wind (10-20 %) –Tax support for wind (5.7 /MWh) was terminated in 2004 –Possibly a joint green certificate market together with Sweden in the future Iceland –No support for RES

9. 12.1.2006 JT 9 Support schemes in the Nordic countries Finland –Investment aid (0-40 %), 25 million in 2004 –Tax support (4.2 or 6.9 /MWh), 32 million in 2004 –Possibly reduction of RES support in emission trading sectors Sweden –Green certificate + quota 7.4 % in 2003 16.9 % in 2010 24 /MWh, 250 million in 2004 –Production support (Miljöbonus) for wind until 2009 11 million in 2005 On-shore 10 /MWh Off-shore 17 /MWh –Changes to green certificate system under consideration

10. 12.1.2006 JT 10 Support for new renewable electricity generation Source: Nordenergi

11. 12.1.2006 JT 11 Nordenergi concludes that well constructed support schemes for renewable energy should: Not interfere in a negative way with the electricity or the CO2- markets Level the playing field – international coordination of effects of different support schemes might be needed in order to achieve equal subsidy levels Be predictable and transparent – credibility and political stability are important for investments Be cost efficient - minimize costs to the energy consumer, energy companies and public expenses Not be directed towards specific technologies – renewable technologies should compete with each other and a support scheme should therefore be technology neutral. This could be complemented by specific support to R&D for emerging technologies. Not create bureaucracy