With the draft Act on Offshore Renewable Energy Production, submitted to the Norwegian Parliament (Stortinget) in June 2009, the Government takes an important first step in facilitating offshore renewable energy production. The Act is intended to provide a unified legal framework for the construction and operation of facilities for offshore power production from renewable energy resources in Norwegian territorial waters and on and above the Norwegian Continental Shelf.
According to a study prepared for Enova, the Norwegian state enterprise set up to promote renewable energy consumption and production, Norwegian territorial waters and the Norwegian continental shelf hold an untapped technical potential for offshore wind power of a staggering 14 000 TWh/y (almost 14 times the energy value of annual Norwegian gas export). Norwegian offshore renewable energy production has hitherto been limited to experimental production and testing of prototypes. The limited development is mainly due to the high cost of offshore renewable energy production compared to land based hydro electric production as well as production from land based wind turbines. Another factor is the currently fragmented and rudimentary legal framework for such activities. The draft Act on Offshore Renewable Energy Production seeks to mend the legislative problem.
A flexible and non discriminatory regime
Apparently inspired by Norway's successful license regime for offshore petroleum production, the draft Act requires a government license for the construction and operation of facilities for offshore power production, as well as for related facilities for transformation and transmission.
The extent and nature of future development of offshore energy production depend on a number of yet unknown factors and circumstances. Thus, the draft Act aims to provide an overall framework with central principles, allowing for more detailed regulation in secondary legislation (regulations). The draft Act does not distinguish between different renewable technologies; offshore wind, wave and current power, as well as other possible renewable technologies, are encompassed.
The draft Act establishes procedures for the opening of offshore areas for power production and for the award of production licenses and transmission licenses. The license regime does not discriminate between public and private entities, or between Norwegian entities and entities established and registered in EEA agreement member states. Detailed requirements and conditions for the awarding of licenses will be established by regulations. Licenses may be granted for a period of up to 30 years from commissioning of the facilities, with a possibility for a subsequent extension of the license period.
Protecting the environment and third parties
The draft Act provides for developer to conduct extensive impact assessments according to detailed impact assessment procedures divided into two stages. First, before new areas can be made available for offshore power production, the authorities must ensure a strategic assessment of environmental and social impacts of renewable power production in the relevant area, including its effects on other users, such as shipping and fisheries. Developers must also conduct a specific impact assessment before applying for a license or as part of the detailed plan for development and operation of facilities. Before an impact assessment can be approved by the government, the developer must submit its impact assessment program to the relevant authorities for public consultation and approval.
The draft Act addresses the potential negative effect of offshore renewable power production on fisheries in particular detail. To the extent that activities pursuant to the Act take place in a fishing ground and thus fully or partially obstruct fishing activities, the state must provide compensation to adversely affected parties. A licensee, on the other hand, will only be liable for loss due to its obstruction of fishing activities to the extent the loss could have been limited or prevented by appropriate mitigation measures. However, a licensee will be strictly liable for damage caused by pollution or waste from its activities, according to the draft Act, regardless of fault. The liability also includes costs related to reasonable measures to avert or limit such damage or loss. Claims for compensation will be resolved by a committee to be established by the Ministry of Petroleum and Energy.
Finally, the draft Act establishes additional provisions on a number of issues: safety and safety zones around facilities, decommissioning and removal of facilities, appointment of a transmission system operator, area fee to be paid to the state, financial guarantee for obligations and liability in connection with activities under the Act, supervision by relevant authorities, administrative sanctions for violations of the Act, and provisions on the Ministry's right to revoke a license if it was awarded based on incorrect or incomplete information or for material breach of the Act, relevant regulations under the Act or conditions stipulated in the license.
Remaining challenges for offshore hydropower
A legislative framework is only one step towards full scale offshore energy production from renewable resources. With the technology currently available, offshore energy production is not commercially viable. Consequently, the state must also create a sensible and efficient support or subsidy system to stimulate development of renewable energy production.
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