Become dependent on high electricity prices – E24

The energy industry is warning of the consequences for existing wind power plants when the ground rent tax comes into force as planned from the new year. Now negotiations begin in Parliament.

The Udal Wind Power Plant, located in the border area between Inlandt and Viken, is the first wind power plant of the energy company Akershus Energy.

The power station consists of 34 turbines and was built before the government proposes to impose a ground rent tax on wind energy at the end of 2022.

Now the proposed wind energy tax spells trouble for the wind power plant.

The Odal wind power plant is debt-financed and faces the risk of not meeting financial conditions in the loan agreement with the government’s tax proposal, warns Astri England Garshol CFO at Akershus Energi.

She says wind energy is not a “super-profitable form of energy” and believes there is no basis for renting the land.

– In order not to violate our financial obligations, the price of energy must remain constantly high, says Jarshol.

– And by that I mean higher than historically normal levels. And no one really wants that.

– Very demanding

Investment decisions for the Udall wind power plant were made under completely different assumptions, Garshol says. The same applies to the debt financing that the power plant entered into.

– She says it is very difficult for existing power plants to significantly change assumptions.

The wind energy industry organization Fornybar Norge has pointed out the same thing several times.

The organization is concerned about the consequences for existing wind power plants and that the tax proposal will slow the development of more land-based wind energy in the future.

Also Statkraft, which according to European powers Overview It is the country’s largest owner of wind energy, and industrial giant Yara fears the tax proposal could prevent increased energy production in the future.

Presidents Statkraft and Jara point out that a lot of new renewable energy will be needed to facilitate the climate measures necessary for Norway to be able to reduce climate emissions by 55 percent by 2030.

The government announced in its 2024 state budget proposal that it will impose a controversial ground rent tax on onshore wind energy from 1 January.

The tax rate has been proposed to be reduced to 35 percent, from 40 percent in the original proposal put forward last fall.

The government’s proposal will now be studied in Parliament’s Finance Committee. The committee has until December 7 to submit its recommendations.

You want a lower tax rate

– The government came off a cliff when it introduced the ground rent tax last year, says leader Aslaug Haga from Fornibar Norge.

It believes that the content of the original proposal and the process were objectionable. Although the government has changed the proposal slightly now, there is still a long way to go before the matter is settled in a good way, Haga believes.

– She says that Norway urgently needs more renewable energy, both for the climate and jobs in industry.

Renewed Norway urges Parliament to reach a broad compromise, and requests the following changes to the government’s proposal:

• Exempting existing power generation plants from the ground rent tax on wind energy
• Ensure that the negative ground rent tax is paid at the annual tax settlement according to the same principle applied to hydropower and oil
• Remove the time limit on physical power agreements to facilitate the price protection needs of both the wind energy and downstream industry
• Reducing the basic income tax rate to 25 percent

– Requires more power

Onshore wind is the only renewable form of energy that can grow in volume before 2030, says Statkraft CEO Christian Renning-Tönniesen.

He is supported in this by Yara CEO Sven Tore Holsether.

The head of Yara points out that the era we live in, with rising energy prices and energy shortages on the horizon, requires a huge effort for Norwegian industry.

– What we decide now must reach the year 2030, which is perhaps the most important deadline facing the world now. It is therefore important that we build renewable energy at a pace that responds to today’s opportunities, Holsether says.

He points out that not only must we be able to reduce greenhouse gas emissions by 55 percent over the next seven years, we must also increase exports from the mainland by 50 percent.

– And here lies a great opportunity as Norway has the best starting point in the world to achieve this, with access to renewable energy in the first place, but also the opportunity to make it stable around the clock, which is a prerequisite for much of the industry. But: Holsether says it will take more power.

Predictability is most important

Norwegian industry and ordinary consumers will need a lot of affordable energy in the future, says Renning Teunissen.

– He says that energy is the main driver of the green transition in Norway.

Hydropower and solar energy will be able to contribute, and offshore wind will also be able to contribute in the long term. But what could be big before 2030 is onshore wind. It is then proposed in the state budget to impose a ground rent tax on onshore wind energy. It can be done, but it must be done in an investment-friendly way, continues the head of Statkraft.

He believes the proposed tax rate is too high, a negative ground rent tax should be paid, and existing wind power plants should be fully compensated for moving to a new tax system.

– Reining Teunissen adds that the value creation element remains in the municipalities and must not be negotiated.

What is more important now than anything else for success in developing more renewable energy is predictability, say leaders of Statcraft and Yara. They hope that the ongoing parliamentary negotiations will result in a political decision that will stand during the upcoming parliamentary elections.