What could Finland learn from Swedish PV policy?

Alvar Palm alvar.palm@iiiee.lu.se

Swedish PV market and context

• ~100 installation firms (typically small, diversified)• Installed capacity: ~100 MW• ”Free” electricity market Surplus can be sold at spot

prices (or more if there is a buyer)• Low electricity prices

Swedish PV policy: Overview

• Support:– Investment subsidy (2009-)– Free grid connection (2010)– Tax reduction (2015-)– Tradable permits (general support for renewable

electricity) (2003-)• Tax rules: Ambiguous…• Overall policy environment: Complex,

uncertain

Tradable certificates (2003-)

• Main Swedish support for renewable electricity• ”Technology neutral”, ”market based”• Certificates granted corresponding to renewable

production (others need to buy certificates)• Poorly adapted for micro-production

– Hassle obtaining/trading small quantities– Difficult/costly for self-consumption

• Only 30% of PV users have joined (all are formallyentitled)

Investment subsidy• Main driver of Swedish PV market – but…• Unpredictable (decisions have been taken at very short

notice)• Capped – when money runs out, no more applications are

approved (until new funding is secured)– Long queue (one year in 2013)– Problems for installers (stop-and-go market)

More expensive for consumers

Guaranteed grid connection (2010)

• Legal right to connect PV to grid• Grid operator must install metering

equipment without charge• Effective, low-cost intervention!

Tax reduction (2015-)

• Introduced ”instead of” net metering• Tax reduced by 0.06 €/kWh for electricity fed

into grid (up to 30,000 kWh/year)• Also for sold electricity• Individuals and organisations• Main fuse <100 A

Tax rules

• VAT on sold electricity– Ambiguous rules (mandatory says tax agency, no/few

individuals have registered)– High transaction costs (for individuals and society)– Uncertain future

• Tax on self-consumed PV electricity– Ambiguous rules (no/few individuals pay)– From July 2016: Exempt <255 kW– Fairness issue – organisation structure:

1000+ stores, one juridical person600+ stores, many juridical persons

Local initiatives

• Grid operators– Sell and market PV– Arrange information seminars– Buy electricity at favourable rates– Often backed by municipalities (owners)

Successful for increasing PV uptake! (Palm, 2016)

Implementation process

• EU compatibility – poor knowledge of what is allowed (led to severe delays/uncertainties)

• Internal compatibility – existing rules are not adapted to micro-production

• Policy learning: Instead of learning from successful cases (Germany), Sweden tried toreinvent the wheel – with poor result

Better approach: Germany

• Procedure:– Decide how profitable PV systems should be (e.g.

7% yearly return on investment)– Set subsidies accordingly, guaranteed for several

(15-20) years– Frequently monitor price reductions of PV systems

and reduce subsidies for new entrants

Lessons from Sweden• Avoid uncertainties

– Installers: What will the market look like a year from now?– Users:

• Will I get subsidies, permits (building, grid connection)?• General system trust: Will new taxes/whatever be introduced after I

buy PV?• Avoid complexity

– Overlapping financial supports– Difficulties of use/understand

• Check compatibility early (EU, internal), update outdatedrules in tax/electricity system

• Efficiency/fairness: Favour small actors/installations?• Emulate the best, not the closest

Thank you!

Alvar Palm alvar.palm@iiiee.lu.se