EFTA Surveillance Authority Validates a NOK 346.4 million State Aid to Troms Kraft Produksjon AS for a Windpark Project

The EFTA Surveillance Authority (ESA) has today given its aproval concerning a state aid granted to Troms Kraft Produksjon AS and concerning the construction of an onshore windpark (18 turbines, 138 GWh) in Fakken at Vannøya (project info here and here), granted by the Norwegian authorities through the Norwegian Energy Fund Scheme (managed by ENOVA).

The measure was notified to ESA in June 2010 under the State Aid Guidelines for environmental protection. The high amount of the aid, NOK 346.4 million (EUR 42 million), required a detailed assessment. According to the press release*, the high investment costs required for putting on line the windpark project justified the approval of the aid under the Guidelines. The benefits represented by the increased production of renewable energy consecutive to the project counter-balances the negative effects on competition, which themselves are considered to be "limited."

As sum up by ESA in general terms:

"The aid is proportional as it is limited to the aid necessary to trigger investments in the wind park. The aid also provides an incentive effect since the project would not be commercially viable without the aid. Finally, the market power of Troms Kraft is less than 1% and hence the structure of the market for electricity production is unlikely to be altered by the grant of the aid."

The granting of direct state aids of such amounts are expected to be reduced considerably after the entry into force of the green certificates scheme on 1 January 2012 (see previous post). The regime of the Norwegian Energy Fund Scheme has been approved by ESA in 2006 (Decision No. 125/06/COL) and renewed once in 2010 (Decision No.486/10/COL).

* The decision is not yet made available until confidentiality clearing.