Royal Norwegian Ministry of Trade, Industry and Fisheries
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ROYAL NORWEGIAN MINISTRY OF TRADE, INDUSTRY AND FISHERIES EFTA Surveillance Authority Rue Belliard 35 B-1040 BRUSSELS Your ref Our ref Date Case no. 78871 16/4548-3 23.09.16 Information from the Norwegian authorities regarding alleged state aid to wind power projects in Trøndelag and green certificates to pre-existing hydro power plants Reference is made to the letter from the EFTA Surveillance Authority of 25 August 2016, inviting the Norwegian authorities to provide their comments to three complaints concerning alleged state aid to wind power projects in Trøndelag and pre-existing hydro power plants. Please find enclosed a letter from the Ministry of Petroleum and Energy dated 23 September 2016. Yours sincerely, Monica Wroldsen Deputy Director General Carsten Borgersrud Nielsen Adviser This document has been signed electronically and therefore it is not signed by hand. Postal address Office address Telephone* Department of Competition Our officer PO Box 8090 Dep Kongens gate 8 +47 22 24 90 90 Policy Carsten Borgersrud 0032 Oslo Vat no. Nielsen [email protected] www.nfd.dep.no 912 660 680 +47 22244623 ROYAL NORWEGIAN MINISTRY OF PETROLEUM AND ENERGY EFTA Surveillance Authority Rue Belliard 35 B-1040 Brussels Belgium Your ref Our ref Date Case No. 78871 16/2929- 23.09.2016 Wind power projects in Trøndelag and green certificates to pre-existing hydro power plants - observations 1. Introduction The Ministry of Petroleum and Energy (hereafter the Ministry) refers to the letter from EFTA Surveillance Authority (hereafter ESA) dated 25 August 2016. The Ministry is invited to submit its observations in relation to the complaints attached to ESAs letter. The complainants put forward a number of allegations relating to different aspects of the investments by several power companies in the Wind Power projects at Fosen and in the Snillfjord area in mid-Norway. In addition, the extension of the Electricity Certificates Scheme to include certain existing hydro power plants ("overgangsordningen") is brought up in one of the complaints. In section 2 in the following, the Ministry will comment on the administrative procedures and licensing decisions for the investments in the power plants and the electricity grid in the above-mentioned area. In section 3 the Ministry will submit some observations to the part of the complaints relating to the extension of the Electricity Certificates Scheme ("overgangsordningen"). Postal address Office address Telephone* Energy and Water Our officer PO Box 8148 Dep Akersgata 59 +47 22 24 90 90 Resources Department Carl Fredrik Ekeberg 0033 Oslo Vat no. +47 22246383 [email protected] http://www.oed.dep.no/ 977 161 630 2. Wind power and power lines at Fosen and in the Snillfjord area The licensing procedure and the administrative proceedings In 2010 and 2012 the Norwegian Water Resources and Energy Directorate (hereafter NVE) adopted decisions pursuant to the Energy Act on licences for the establishment and operation of several wind power plants at Fosen north of Trondheimsfjorden and in the Snillfjord area south of the same fjord. NVE also granted the license for establishing a power line carrying a voltage of 420 kV from Namsos via Fosen to Trollheim (Suma) south of Trondheimsfjorden, as well as licenses to establish lines from the wind power plants to the 420 kV grid. The licences granted by NVE in 2010 related to the wind power plants and grid connection north of Trondheimsfjorden. The licences from 2012 related to the wind power plants, grid connections south of the fjord and the crossing of the fjord. The decisions were appealed to the Ministry of Petroleum and Energy in several complaints lodged by different complainants. In August 2013 the Ministry rejected the appeals and upheld the decisions granting the licences to Statnett SF and to the wind power licensees. In the decision of August 2013, the Ministry considered the 420 kV power lines from Namsos via Fosen to Trollheim as one coherent grid. The purpose of the power lines is both to strengthen the north-south capacity in the transmission system and to connect the planned wind power plants to the transmission system (the "central grid")1. The development of the 420 kV grid consists of three steps, the northern part between Namsos and Åijord at Fosen, the southern part between Snillfjord and Trollheim (also named Suma) and the connection of the two parts through a submarine power cable between Åfjord and Snillfjord. The northern and southern part are now under construction and will be established first. The licence for establishing the 420 kV grid is given on terms of a completion deadline for each of the three steps. Part one and two is given a completion deadline by August 2020. The Ministry set a completion deadline for part three by August 2023. In its decision the Ministry stated that the time frame for realising part three is linked to the regional power balance and the need for strengthening the capacity from north of the region of Trøndelag to the south. Forecasts related to the grid development has a long-term perspective. Considerations at the time of deciding a licence therefore has to be affected with uncertainty. Due to updated considerations from Statnett, expansion of the completion deadline of part three to 2028 was granted by the Ministry in April 2015. In February 2016 the joint venture "Fosen Vind DA" adopted investment decisions for six of the wind power plants in the areas around Trondheimsfjorden. This entity is owned by Statkraft SF, TrønderEnergi and Nordic Wind Power DA.2 1 From July 2016 the term "transmission grid" is used in the Energy Act of 1990. For all practical purposes the transmission grid is equivalent to the "central grid". 9 See the enclosure for a map of the projects included in the investment decision. Page 2 Regulation of the transmission grid The planned wind power plants at Fosen and in the Snillfjord area will be connected the transmission grid. The transmission grid constitutes a natural monopoly for transport of electricity from producers to the market. The major owner of the transmission grid in Norway is the transmission system operator Statnett SF. Statnett SF is responsible for operating and developing the transmission grid infrastructure in a socio-economically efficient way. As a state enterprise ("statsforetak") Statnett is governed by the Act relating to State-owned Enterprises of 1992. In accordance with this Act the responsibility for the management of the company lies with the board and a chief executive officer (CEO). The board members are appointed by the owner. Decisions by the state in its capacity as owner must be adopted in an enterprise meeting.3 Statnett SF determines its own tariff strategy for four years at the time, in dialogue with its customers. A basic principle is that all grid customers shall contribute to cost recovery. The legal framework for setting transmission tariffs follows from the Regulation on Financial and Technical Reporting, Income Caps for Network Oþeration and Transmission Tariffs pursuant to the Energy Act.4 Requirements for setting transmission grid tariffs also follow from the relevant EU- and EEA law, c.f. Annex IV to the EEA Agreement. Under the present legal framework tariffs are to be set in a way that stimulates efficient utilisation and development of the network, and in a way that is non-discriminatory. Requirements for charges for access to networks follow from Regulation (EC) 1228/2003. Furthermore, according to Commission Regulation (EU) No 774/2010 the annual average transmission charges paid by Norwegian producers shall be within a range of 0 to 1,2 EUR/MWh. The activities of Statnett are subject to scrutiny by the national regulator (NVE). An income cap for Statnett is set in a way to cover the costs, provided efficient operations and investments. It is the Ministry's opinion that the decisions by Statnett as referred to in the complaints do not fall under the notion of State Aid pursuant to Article 61 (1) in the EEA Agreement. The 420 kV grid Namsos - Trollheim (Surna) In the licencing procedure for the power grid at Fosen and in the Snillijord area, a question was whether the 420 kV power line should be considered as part of the central grid or as a production related power line. In its decision, the Ministry concluded that the power line is part of the central grid, emphasizing the future development of the grid in its assessment of the main function of the power line. As a consequence, the tariffs paid by the wind power licensees would not be dependent of a stepwise establishment of the grid. For the purpose of tariff regulation the "central grid" is defined in Section 1-3 of Regulation No 302 of 11 March 1999 pursuant to the Energy Act. The definition includes installations for the transport of electricity at a voltage level of 132 kV or higher, which are defined as 3 Act on State-owned Enterprises Section 38. 4 Regulation No 302 of 11 March 1999. Page 3 installations in the central grid. Power lines and other grid installations, where the main function is the transport of electricity from a production facility to the nearest point of the grid, are defined as production related. Particular provisions for such installations follow from Section 17-1 in the Regulation. The transmission grid serves different purposes. In its decision, the Ministry referred to the voltage level, the length of the planned power line and the north-south capacity. The Ministry noted that the planned power line is dimensioned as a transmission line. The power line could have been dimensioned at a lower cost if the purpose was only to connect the wind power plants.