The Swedish Government assigned the Swedish Energy Agency to investigate ways to remove the grid-connection costs for offshore wind power. The Agency will examine two different models. The first model will move the grid connection point to the offshore wind farm. The second model will use subsidies to wind power producers for a portion of the connection costs.
For the first model, the Swedish National Power Grid will plan, construct, and operate the undersea connection cable. Funding of the measure could be provided through an increased grid tariff. However, this model is possible to create unequal conditions for onshore wind power, as onshore wind power and other electricity production facilities would continue to pay connection costs. Moreover, the Agency said that there would be no incentive for wind power producers to select locations that lead to cost-efficient connections if they don’t have to pay any portion of the connection costs.
The second model will use subsidies to wind power producers for a portion of the connection costs. This support has to be limited to covering the undersea cable and associated transformers, the Agency said, as this would create conditions more comparable to those of onshore wind power. What is more, with this project the total cost of the removal of connection costs would be limited while still retaining an incentive to connection locations that are cost-effective
Removing the connection costs can change the competitive conditions faced by different types of power generation. It introduces an additional risk factor for stakeholders in the electricity certificate system and a risk of other, new forms of renewable electricity production being unable to compete. On the other hand, removing the costs may make Swedish offshore wind power more competitive in the European context.
In order to continue promoting the provision of cost-effective energy in the event of a removal of the connection costs, the Agency believes that it is important, regardless of which model is chosen, to have some form of selection criteria and minimum requirements for proposed offshore wind projects connecting to the grid.
