Norway prohibits private ownership of hydropower concessions

Norway has announced it no longer will let private investors buy hydropower concessions, but will let companies own up to one-third stakes in publicly held hydroelectric plants.

The change is a bid by Norway’s Labor-led coalition government to overcome a dispute with European authorities over Norwegian rules on ownership of hydropower assets.

In June, the European Free Trade Association Court (EFTA Court) in Luxembourg said Norway’s rules on ownership of hydropower concessions, which force private owners to relinquish licenses after 60 years, were against European Economic Area (EEA) rules and discriminated against private owners and potential investors. Norway grants hydro concessions to public owners in perpetuity. (HNN 6/27/07)

Norwegian energy authorities argued that public control has been central to Norway’s management of hydropower resources since 1909. Many politicians slammed the court’s ruling, which was welcomed by private industry.

Municipalities and counties own about half of Norway’s power generation capacity and the central government, through state power company Statkraft, about 37 percent. Private owners have about 13 percent of the total capacity.

“The provisional decree of public ownership states that licenses of acquisition to waterfalls and hydropower plants will no longer be granted to private actors,” the Ministry of Petroleum and Energy said August 10. “However, it will be possible to sell one-third of publicly owned hydropower companies to non-public owners.”

Oil and Energy Minister Odd Roger Enoksen said the new law maintains “the basic principle of public ownership of the Norwegian hydropower resources at state, regional, and local level.”

Officials said the decree, which is to be replaced later by a permanent law, made Norwegian law compatible with the EEA treaty that links non-European Union members Norway, Iceland, and Liechtenstein to the single European market. A suit had been brought against Norway by the EFTA Surveillance Authority (ESA), a body that monitors compliance with the EEA treaty.

“We have had two meetings with ESA and have not received strong objections against the model that has been drafted,” Enoksen told a news conference. “With this decree the government secures stability and predictability, and avoids speculation in the electric power sector.”

Enoksen said the central government would not necessarily keep its current level of ownership, but could sell assets to munipalities and counties in the future.

Norway is the world’s sixth largest hydropower producer and has the world’s largest per capita hydropower output. Annual production in a year with normal rainfall is about 120 terawatt-hours. Hydroelectric plants account for about 99 percent of Norwegian power generation.

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