Sweden and Norway in red over green goals

THE QUEST to supply everything from data server halls, insurance companies to large furniture stores with green electricity has flooded the Nordic region with wind power and crashed a US$ 100 million renewable- certificates market.

While that’s good for the environment and the image of companies from Google Inc. to Ikea Group, the growth in renewable energy has been faster than Sweden and Norway expected. That’s pushed certificate prices down 45 per cent this year, undermining the incentive to invest in new wind power projects.

It’s a case of too much, too soon for market regulator Swedish Energy Agency, which never planned for expansion at this rate. Taking into account a typical wind turbine’s life of about 20 years, its preference was always for a major buildout by the end of next decade, just before state- owned utility Vattenfall AB starts to close six 1980s- era nuclear reactors.

With renewable capacity needed to meet a 2020 target either already in place or under construction, every additional investment will just add to a surplus, according to Nena AS, an industry consultant in Oslo.

“It’s like watching a python dying from starvation after devouring a pig that is too large for it to digest,” said Fredrik Bodecker, chairman of Bodecker Partners AB, an energy markets adviser in Malmo, Sweden.

Sweden and Norway plan to add 28.4 terawatt-hours of renewable generation by 2020, or enough to meet 10 per cent of their joint annual power demand. In the renewable- certificates market, green energy producers receive securities that suppliers must buy to match customer demand. The surge in capacity hasn’t been met by increases in consumption, hence the surplus and plunging prices.

Google, which operates a data server hall in Finland, has signed at least six deals in the past two years to buy power at a fixed price directly from wind parks in Sweden and Norway.