Sweden, Norway Increase Renewable Target Amid Power Glut Concern

Sweden and Norway agreed to boost their target for renewable energy production amid concerns the additional capacity will exacerbate a power glut and strain the region’s electricity grid.

The subsidized joint energy program will be increased by 2 terawatt hours, or the annual use of about 80,000 Swedish households, to 28.4 terawatt hours by 2020 from 2012 levels, the countries said today in Stockholm. The proposed new target will be set Jan. 1, 2016, pending lawmaker approval in both nations.

The proposal has come under fire from energy producers and traders who say more subsidized power will worsen a surplus that’s already set to exceed consumption by 10 percent in Sweden, according to the country’s energy agency. Sweden’s grid manager has raised concerns over the region’s ability to handle more intermittent renewable power production.

“We have been concerned about creating imbalances in our market, but at the same time we know there are markets out there with big demand for power,” Tord Lien, Norway’s energy minister, said at a press conference on Friday.

Plans for new interconnectors to Germany, the U.K. and the Baltic states will boost demand, Lien said.

“We produce far more electricity than we use,” Cecilia Kellberg, a spokeswoman at Swedenergy, a power industry organization, said in a statement Friday. “With limitations in the transmission connections it’s very questionable from an economic point of view to subsidize additional power generation.”

Under the joint agreement, Sweden will pay for the cost of the addition to the target. It will also remove a tax relief for its wind power producers to make investment conditions in the two countries more alike.

Norway and Sweden hand out tradable certificates to power companies for each megawatt-hour of renewable energy they produce. Electricity suppliers and consumers are required to buy the certificates to match the power they provide or use.

Certificate prices rose about 2 percent to 143 kronor ($16.60) per megawatt-hour, power trader Danish Commodities said in an e-mailed statement.

Copyright 2015 Bloomberg

Lead image: Sweden and Norway flags. Credit: Shutterstock.

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