On July 2, 2018 the Norwegian Water Resources and Energy Directorate (NVE) adopted an amendment in the regulations to the Norwegian Energy Act, including amendment to the rules on grid investment contributions (Nw.: “anleggsbidrag”).

The amendment, which will take effect on January 1, 2019, means that grid companies shall claim grid investment contributions also in transmission and regional grid. In light of the fact that many companies within the renewable energy sector these days are contemplating investment decisions related to their projects, the transitional rules in the amendment are particularly interesting.

The proposition document included transitional rules where projects that had come sufficiently far in the planning phase, and fulfilled specific criteria before March 26, 2018, where to be considered under the current regulations. In the adoption document, the transitional rule has been amended based on the feedback from the public hearing. In our view, the adopted regulation is far more predictable for power companies.

The adopted article 16-2, first paragraph, which deals with feed-in customers, states that the grid owners shall not claim grid investment contributions when 1) the customer has been granted necessary license before July 1, 2018, and 2) the customer is connected to the grid, has received increased capacity or better quality before July 1, 2022. Both elements of the rule have to be fulfilled in order for the project to be considered under the current regulations.

The regulatory amendment means that projects that were not granted a license within July 1, 2018 will be covered by the new rules for construction contributions.

According to the NVE’s adoption document, even if the customer has been granted concession before July 1, 2018, and is likely to be connected to the grid/given increased capacity or better quality before July 1, 2022, the grid companies are to provide an estimate of the potential grid investment contribution the customer would pay under the new regulation.

This is because the criteria in letter b) in the rule has a perspective of four years ahead and changes in project plans during this period are not unlikely. The network company should not be able to claim grid investment contributions later on if the customer has not been informed of the potential amount of the grid investment contribution before going ahead with the project.

It is not unlikely that there will be cases of projects that have been granted concession before July 1, 2018, but where the grid connection is not completed before July 1, 2022. This will entail a risk factor, and should be considered in further planning of projects that have received necessary concession.

The amendment also implies that companies may withdraw from a number of planned projects that have not yet received the necessary concession because these might have now become unprofitable due to the amount of the grid investment contribution.

Although there still is some risk associated with the transitional rules, the adopted amendment is significantly clearer than the originally proposed one, as vague conditions, such as “entered into financially binding agreements”, have now been removed. It is particularly positive that the amendment removes the uncertainty associated with projects that have been granted a concession and are now trying to reach the deadline for elcertificates.

It still remains to see how the amount of the grid investment contribution will be calculated once the regulation takes effect, as the adoption document still leaves some room for debate on this part.