The Norwegian and Swedish governments have finally come to terms on a Swedish expansion of the ElCert. The expansion implies a new Swedish target of 18 TWh by 2030, with a trading period up to 1 April 2046.

Based on information from the Norwegian Ministry of Petroleum and Energy, the key takeaways can be summarised as follows:

  • The expansion will be effected by an increase of the Swedish target of 18 TWh, linearly over the period 2022 - 2030. The new target comes in addition to the current Swedish target of 15.2 TWh for 2020. Norway will not contribute to the funding of the additional 18 TWh, but retains the current target of 13.2 TWh under the existing regime.
  • The agreement will allow for an increase of Swedish ElCert obligations on end users from 2018 - 2020 to increase the demand for ElCerts from an earlier point in time.
  • Both Norwegian and Swedish ElCerts will be fully tradable in the joint market until 1. April 2046. This implies that Norwegian producers can fulfil Swedish targets and vice versa. Sweden will, however, have decisive influence with regards to the design of the ElCert market after 2035.
  • Norwegian projects still have to qualify by 31 December 2021 to be able to participate in the regime, and will not receive ElCerts for production after 2035.
  • By 2020, Sweden shall propose a backstop mechanism to achieve the new 18 TWh target, and to ensure predictability for market participants after 2030. The backstop mechanism shall fix a deadline or set other limitations on the eligibility of new producers.
  • New renewable production to be reported under the Renewable Energy Directive (Directive 2009/28/EC) shall be equally split between Norway and Sweden until Norway has achieved its target of 13.2 TWh. Any excess production capacity shall be credited to Sweden.

The current ElCert regime is regulated by an agreement between Norway and Sweden, dated 2011 and amended in 2015. The principles set out above will be transformed into a formal amendment agreement "as soon as possible", according to the Norwegian Ministry of Petroleum and Energy.

The Norwegian Energy secretary, Terje Søviknes, has confirmed that new Norwegian capacity beyond 13.2 TWh will be eligible and count towards the new Swedish target financed by Swedish end users, even if the current common target of 26.4 TWh is surpassed. For investors looking to invest in Norwegian projects, the possibility of trading ElCerts in the Swedish expansion period up to 2046 should also be seen as a valuable addition to the existing regime.

The ElCert spot price rose by nearly 1 EUR in the early trading on 19 April following the announcement.

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