FAQs on the Government’s Settlement

What are the general targets of the Alliance government’s settlement?

• 50 percent renewable energy consumption (an increase of 1 percent)
• 10 percent renewable energy in the transport sector
• 20 percent more efficient energy usage
• 40 percent reduction in greenhouse gas emissions

All these targets are to be achieved by 2020

What control measures does the government intend to use?

To achieve these targets, the government will present proposals including an increase in carbon dioxide tax. The tax on fuel and energy may also be raised. The aim is to use these economic control measures to bring about a 2 million tonne reduction in greenhouse gas emissions.

Will new nuclear power stations be built?

The agreement removes the ban on planning or building new nuclear power stations. The economic situation and the planning application process will govern the final outcome. Building a new nuclear power station takes at least ten years of planning and construction. The fifth Finnish nuclear power station has suffered significant delays, and the cost of investment will be twice as high as originally estimated.

In our opinion, there is, at present, no concrete plans to build new nuclear power stations in Sweden. The current economic climate makes it unlikely that electricity produced from newly-built nuclear power stations will be cheaper than electricity from wind farms.

How much new nuclear power is the government going to permit?

A maximum of ten reactors at existing sites. Permission may be granted for the gradual replacement of current reactors as they reach the end of their economic and technical life. The first reactor is expected to be brought on-stream around 2025, and the last ones will be build a few years into the 2040s.

In our opinion, Sweden will very likely have an energy surplus by 2025. It will probably be possible to decommission one or more reactors, without replacing them with new ones.

Will nuclear power be subsidised?

No, there will be no direct or indirect (government) subsidies. The reactor owners’ liability for the risks associated with nuclear power will also be increased. The issue will be examined as part of an enquiry into new nuclear power legislation.

What does the new “planning framework” for 30 TWh wind power entail?

This means that public preparations must be in place for the construction of 30 TWh of wind power by 2020. But it is not completely clear whether this much will, in fact, be built. The actual development is governed by the volume limits imposed by the electricity certificate system. It is essential that the concepts are not confused.

Has the implementation of the planning framework been decided?

According to the Swedish Energy Agency, the plans should cover 20 TWh onshore and 10 TWh offshore. To meet the planning framework, the Swedish Energy Agency is currently working on a proposal for a special subsidy system for offshore wind power. The proposal will probably be published in spring 2009.

Will there be changes to the electricity certificate system?

Yes, but at present, we do not know what the changes will be. The Swedish Energy Agency will carry out an analysis of how the changes should be implemented. The aim is that the current target of 17 TWh of new renewable electricity by 2016 should be increased to 25 TWh by 2020.

The Swedish Energy Agency and ourselves share the opinion that the full 8 TWh increase will come from wind power.

So how much wind power will be constructed before 2020?

It is our understanding that the agreement means that we will be generating a total of 15 TWh of electricity from onshore wind power by 2020. This is equivalent to approximately 6,000 MW of installed output. Present production is 2 TWh of electricity from wind power, and just over 1,000 MW of installed output.

Is this the only change?

No, the government is also trying to expand the certificate system to cover more countries. Part of this may involve other countries being permitted to finance renewable energy production in Sweden within the framework of the EU directive on renewable energy.

What happens if, for example, Norway adopts the electricity certificate system?

Norway indicated some time ago that it wanted to negotiate a joint electricity certificate system with Sweden. The Swedish government has adopted a cautious approach to direct negotiations.

Our view is that Norway must first explain why it wants a joint system. It should also produce a firm plan for how much renewable energy it is willing to produce, and what the what the quota curve would look like. Only then will Sweden be able to decide whether the system would be equally beneficial to both parties, and worth signing up to. Our view is also that there is a risk that the expansion of hydropower in Norway within the framework of a joint certificate system would result in significantly lower certificate prices which would have a negative impact on the expansion of wind power. This is something we want to avoid at all costs.

What will happen with offshore wind power?

According to the government, he conditions for this should be given special study. These include transmission network connection regulations, the competing subsidy systems of different littoral states and the opportunities for joint projects.

As yet, there are no plans to introduce a special subsidy system for offshore wind power. But when the planning framework is adopted, with the result that preparations have to be made for the construction of 10 TWh at sea, the financial conditions to achieve the adopted target must also be put in place.

In our opinion, Sweden requires a special subsidy system for offshore wind power. We also feel that it is crucial that as many factors as possible are harmonised between different countries. This is made particularly clear in the case of the Kriegers Flak project, which is geographically located in three different countries and, therefore, is subject to different rules on a number of important points. This project is being examined particularly closely by the EU Commission, which would like Sweden, Germany and Denmark to agree on a common regulatory framework and move ahead with the construction of the project.

What will happen to the expansion of renewable energy after 2020?

The hypothesis is that the renewable energy targets will become even more ambitious as the electricity certificate system is extended. We hope that the Swedish Energy Agency will very soon propose the extension of the electricity certificate system past the 2020 deadline, until 2025 or, even better, 2030. This would increase the interest in investment significantly, and probably result in faster industrial growth in Sweden.

Even if finance can be arranged through an expansion of the electricity certificate system, will the planning application process not take too long?

If the succeeds in its aim of simplifying the process by adopting the suggestion of the Environmental Process Committee to abolish the practice of double scrutiny, the permits for projects will be granted significantly sooner than at present. The proposal currently under preparation, which will be presented as a Bill within the near future does, unfortunately, include a municipal right of veto for municipalities which do not want wind power. The proposal also means that a detailed plan will become the rule rather than the exception in the planning application process.

In our opinion, if the government’s proposal is not changed in the way we wish, it would be better to maintain the current application process with scrutiny under both Swedish planning laws and the Environmental Code.

Can we obtain a sufficient number of wind turbines and other necessary equipment?

The financial crisis has allowed most suppliers to cut delivery times significantly. In the current situation, the availability of wind turbines is relatively good. The waiting time is now 6 months to a year, compared with up to two or three years before the crisis.

How will the financial crisis impact on the wind power industry?

The crisis is having a global impact on the wind power industry. In the EU, Sweden is, unfortunately, being hit particularly hard. This is partly due to the fact that we have not adopted the Euro as our currency. The Swedish Krona has fallen significantly against the Euro, and also against other currencies, including the Danish Krona. For our industry, this means that wind turbines, which are often responsible for 80-85 percent of the cost of a project, have become more expensive to import since they are built in countries with stronger currencies.

In addition, countries with feed-in tariffs are less badly affected than Sweden in the short term. Their income is fixed, while the income of Swedish wind power producers has fallen as a result of the drop in electricity prices in recent months.

Finally, Sweden is affected by the substantial drop in electricity consumption in the past few months. This means that new construction of wind turbines, for example, has become unnecessary to meet the quota obligations under the electricity certificate system.

The price of electricity certificates is significantly less responsive, and is affected by many factors other than the price of electricity. As a result, the price has not yet risen to compensate for changes in the exchange rate and lower electricity prices. We will, in the near future, find out whether our support system can withstand the current crisis.

What is the government’s view on other renewable electricity production methods?

On hydropower, the government has stated that the National Rivers, and other stretches of rivers specified in the Act, will continue to be protected from development. Environmental considerations make it difficult to obtain planning permission for small-scale hydropower plants.

The expansion of district heating power will stop in about three to four years’ time. The reason is that the existing district heating networks will, by then, have been expanded into district heating power networks. Building anything other than very large district heating power plants is extremely expensive.

What is the significance of the increase from 49 percent renewable energy laid down in the EU directive, to the 50 percent specified in the new proposal?

All other things being equal, the new percentage means that we must produce more than 4 TWh of additional renewable energy compared with the 49 percent Sweden agreed to consume by 2020. A reasonable assumption is that this energy will come from an increase in the production of wind power.

Will Sweden have to lay new cables to the Continent to export its surplus electricity?

If there is no way to establish large-scale storage of electrical power, the surplus electricity will have to be exported, unless consumption in Sweden increases to match the expansion. This seems unlikely, even though electrical vehicles and plug-in hybrid vehicles will require additional electricity.

The existing overseas connections will not be sufficient, and Svenska Kraftnät is in process of planning a new transmission cable between the south of Sweden and Latvia or Lithuania.

Exporting electricity is an excellent business, and may provide Sweden with a great source of export income. At the same time, Sweden will play a part in closing down coal-fired power plants in Finland, Denmark and on the Continent.

If we have access to unlimited transmission, our electricity prices will reach the same levels as on the Continent. The secret is, therefore, to have just the right amount of cable capacity.

5 March 2009

Below is a list of common questions, or misconceptions, about wind energy and answers to these.

Feel free to contact us if you have additional questions! 

1. We will never be able to build adequate wind energy to replace nuclear power. 

Because wind power should be seen primarily as a complement to other electricity generation, there is no inherent competitive relationship. Wind power technology is advancing rapidly – since the mid-1980s wind farms have doubled in size around every four years. A large wind farm today produces around 8,000 MWh of electricity per year, which is equal to the annual consumption of around 400 electrically heated homes or household electricity for some 1,500 families. It would be fully possible to expand wind energy so that it covers 20% of Sweden’s total domestic electricity consumption, as is the case in Denmark.

2. Wind energy is far too unreliable and would require a large back-up system, since no power is generated when the wind is not blowing and it is not possible to store wind. 

No new back-up generation will be needed for many years to come. In the Nordic region and Sweden, wind energy can be regulated with hydropower – in high winds it is possible to store water in the reservoirs which can then be used to generate electricity when winds are too low. Wind power is also regulated through the import and export of electricity through cable links to other countries. An increased number of international cables will make it easier to regulate large volumes of wind power in the future. 

No generation method can produce electricity 100 % of the time. In 2003, for example, the nuclear reactors at Sweden’s Forsmark plant were offline an average of 7% of the time, and were out of service for much longer in connection with the incident in 2006. Wind energy systems produce no electricity when wind speeds are too low (ca 4 m/s) and must be shut down for safety reasons when they are too high (more than approx. 25 m/s). The general rule is that a wind turbine is available to generate electricity, to varying degrees, for around 90% of the total hours in a year.

3. The fish are disturbed by noise and shadows.

The effects on fish have always been a central consideration in the establishment of offshore wind energy. According to research carried out at the Utgrunden I and Yttre Stengrund wind farms, these concerns appear exaggerated. On the contrary, offshore turbines can function as artificial reefs that provide better conditions for both shelter and feeding than the surrounding seabed. The number of species was otherwise unchanged, regardless of distance to the turbines.

4. They are dangerous and can lead to death, they can collapse on people during storms, people fall off of them and can be injured by ice throw.

Of the approximately 30 deaths that are directly connected to wind energy since the 1970s, the majority have taken place during repair work and service. It is extremely rare for wind power accidents to affect the public and there is only one known case where a person has been injured by ice throw from the rotor blades.

5. Turbines are noisy and ugly.

Technological advances have made it possible to reduce mechanical noise from the gearbox and gearless turbines have been recently introduced. That which remains is the aerodynamic “whoosh” noise from the rotor blades. There are rules regulating the permitted noise levels in populated areas. The recommended limit is a maximum of 40 dB(A) at the property line, which corresponds to the noise level from a kitchen refrigerator.

When it comes to their appearance, opinions vary. While some people consider wind turbines an unattractive blot on the landscape, others find them majestic and beautiful. Research is also taking place in this area to determine how to reduce any negative impact on local residents. One advantage of wind energy in this context is that when the equipment has served its purpose, it can be dismantled and the local environment essentially restored to its original condition.

6. Wind power is more expensive than other energy types.

If we disregard taxes, charges and subsidies, the cost of electricity from a newly built wind farm is roughly the same as that for electricity from a newly built coal-fired condensing plant, large-scale biomass CHP plant or large-scale gas turbine CHP plant. Compared to other renewable energy sources, only electricity from newly built hydropower is less expensive if all taxes, charges and subsidies are excluded. Including these, wind energy is the cheapest.

Obviously, a hydropower plant that has been in service for 40 years and has earned back the cost of its construction can naturally produce cheaper electricity than a newly built wind farm.

7. Birds and bats are killed when they collide with the rotor blades.

Research at the Utgrunden I offshore wind farm has shown that birds change course approximately two km before reaching the turbines, and are therefore not at risk of colliding with the rotor blades. The more research that is done in this area, the more minor the risks appear. In the case of bats there is still little knowledge, but research is underway here as well. In general, it can be said that birds do not collide with wind turbines to any greater extent than with other man-made structures such as bridges and power lines. 

8. Someone once said that if England were to obtain its entire electricity supply from wind, it would have to build a 70 km wide band of wind turbines around its coast! 

Like Sweden, the UK currently has no plans to replace all of its existing electricity generation with wind energy. The UK’s present goal is a level of 10%. Here in Sweden, it would be necessary to build around 1,200 modern wind turbines to meet our planning target of 10 TWh by 2015. In pace with improved technology and increased turbine size, this figure is expected to decrease over time.