The government recently presented a bill to Parliament suggesting changes to the electricity certificate system – Sweden's primary support system for renewable energy. Producers of renewable energy receive one certificate per megawatt hour of renewable energy produced. The government is now proposing to extend the certificate system to 2045 and to increase total quota obligations with an additional 18 terrawatt hours until 2030.
The government and three opposition parties recently reached an agreement on the long-term energy policy. Among other things, the agreement sets out that by 2040, 100% of Sweden's electricity production will come from renewable energy sources. However, according to the government, this goal should not be understood as a cut-off date for nuclear energy.
The Energy Commission recently reported on energy production conditions as part of the first phase of its work. Although the report clearly identified the difficulties for renewable energy production, it offered no solutions. In addition, there is confusion around the political landscape beyond 2020 in regard to development aims and subsidies. While the market is requesting clear post-2020 policies, Parliament is largely awaiting the commission's final results.
Parliament recently passed a bill on increased targets for renewable energy production, which aims to increase renewable electricity production in the Swedish-Norwegian electricity certificate market. To finance the increased production, the bill has adjusted the quota requirement for electricity certificates, meaning that certain producers and endusers must now purchase more electricity certificates.
The government has proposed a revised tax exemption for production of renewable electricity. The rules have been criticised for not being technology neutral because they benefit wind power only. The government intends to harmonise the rules for other types of electricity production, while limiting the tax exemption for larger-scale producers.
The Energy Agency has presented its proposals to increase support for the expansion of offshore wind power. The report recognises that the existing subsidy system is insufficient for the expansion of offshore wind power and substantial subsidies are required for large-scale expansion. However, it is unlikely that new regulations will be introduced before a more thorough investigation has taken place.
The government recently proposed increased quotas for electricity certificates with the aim of increasing renewable electricity production. The government has also proposed dropping the tax exemption for production of renewable energy for personal use by 2016. The proposal has had a mixed reception from the renewable energy industry.
As a result of uncertainty concerning the calculation of grid owners' revenue frames, the government instructed the Energy Market Inspectorate to propose amendments to the Ordinance on Adoption of Revenue Frames, so as to protect electricity customers by ensuring that grid owners' charges are reasonable. The ordinance has not been well received by the industry as it limits the right to make use of older equipment.
At present, natural gas grid fees are reviewed by the Energy Market Inspectorate after a certain period from when those fees come into effect. This will change from January 1 2015: from that date, natural gas grid fees will be determined in advance for a supervisory period of four calendar years, just like electricity grid fees.
Electricity grid owners must have a concession to build and operate regional and local grids. This means that each grid owner in control of an area concession has a local monopoly, and the end user can enter into grid connection agreements only with that grid owner. The Energy Market Inspectorate has published a report stating that the existing method of calculating revenue frames has shortcomings which need to be remedied.
A recent draft bill suggests amendments to the Minerals Act in relation to the exploration of minerals. The government proposes that more specific information be given in work plans. The proposal includes expanded notification obligations for mineral prospectors. From the viewpoint of prospectors, extended work plan requirements will result in increased administration and higher costs in connection with exploration work.
A major Swedish paper pulp producer has recently announced that it might move part of its production to South Africa due to high electricity prices in Sweden. Prices are expected to rise this year, as the allocation of emission allowances will be reduced during the second trading period. Sweden is now at a crucial point: the industry will either adapt to the emission allowance system or seek new ground.
Nord Stream has recently notified the Baltic Sea governments of its plans to build a pipeline for the transmission of natural gas from Russia to Germany, including a service platform near the Swedish island of Gotland. All political parties represented in the Swedish Parliament seem to be against the pipeline. This update reviews the legal possibilities to stop the laying of the pipeline.
The Energy Agency has developed a method to evaluate the reasonableness of network tariffs: the performance assessment model. The model is based on a virtual reference network, which is considered to be run in an economical and technically efficient manner. The model has been heavily criticized ever since its introduction and is soon to be examined by a court for the first time.
The Energy Market Inspectorate has delivered a report on price formation and competition in the electricity market. It suspects that the three companies dominating the market have limited the generation of electricity to influence electricity prices. Moreover, under governmental pressure, state-owned energy company Vattenfall has decided to offer a lowest price guarantee to its customers.
The government recently proposed changes to the current system of electricity certificates, which was implemented to increase the production of renewable electricity. This update provides an introduction to the electricity certificate system, reviews the principal changes proposed by the government and comments on a possible common Swedish/Norwegian market for electricity certificates.
Following a storm which caused the breakdown of large parts of the electricity network, the government announced the forthcoming implementation of rules aimed at achieving increased security of electricity supply. Among other things, the legislation will introduce a minimum requirement for secured electricity supply, as well as mandatory compensation for interrupted supply.
On July 1 2005 the Natural Gas Act was replaced by a revised act which implements the Natural Gas Directive. However, some issues and risks still need to be considered by the legislature. For example, the division of powers and responsibilities for the performance of system operatorship under the act differs from the main principle of system operatorship under the directive.
The government has recently presented a bill for the implementation of the revised EU Electricity Directive. Since Sweden reformed its electricity market in 1996, the government must implement only a limited number of provisions. The implementation of the directive is nonetheless untimely, since the deadline expired on July 1 2004.
The Swedish Energy Authority recently conducted an overview of the electricity certificates system. One of the major changes proposed is to make the system permanent and to set quota levels for a period of at least 10 years. Such regulation is expected to create a more transparent system, which is also expected to enhance investments in renewable production capacity.