Offshore wind power policy and planning in Sweden☆
Introduction
The current concerns about climate change relate strongly to the past technological developments, which have fundamentally changed the structure of the energy sector by making possible the diffusion of new and less costly technologies. The energy production processes introduced during the 20th century – most notably those relying on the combustion of fossil fuels – have given rise to a significant increase in the emissions of greenhouse gases out of which carbon dioxide is the most important. The balance of evidence suggests, though, that these emissions are having a distinct negative impact on the global climate (e.g., IPCC, 2007). Somewhat paradoxically, policy makers worldwide now hope that future technological developments will solve the problems that technical change has caused in the past. This requires policy efforts in the energy sector to be heavily focused on innovation and technology diffusion activities as a complement to policies addressing explicitly the reduction of carbon emissions (e.g., emissions trading, carbon taxes, etc.) (Jaffe et al., 2005).
An essential component of the European Union’s energy policy is the promotion of renewable energy sources in its Member Countries, and for the electricity sector the Renewables (RES-E) Directive (2001/77/EC) has played a key role in this policy endeavor. In addition to climate change, several other political ambitions are also provided as arguments for an increased reliance on electricity produced by renewable energy sources. These include, first and foremost, improved security of supply in the Union, but also social cohesion, local employment and environmental protection are put forward as key arguments. While the RES-E Directive has outlined quantitative goals for the development of renewable electricity in each country until the year 2010, it has also provided substantial freedom on the parts of national governments to select the policy instruments needed to fulfill these goals. The existing policy support schemes for renewable electricity (e.g., feed-in tariffs, green certificates, etc.) have primarily succeeded in stimulating the diffusion of relatively mature technologies, such as onshore wind power, but it has become increasingly important to also support the development of the more immature energy technologies in order to make it possible to comply cost-effectively with more stringent climate policy commitments in the future. In order to design efficient policies, though, a proper understanding of the economic, legal and institutional conditions that govern technology innovation and diffusion in the electric power sector is needed. Investments in new carbon-free electric power sources typically face a number of economic, political and institutional hurdles, and these can often differ across countries as well as across different renewable electricity technologies.
The main objective of this paper is to analyze the role of policy support schemes and planning systems for inducing offshore wind power development in Sweden. Specifically, we make use of economic and legal analysis to identify the different types of economic, political and planning-related uncertainties that face offshore wind power investors in Sweden. This implies that we assess the lifetime engineering costs of different types of wind power projects in Sweden, and then analyze the impact of the different policy instruments in use on the competitive cost position of these projects under varying rate-of-return requirements. We also recognize, though, that investment decisions will be influenced by the legal frameworks conditioning the permitting, planning and location of wind farms. The paper therefore also provides an analysis of important legal provisions and selected case law examples concerning the assessment of the environmental impacts of wind mills and the planning procedures for offshore wind mill installations in Sweden.
Throughout the paper we make brief comparisons to the corresponding investment conditions in three other European countries: Denmark, Norway and the United Kingdom (UK). In all of these countries there are great potentials for substantial future expansions of offshore wind power, and Denmark and the UK are already at the forefront of offshore wind development worldwide (see Section 2). Similar inter-country comparisons have been made for onshore power (e.g., Toke et al., 2008), but few previous studies highlight the special conditions offshore. The analysis indicates that the political and legal conditions for offshore wind power development differ considerably across these countries, and in the paper we also conclude that in Sweden these conditions vary considerably for onshore versus offshore wind power installations. The establishment of onshore wind farms in Sweden is negatively affected by the legal provisions governing the assessment of the environmental impacts of wind mills and the planning procedures for mill location (e.g., Söderholm et al., 2007). In contrast, Swedish offshore installations are primarily hampered by lack of policy support, while the legal conditions overall appear favorable.
In Section 2 we briefly review the past development of offshore wind power in Europe. Section 3 analyzes the economics of wind power in Sweden, and the impacts of policy on the lifetime power generation costs. We also address some political and economic aspects on the choice between future technology support policies in Sweden. In Section 4 we discuss environmental permitting and physical planning procedures for offshore wind power in Sweden, and compare these to the respective legal frameworks in Denmark, Norway and the UK.
Section snippets
Offshore capacity developments in an European perspective
Fig. 1 displays the development of offshore wind power capacity in Europe since 1998 and onwards. The growth in installed capacity has been high during this period, albeit from very low levels at the end of the 1990s. At the end of 2009, total installed European offshore wind power capacity amounted to 2056 MW, representing about 2 percent of total wind power capacity in Europe (EWEA, 2010). Globally Europe is a dominant player in the offshore wind sector and the associated production of
Power generation costs and the impact of policy
In Sweden there exist two sets of policy instruments that may support the establishment of offshore wind power: the green certificate system and an investment subsidy to pilot projects. First, the green certificate system for renewable electricity was introduced in 2003. Its aim has been to secure a pre-determined market share for renewable electric power sources, and promote a cost-effective competition between the different types of renewable energy sources. The new system has replaced
Offshore versus onshore wind power planning in Sweden
In Sweden the legal preconditions for the establishment of wind power have often constituted major hurdles for investors, and in particular for onshore installations (e.g., Söderholm et al., 2007). These obstacles to implementation can be found in: (a) the permitting procedure for environmental concession and (b) the territorial planning system.
First, the “environmental trial” relies on assessment rules outlined in the Environmental Code rather than on legal standards (e.g., noise limits),
Concluding remarks
The analysis in this paper shows that the prevailing investment environment for Swedish wind power is in many ways contradictory. The current policy support scheme (and the planned changes in this) substantially improves the economics of onshore wind power investments, but the municipal planning monopoly in Sweden leaves substantial scope for local discretion and for de facto ignoring national energy policy objectives. Specifically, in Sweden only very vague guidelines are provided in specific
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The research undertaken in preparation of this paper was funded by the Swedish Energy Agency (International Climate Policy Program) and the project “Pathways to Sustainable European Energy Systems”, hosted by Chalmers University of Technology. The paper builds on two presentations held at the conference on Offshore Wind Power Planning, Economics and Environment, University of Birmingham, 28 August 2009. Valuable comments from conference participants and one anonymous reviewer are gratefully acknowledged. Any remaining errors, however, reside solely with the authors.