Norwegian politicians are expected to change the depreciation rules for wind energy production before the summer in an effort to attract investors.
The proposed changes would harmonise tax depreciation across all wind farm components, subjecting them to a straight line depreciation of 20% annually over a five-year period.
These changes are one of the steps taken to align the Norwegian tax legislation to that of Sweden. The two neighbouring countries stipulated a common renewable support scheme in 2012, in which they committed to increase energy production from renewable sources, like wind, solar, and biomass, to 26.4TWh by 2020.
“The wind industry in Norway has long been waiting for this proposal because there’s been a lot more building of wind power in Sweden instead of Norway,” says Anders Lenborg, partner at DLA Piper.
Due to a more favourable investment environment, Sweden has so far outdone Norway’s energy output, 6.6TWh to 0.3TWh, as reported by Reuters. According to Lenborg, plans are underway to also change the corporate tax level from the current 27% to 20%, the level in Sweden.
Once enacted, the depreciation changes will apply to all deals signed from January 1, 2015. Lars Løken Granlund, advisor at Norwea, a lobby group promoting investment in Norwegian renewable energy production, is confident that Norway’s renewable energy output will increase significantly: “We think the changes will generate 5-8TWh in Norway before 2020,” he tells GTR. According to him, once the investment conditions between Norway and Sweden are equalised, Norway’s stronger winds will be more attractive to investors than Sweden’s.