– He must dare to build wind power on Earth

– We had a financial crisis where there was a shortage of money, then we can add money. Now there is a lack of power. Then we need strength, says Robin Cass.

The mayor of the industrial municipality of Boersgrunn doubts whether subsidizing electricity is the way to go. But the electricity crisis plaguing the industry now worries him.

The industrial area of ​​Herøya lived well thanks to good access to power, port and employment. As a result, Porsgrunn flourished. They have been investing in road and rail networks. Home prices have risen steadily.

But in the wake of the electricity crisis, the Indian-owned Rec Solar has been shut down here and in Kristiansand. Large parts of the industry have secured themselves with long fixed-price agreements – until now. But what actually happens when they have to be renegotiated?

It occupies the minds of both the mayor and trade union Industri Energi.

Move towards the end of the contract

Labor committee member Kay Nordhag at Industri Energi notes that industry giants such as Hydro, Yara and Elkem often have several different long-term contracts for electricity, with different expiration dates.

– So it’s ticking. There are contracts that expire all the time. renegotiating it now is not easy, Nordhog says.

In the long term, he believes, the crisis shows that more power must be developed. And quickly.

There are a lot of water turbines to upgrade, and a lot has happened in 50 years. Offshore wind also has great potential, Nordhog says, and stresses the need for concrete measures.

We cannot sit and intertwine our fingers until the sky begins to rain as it was.

– What about the wind on the ground?

– Yes, but as a federation we do not demand that we have a wild wind, the decision is up to the local parties. But we are certainly nonetheless.

Want more wind on Earth

In terms of onshore winds, Mayor Cass is willing to go somewhat further.

You have to dare build new hydropower, you have to dare build wind power on Earth, and you have to dare build 420 new kilovolt lines — the so-called monstrous masts, says Cass.

We must reach a situation where the industry guarantees electricity with long-term agreements. It is the only way to stand against what Putin is doing now in the energy market.

Yara is also looking at more energy production to ensure the long-term competitiveness of the Norwegian industry.

Yara’s production is currently not as heavily affected by electricity prices as other industry giants, as they mostly use gas as their energy source. But if all goes according to plan, this will not be the case in a few years. Yara is in the process of switching from gas to electricity.

We are more concerned with how it will turn out in 2027. To implement the green transition, we need to develop green energy so that we can compete in electricity, not gas, says Magnus Ankarstrand, head of the Green Ammonia Project at Yarra.

– In order to achieve this, we must have a significant development of the force in Norway. And we need it before the sea winds. 2030 and beyond is not good enough.

Ancarstrand highlights energy efficiency and upgrading of hydropower plants as a fruit hanging.

– and then we have to think of the winds on earth wherever that is possible in terms of nature. Obviously we have to have a massive development in energy, but with environmental considerations in mind. These are assessments to be made by politicians.

It must be competitive

Ask anyone with anything to do with the Norwegian industry how important and still cheap and stable access to renewable energy is, and it will probably catch their eye. Then they will utter you with words like “basic”, “obvious”, “key to 100 years of industrial history”.

The competitive advantage has also attracted foreign investors, such as the owner of Rec Reliance New Energy Solar. The company’s German CEO Jan Eno Becker, based in Singapore, is clinging to hope of a solution to energy subsidies from the Norwegian authorities.

He won’t answer how much or how little it will take before the Indian parent company asks him to pack the silicon blocks and leave Heroya and Kristiansand.

But if it is to be profitable, electricity prices must be competitive – not three times higher than the Chinese’s 50 megawatt-hours.

– In June, when the price of electricity was 160 øre per kilowatt-hour, we were about to turn a profit, he said in an interview with E24 this week.

Tax rules in the method of short contracts

Stable electricity prices have allowed the industry to write long-term fixed-price agreements with energy companies.

In addition, special tax rules were introduced in the 1990s to give energy companies incentives to enter into cheap fixed rate agreements. The base interest tax paid by energy companies is usually calculated based on the spot price of electricity. Thus, it increases as the profits of energy companies increase from the sale of electricity.

For industry, the tax is calculated on the fixed rate that the company has concluded with the energy supplier. This gives both the industry and the energy company predictability.

Catch: The tax system applies only to agreements with a term of more than seven years.

It hasn’t been a problem yet. The normal length of fixed price agreements in the industry is usually 10-15 years.

Opening up shorter contracts with the same rules for the land rent tax is one of the things a Rec Manager wants. The solar company cannot enter into a seven-year agreement on a price for electricity much higher than competitors are paying, without knowing how the energy market will evolve, Becker warns.

It can be a challenge for the rest of the industry as well, when they have to renegotiate contracts. Labor committee member Kay Nordhag of the Industry Energy union is particularly concerned about the energy refining industries — companies that use energy to refining metals like nickel and aluminium, for example.

– At the moment there is also an artificial rise in metal prices, due to the war in Europe and the supply crisis, says Nordhaug.

He’s not sure if shorter contracts are the way to go, especially before it becomes clear what the government’s proposal to subsidize for electricity will look like. If the country gets a short-term subsidy scheme, it is open to considering the energy contract system as well.

But it is important for the industry to be able to secure contracts at a sustainable electricity price over the long term, so that it has predictability. This is an industry that invests billions annually, often owned by foreign companies. It is not certain that they would invest in Norway if the predictability was not there.