From: Reuters
Published April 16, 2008 09:35 AM

Fortum seeks Nordic-wide aid rules on renewables

By Wojciech Moskwa

OSLO (Reuters) - Finnish utility Fortum called for the creation of pan-Nordic subsidy rules for renewable energy, saying they would save money and ensure the regional power market was not distorted by national schemes.

Finland, Sweden, Norway and Denmark have a single power market but separate schemes to boost renewable energy with so-called "green certificates" issued to producers of electricity from renewable resources.

Fortum said in a statement on Wednesday that combining them would help prevent overlapping and save 1 billion euros ($1.58 billion), or 25 percent annually, as the region builds capacity to keep up with growing demand for electricity.

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"When the resources are pooled at a Nordic model, lower-cost resources available in all four countries would be sufficient to meet the needed production increase," said Fortum, a nuclear, hydropower and coal-fired generator majority-owned by Finland.

"Building capacity in the most optimal locations first will create cost benefits for all stakeholders involved," it stated.

It said that in a Nordic model, new wind power could be built in Norway which has the best wind conditions, whereas biomass-based capacity could be built in Finland and Sweden, which have the most abundant biomass resources.

Fortum said that support schemes could eventually be made at the European Union level, to limit their impact on regional power markets.

"In the integrating energy market, it is important to design the renewables support schemes in a manner that has the minimum distorting effect on the regional power market," Fortum Vice President Esa Hyvarinen said in a statement.

"This makes a Nordic green certificate scheme an interesting option to be investigated in more detail -- market integration is pursued to address also environmental concerns in the most efficient way, at the lowest cost to society," Hyvarinen said.

Overall, more than half of the Nordic region's electricity comes from hydropower, and only about a quarter from gas or coal-burning plants, well above EU plans for 20 percent renewable energy usage by 2020. Sweden and Norway are big on hydropower, while Denmark is a world leader in wind energy.

"In the common Nordic market, electricity produced in one country would be available for consumers in all Nordic countries (and) trading of green values creates a win-win situation," said Fortum, a group worth $36 billion.

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