July 2, 2018 / 3:12 PM / 9 months ago

Norway adopts new power grid regime from 2019

OSLO (Reuters) - Norway will force big power consumers and producers to pay more for grid upgrades and extensions under a new regulation from 2019, the country’s water resources and energy directorate (NVE) said on Monday.

FILE PHOTO: A windmill is seen in Utsira, a North Sea island of just 6 square km (2.3 square miles) and home to 210 people who already get most of their power from two onshore windmills, April 22, 2008. REUTERS/Wojciech Moskwa/File Photo

The plan is widely opposed by Norway’s energy industry, which says it will have to foot a significant part of the bill, with grid investments of around $17 billion planned between 2016 and 2025.

NVE decided to adopt the regulation in an amended version, effective from Jan. 1, 2019, for consumers and producers of more than 1 megawatt per hour.

“It will motivate customers to take measures themselves that reduce the need for net investment. At the same time, it contributes to a fairer cost allocation between customers that trigger net investment and other grid users,” NVE said in a statement.

The new regulation requires big consumers and producers to pay up to half the cost of any grid investment they require, in a move to encourage building power facilities in locations that already have strong grids, cutting the overall connection cost.

In its amended version, NVE said grid companies can ask for an advance payment of up to 15 percent of the construction fee and a transition period will only include projects already granted a license.

Existing customers that have filed requests for connection or increased capacity before July 1, 2018, will also be included in the transition period.

In the amendments adopted, NVE has waived the requirement that the customer must have entered into a binding financial agreement with a network company or third party.

The regulator has the authority to impose the changes unilaterally.

“The transition period’s purpose is that projects that are already in development will not be treated unreasonably by the new regulation,” NVE’s energy regulation chief Ove Flataker said in the statement.

Norway’s largest power consumer Norsk Hydro (NHY.OL) warned last week that the regulation would make grid costs a challenge for new project investments.

Power producers, including hydropower giant Statkraft[STATKF.UL] and Agder Energy [AGDER.UL], said the new plan would make new renewable energy plants more expensive, with the projects mostly affected being wind power ventures.

Norway’s Oil and Gas Association said the rules could also raise the cost of supplying electricity to offshore oil platforms, as well as for grid upgrades planned at onshore facilities, such as the Nyhamna gas-processing plant.

The transition period will come into effect immediately and NVE will handle any disagreements on whether a customer can be part of it.

Reporting by Lefteris Karagiannopoulos; editing by Nina Chestney and Dale Hudson

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