The world’s largest manager Blackrock owns two wind farms in Norway and criticizes the land rent tax on wind power. — would harm the viability of Norway’s wind power plants, they write.
American company BlackRock made a critical Consultation input To the Norwegian government regarding land rent tax on wind power. The hearing ends today, March 15th.
Blackrock owns Tellenes in Rogaland and Guleslettene in the province of Vestland. The two wind power plants sell their power to Google and aluminum company Alcoa, respectively.
“Our view is that a land rent tax as has been proposed would be detrimental to the capacity of wind farms in Norway, offer the possibility of default on loan obligations, and could result in a significant loss of invested capital,” Blackrock wrote.
The company believes that wind power plants in Norway generally do not generate a super profit, ground rent as they are also called, which is tax targets. According to Blackrock, neither Tellenes nor Guleslettene power plants have super profits, but they still have to pay land rent tax.
“We strongly encourage the department to reconsider the proposal,” Blackrock wrote.
He warns of rising energy prices
BlackRock also warned that the proposal would have a “negative impact” on investments in wind energy in Norway, and that it could lead to higher electricity prices.
The company refers to the target recommended by the Energy Commission to increase annual energy production in Norway by 40 TWh by 2030.
“This cannot be achieved without the extensive construction of onshore wind. Failure to meet these targets will mean higher energy prices for Norway in the future,” warns Blackrock.
He said that “the proposals would have a negative impact on further investment in the Norwegian energy sector. This would be detrimental, especially given that power deficits are expected by 2027 unless more power capacity is built quickly,” Blackrock writes.
– very disappointed
The government has also come under fire from Finnish company Taaleri Energia, which develops and operates wind and solar power plants and, among other things, owns the controversial Haramsøya wind farm.
“Talerie Energia is deeply disappointed with the Norwegian government,” Talleri Energia wrote in his entry to the consultations.
The Haramsu wind power plant was already suffering from poor profitability and, according to Tallieri, risked bankruptcy due to the land rent tax. The company says it probably won’t invest more in Norway because of the political risks after the proposal.
“In its current form, the introduction of a land rent tax would have disastrous consequences for Norway’s reputation and for new investments in Norway,” wrote Tallery Energia.
Norwegian wind power players such as Vardar, Alta Kraftlag, Sogn og Fjordane Energi and Cloudberry listed have also provided important advisory input. It also has Germany’s Aquila Clean Energy, which operates Midtfjellet Vindpark and Øyfjellet Vindpark, and Italy’s Renantis (formerly Falck Renewables), which operates Hennøy and Okla wind farms and is joint ownership By Sogn og Fjordane Energy.
DNB also warns of higher electricity prices
DNB does not own wind energy itself, but the bank can be the owner of securities related to the energy industry on behalf of others, by managing funds and pension funds.
“In general, we consider that the proposed structure of the land lease tax on onshore wind carries risks of lowering the level of investment in Norway in the future. In the long term, lower investments in energy production will, all things being equal, lead to a tighter energy market and, consequently, higher prices energy,” DNB writes.
According to the DNB, the proposal could lead to bankruptcy of some wind power projects, and affect the industry from which it buys cheap energy on long contracts.
“A bankruptcy of the wind power project will lead to the termination of energy security agreements with Norwegian industry, which will in turn lead to higher electricity costs. Many large Norwegian industrial groups have entered into such contracts, which, if they fall through, could weaken their competitiveness,” DNB wrote. “.
Legitimate and based on sound foundations
Oil and Energy Minister Terje Asland (AP) said the government would listen to input from players such as Blackrock and Tallieri.
– It is the Ministry of Finance that will process these consultation proposals, and it is important to process the inputs accurately before we reach a conclusion. But these players are exploiting the resources of Norwegian society, and we think the land rent tax is legitimate and well justified, Aasland tells E24.
– We must amend the ground rent tax so that it does not prevent future investments or turnover of projects that restricted much of the energy supply in the PPA. He says it is still beneficial to develop wind energy in Norway.
Many supporters of this proposal
The Norwegian Tax Justice Authority supports the government’s proposal to introduce base interest on wind power, according to advisory input. The organization previously recommended such a tax, because they believe many Norwegian wind power plants have very high operating margins.
They also call for more transparency about the true owners, and point out that the future registry will have limited possibilities for penalties.
“The authorities should therefore require the actors to submit ownership information in regulations on the awarding of wind energy concessions, with stronger penalty options in case of non-compliance compared to Brønnøysund registries under the Beneficial Rights Holders Records Act,” he writes.
The protest group Motvind Norge also supports the land rent tax.
“Since we already have several wind power plants, Motvind Norge supports proposals for a land rent tax and a natural resource tax, because profitable use of our natural resources must of course be taxed,” they wrote in their entry.
However, Motvind Norge does not agree that income from wind energy should be partially returned to the municipalities.
“We are concerned that increased income for municipalities reduces nature conservation under the guise of local democracy,” they wrote.
Rabobank is afraid of bankruptcies
Deutsche Rabobank has lent money for wind power plants Telenes and Tunstad, as well as for the Snow Lion project, which consists of three wind power plants including Buheii and Tysvær in Norway.
“Introducing a land rent tax as now proposed would lead to unintended consequences such as wind farms defaulting on their loans or going bankrupt; especially wind farms like Tellenes and Tonstad, with long-term power sales agreements at price levels before 2021, or Buheii and Tysvær.” When prices stabilize,” Rabobank wrote in the advisory’s entry.
“Another consequence will be higher prices for LTPS, which will affect the Norwegian industry, which is currently earning handsome profits from the lower fixed prices from existing wind power plants,” Rabobank wrote.
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