Year in Review: Renewable Energy
Aktuelt | 04.01.20Klima og fornybar energi
The Norwegian Water Resources and Energy directorate will not extend deadlines for commissioning beyond 31 December 2021
In a letter to all concession holders dated 27 November 2019 the Norwegian Water Resources and Energy Directorate (NVE) announce restrictions in their previous practice of granting extensions of the commissioning deadline in relation to wind power farms.
The current practice of extending the deadline for commissioning is that the commissioning deadline has been extended when applied for. It is quite seldom that applications for such extensions have not been approved. The deadlines have in the recent years been linked to the deadline for becoming eligible for el-certificates under the electricity certificate system which is set to 31 December 2021.
The practice of extending the deadline for commissioning met the political intention of promoting and supporting investments in new wind power farms in Norway.
However, further extensions of deadlines beyond 2021 will from now on be more challenging. The commissioning deadlines for wind power projects was commented in the report to the Storting (Stortingsmelding) no. 25 (2015-2016). It is stated therein that concessions for wind power in effect may prevent alternative desirable development of the same land and cause the continuation of local conflicts. In cases where years have passed since the concession was granted it is also argued that there may be a need for new studies and maybe even a new concession process due to change of conditions in the area.
Wind power projects that are not commissioned within the deadline of 31 December 2021 may thus lose their concessions. The developer may then choose to apply for a new concession based on the same project. This will quite likely require an updating of the old concession application and new studies and reports. It will of course be important that the authorities have a sensible approach and allow for reuse of old applications, with necessary updates, and that they secure that the application process for the best projects is granted certain "fast tracking".
NVE states that projects which are under construction and experiences delays in commissioning shall be granted extension of the deadline for commissioning if the delay is caused by force majeure. The latter threshold for extensions appears to be stricter than we believe that NVE in practice will require.
We do however, in light of the combination of (i) the short period of time left to 31 December 2021, (ii) the number of projects with final concessions handing in applications for MTA plans for approval by NVE and (iii) certain congestion on the turbine supply side, that NVE would need to further clarify how this new deadline shall work and whether they will accept further limited extensions/delays in relation to the commission deadlines.
Caroline Waller is the new editor for legal comments to the waterfall concession act
Caroline was earlier this year asked by Rettsdata to write and update their commentary to the waterfall concession act (vannfallrettighetsloven) (the act regulating ownership to hydropower in Norway). The new legal comments were launched on www.rettsdata.no on 18 December 2019.
Peter Aall Simonsen and Sveinung Rostad discuss security options for lenders in offshore wind projects in Dagens Næringsliv
Equinor's Hywind Tampen project – set to become the biggest floating wind farm in the world – marks the first foray into offshore wind production in Norway. There are high hopes for the potential of this industry in a country with a vast continental shelf and territorial waters and considerable expertise in traditional offshore energy production.
Even so, there is still a number of issues that must be resolved in order for offshore wind production to become a commercially viable industry in Norway. Central in this regard is the existence of a legal framework that enables projects to attract commercial financiers. For such financiers to be willing to provide capital, adequate security must be available.
While, in the current regulatory landscape, lenders may access general corporate security such as assignments of monetary claims and insurances, account pledges and share pledges, it is doubtful whether valid security may be agreed over the wind turbines themselves and the production licenses required to use them.
For floating turbines, a feasible system may already be in place through the Norwegian Maritime Code, which allows for registration in the ship register of most floating devices. A lender may therefore be able to record essentially a ship mortgage over a Norwegian "flagged" turbine. However, as registration of unspecified floating devices requires consent from the Norwegian Maritime Authority on a case by case basis, the solution may not yet be suitable for commercial purposes.
In the case of fixed turbines and production licenses, it seems new legislation is required in order to enable valid security arrangements. A system akin to the one established under the Petroleum Act, whereby security may be recorded over development licenses, with associated fixed production equipment, in a separate register (the Petroleum Register) could be a practical solution.
The question of security therefore requires further clarification – and likely new legislation – before commercial financiers will enter the fray. Security has however been noted as one of the issues on the agenda as the Norwegian Ministry for Oil explores new regulations under the Offshore Renewable Energy Act.
The full Dagens Næringsliv article is available (in Norwegian) here.
The Norwegian government abandons the national framework for land based wind power
NVE presented a draft national framework plan for land based wind power on 1 March 2019. The framework consists of an updated knowledge base and a map showing the 13 areas that NVE has assessed as suitable for land based wind power.
The public hearing resulted in over 5,000 responses, including 56 from municipalities of which 49 expressed their scepticism towards land based wind power projects.
Following the public hearing, the Norwegian Government abandoned their plan to finalise and approve a national framework for land based wind power. The Prime Minister Erna Solberg declared that the purpose of the framework was to reduce the conflict that land based wind power has experienced later years. However, the public hearing showed that the framework may be said to have the opposite effect.
Awaiting the public hearing of the national framework, all applications for concession had been put on hold by NVE. It is decided that the existing concession granting system needs to be reviewed and the existing and new applications for new wind power projects are still on hold. We expect that this review is concluded prior to the summer of 2020 and that the processing of these applications are then resumed.
This article is part of a series of articles where the different practice groups in SVW will summarize the most important regulatory happenings in Norway in 2019.