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Written by: Stine Solbakken 08/11/2022
The Bergsåi power plant recently opened in Fyresdal. This is one of many new small-scale power plants in Norway. Tor Bendik Midtgarden (65) and the next generation of forest owners have thus been ensured a solid annual income of several hundred thousand Norwegian kroner.
“My daughter, Marte, recently took over the farm and the forest area. She will have an income from the waterfall lease of NOK 300,000 a year, with an electricity price of NOK 1 per kilowatt hour. This is a conservative estimate. Her income may easily be doubled or tripled,” says the forest owner in Fyresdal.
Large small-scale power plant
Recently, Tor Bendik retired from her job at Statkraft, where his tasks included the operation and maintenance of hydropower plants. After a long process involving initiative, commitment, waiting time, and various ups and downs, the small-scale power plant was able to start production this autumn, just a stone’s throw from the farm, Nedre Midtgarden.
“This will be a large small-scale power plant, producing 10 million kilowatt hours,” says Tor Bendik, here in front of the power plant, which is located at the bottom of a waterfall with a drop of 240 metres.
The pipes, which are up to a metre in diameter, are buried in a 20-metre penstock through the terrain. The entire penstock from top to bottom is 3.2 kilometres long.
The process since 2012
Tor Bendik began planning a power plant on his property in Fyresdal in 2012. He invited three neighbours to join him, and they established a joint stock company and hired an engineer with experience from seven other start-up power plants. Biological surveys were conducted, and they applied for a licence from NVE in March 2015. It was not until August 2018 that they were finally granted a licence.
“The government has promised that it will take less time to process licence applications in the future. When the licence finally arrived for our project, the power price was down to just a few øre. So the entire project was put on hold and two of the neighbours withdrew from it, but they still wanted to lease out the waterfall rights,” explains Tor Bendik.
New initiative from a neighbour
The power plant dream was saved by Willy Skjeggerud, who had bought the property next door to the Midtgarden family. He had the necessary initiative to take the project further.
All the fall rights were gathered into one company. The licence was secured, the environmental surveys had been carried out, and an agreement with affected landowners on road use had been negotiated.
The company Småkraft AS, which currently owns 170 small-scale power plants in Norway, was thus offered a complete package from Skjeggerud. Earlier in the process, none of the landowners wanted to accept the risk of building a power plant for NOK 38 million. Småkraftverk AS was interested and agreed to the complete package.
How much risk are you willing to take?
The waterfall rights for a span of 60 years have been leased to Småkraft AS, which has assumed all the risks of the development. As one of the landowners, the Midtgarden family receives their share of the 10 percent of the gross income from power production. Nedre Midtgarden has 32 percent of the fall.
“How much risk are you willing to take? That is the most important question you should ask yourself if you want to start power production on your property.
“I think many people fail to assess the risk. You can achieve higher earnings with a larger risk, but it’s important to consider the consequences if the world changes. We weren’t interested in investing the farm and land just to build a power plant, even if the figures looked promising.”
What is needed?
Tor Bendik has extensive professional experience from his work at a power company, and now also his own experience as a landowner. He offers some good advice.
“You must have a waterfall that can be developed with a profit, you must decide how high a risk you are willing to take, and you must use professionals who know what they’re doing.”
“There are many pitfalls, and it’s no secret that some power companies have conned many people into bad deals. My first demand was that the default lease should come from the gross income of the power plant, in other words, from the entire power production. With income from the net production, the figures may be manipulated, and the landowner will get a smaller share of the income.”
In addition to a well-managed forest property of almost 10,000 acres, which has an annual logging income, the next generation can benefit from the value creation from power production.
Marte Martilla Dybdal (33) took over the farm together with her husband, Tore Dub Dybdal, in 2019.
“Hydropower is a cleaner form of energy and places less strain on the environment than many other energy sources. Nevertheless, building a power plant involves a major encroachment on nature. It’s a big responsibility. Also, I don’t quite know what the future will hold. It looks as though the summers will be drier. What will the production be like then?” wonders Marte, who is thankful that her father has made such a good arrangement for a steady income. Although it may seem a bit daunting, the power plant provides the opportunity to live off the farm to a greater extent in the future.
Strong faith in water and sun
“This development is profitable with a power price of 25 øre. I don’t think we’ll get a power price of NOK 4 or 5, but somewhere between NOK 50 and NOK 0.2 is realistic. I saw that the demand for power after 2010 was increasing, while the last major developments in power here in Norway was in the 1980s. There is a huge backlog.
“I strongly believe there will be a renaissance for hydropower plants. True, there are some scars in the terrain further up the hill, with 20-metre wide penstocks, but they’ve been laid underground, and the vegetation will grow back, so it shouldn’t be an eyesore in the future. I have a strong belief in power from water and sun, simply because it is less controversial and gentler on the environment than wind farms. There will be strong competition for small-scale power plants, but don’t ask for too high a price,” advises Tor Bendik Midtgarden.