Stein Lier-Hansen at Norsk Industri is asking energy producers from the United States to pursue the changing power plant taxes by upgrading old hydroelectric plants (Last in DN 30 November). He claims that this will give eight to ten terawatts of new energy.
This is not realistic.
New large volumes of renewable energy must come from wind, unregulated hydropower, and solar.
The development of old hydroelectric plants will provide little new energy, but on the other hand may provide more energy and storage capabilities. The latter is very important even outside of power supplies and prices.
There are still very little tax incentives to quickly modernize Norway’s standby power plants.
Upgrading a larger Norwegian tank power plant usually means building an entirely new power plant in parallel with the old one. It’s not sustainable for the environment, or the economy, for upgrades to happen often.
Dams and tunnels in Norwegian reservoirs have a depreciation period of 67 years. Our largest power plant, Tafjord 4, started in 1966 – the year I was born. Today, the residual book value of this facility is NOK 100 million. So the owners of Tafjord have to write off 100 million if we want to upgrade now.
Technical service life is a flexible concept. The actual technical life of Norwegian hydroelectric power plants is between 70 and 100 years. If we get better tax incentives and depreciation, we can take a little less tech risk and upgrade the Tafjord 4 after 70 years, and not wait until the 80th or 90th anniversary.
I agree with Stein Lier-Hansen that we must continue to work to develop the energy-intensive Norwegian industry, and that ample access to affordable renewable energy is a prerequisite for this. To achieve this, several actions must be taken holistically:
When we need 50-70 TWh of new energy, it makes perfect sense to develop more ground wind. There is no readily available renewable energy source that can compete with wind for such sizes. The Norwegian industry should be more active in all areas of the media, and communicate this to the people.
- Pumping power station without ground rent
There are good reasons for the nation to impose a land rent tax on a national natural resource. If you build a pumping storage power station, you will not use the national resource, which is rain and flow. Therefore, the pump power must be exempted from the land rent tax.
- Reducing the depreciation period of hydroelectric power stations
In the uncertain future energy market, it is likely that the economic life of a hydropower plant will be much shorter than the technical life. This speaks in favor of lower depreciation times. I think all economists think 67 years is a long time.
- Review of existing hydropower licenses
In most Norwegian hydroelectric licenses, the NVE can be opened for review after 50 years. The fear in the industry is that these revisions will increase the minimum release of water and thus reduce the volume of energy as well as impose further restrictions that reduce storage capacity.
Government should ensure that the volume of capacity is maintained or increased in all revisions of conditions, and that capacity for regulation should be increased where practicable by raising dams etc.
- Waterway Protection Review
Parliament’s protection of waterways was introduced as a result of the rather brutal early developments of hydroelectric power. Protecting the waterways was equally brutal, and in practice halted all reasonable and unintended hydroelectric production.
The government should form a committee to re-evaluate the protection system. Here, several considerations must be prioritized against each other – the need for more renewable production, nature conservation, the growing need for flood protection and living settlements.
And finally: it’s not a good idea to ask us to be part of the task of making renewable energy affordable in Norway’s future, and at the same time take the opportunity to sell guarantees of origin.
It is not good for a renewable society to remove guarantees of origin, as Hurdal’s platform states.
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