Quota system
Updated: 10.01.2019
Author: Oskar Vågerö
The Electricity Certificates Act obliges electricity suppliers and certain electricity consumers to annually acquire renewable energy certificates in due proportion to their electricity sales and their consumption by a set date. Furthermore, the act stipulates the conditions under which owners of renewable energy generation plants may acquire electricity certificates.
The new amendment that enters into force 01.01.2019 will adjust the quota obligation per MWh of electricity sold or consumed to a slightly lower level.
Eligible technologies
In general, all renewable energy generation technologies are eligible for the quota system (§ 7 No. 2 Electricity Certificates Act).
The following conditions must be met:
- The construction or the production capacity expansion of a plant must have started after 7 September 2009 (§ 8 par. 1 Electricity Certificates Act). Hydro-power plants are treated differently and must instead have started the construction or the production capacity expansion after 1 January 2004.
- Plants commissioned after 31 December 2020 are not eligible under the quota system (§ 8 par. 4 Electricity Certificates Act).
- Plants for which a government investment grant was received shall only be eligible if the received investment grant was paid back prior to or on 30 April 2012 (§ 8 par. 4 Electricity Certificates Act).
- Plants must be built in accordance with the licensing terms or comply with the conditions for exemption from licensing (§ 9 par. 2 Electricity Certificates Regulation).
| Wind energy | Eligible (§ 7 Electricity Certificates Act) |
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| Solar energy | Eligible (§ 7 Electricity Certificates Act) |
| Geothermal energy | Eligible (§ 7 Electricity Certificates Act) |
| Biogas | Eligible (§ 7 Electricity Certificates Act) |
| Hydro-power | Ocean energy is fully eligible (§ 7 Electricity Certificates Act). Other forms of hydro-electricity are eligible only if generated by plants whose construction started after 1 January 2004 (§ 8 Electricity Certificates Act). |
| Biomass | Eligible (§ 7 Electricity Certificates Act) |
Amount
| Amount of quota and period of application | The quotas for the period from 2016 to 2035 have been set as follows (§ 17 Electricity Certificates Act):
The level of quota corresponds to the amount of electricity sold or consumed in any given year, multiplied by the quota obligation for that year (§ 18 par. 1 Electricity Certificates Act). | ||||||||||||||||||||||||||||||||||||||||
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| Adjustment of quotas | Norwegian law does not define a procedure for changing the quota levels. To change the quota levels, it will be necessary to amend the act governing the quota obligation. | ||||||||||||||||||||||||||||||||||||||||
| Number of certificates according to technology | One certificate is issued for every MWh of renewable electricity produced, regardless of the generation technology employed (§ 10 par. 1 Electricity Certificates Act). | ||||||||||||||||||||||||||||||||||||||||
| Fees and penalty charges | Quota obligation fine. Persons and entities that fail to satisfy their quota obligation shall pay a fine (§ 21 par. 1 Electricity Certificates Act). Every certificate an obligated person/entity fails to present carries a fine of 150% of the weighted average certificate value in Sweden and Norway during the period between 1 April of the previous year and 31 March of the given year. The amount of the fee shall be published by NVE every year by 1 June (§ 37 par. 3 Electricity Certificates Regulation). | ||||||||||||||||||||||||||||||||||||||||
| Annual average certificate price | According to the NVE, the average certificate price in 2017 amounted to NOK 0.017 per kWh (€ct 0.18 per kWh) (NVE Annual Electricity Certificate Report 2017). |
Addressees
The quota obligation applies to
- companies supplying electricity to consumers,
- electricity consumers who use electricity they produced,
- electricity consumers who purchase electricity on the Nordic electricity market or have entered into a bilateral agreement
(§ 16 Electricity Certificates Act).
Procedure
Process flow |
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Competent authority | The authorities in charge of the quota system are the Norwegian Water Resource and Energy Directorate (NVE), which manages and monitors the electricity certificates system, and the Norwegian transmission grid operator (Statnett), which issues electricity certificates and maintains an electronic electricity certificate register. |
Eligibility period
Eligibility ends after 15 years from the initial support date (§ 10 par. 3 Electricity Certificates Act).
For plants that were commissioned before the Electricity Certificates Act entered into force (2012), the eligibility period will be reduced by the plant's previous period of operation (§ 10 par. 3 Electricity Certificates Act).
Electricity certificates will be issued for all electricity produced by 31 December 2035 (§ 4 Electricity Certificates Act).
Where a plant operator is not able to generate electricity due to unforeseen disruptions or where other events related to the transmission or distribution of electric energy prevented him from receiving green certificates over a period longer than 30 days, the NVE may, on request, extend the eligibility period by the time in which the plant operator did not receive electricity certificates. However, electricity certificates will not be issued for electricity generated after 31 December 2035 (§ 13 Electricity Certificates Regulation).
International applicability
| International certificate trade | According to the Norwegian Water Resource and Energy Directorate (NVE), Sweden and Norway introduced a common electricity certificate market on 1 January 2012. Electricity certificates issued in accordance with Swedish law may be used to fulfil the quota obligation in Norway (§ 5 Electricity Certificates Regulation). |
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Distribution of costs
| Consumers | According to the Norwegian Water Resource and Energy Directorate, the costs are borne by the consumers. |
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| Distribution mechanism | According to the Norwegian Water Resource and Energy Directorate, electricity suppliers pass on the costs arising from the quota obligation to the consumers by adding a surcharge to the electricity bill. Since the introduction of the Swedish-Norwegian common certificate market, the costs of the quota obligation have been shared by electricity consumers in both countries. |
Norway
