Norway's small hydropower industry has frozen dozens of projects following the government's proposal to expand a resource tax. Companies say they stopped new investments within hours of the announcement.
The government wants to lower the threshold for Norway's resource tax on hydropower. The tax currently applies to power plants generating over 10 megawatts. The proposal would extend it to hundreds of smaller plants between 1.5 and 10 megawatts.
Major players like Småkraft and Forte Vannkraft immediately paused dozens of projects. Supplier companies are now losing contracts and some have begun laying off staff.
Eivind Tvedt of EnergiTeknikk said the situation means complete stop for new developments. Their customers cannot make investment decisions while this uncertainty remains. He noted the value of existing power plants has dropped 40 percent.
Tvedt confirmed layoffs are inevitable. The impact extends throughout the supply chain. His company employs 31 people and engages about 100 more in transport and electrical work. All will be affected.
Rune Skjevdal of Hywer called the situation dramatic for suppliers. His company has delivered over 80 complete small hydropower plants. Customers are canceling or delaying projects that were about to start. New project inquiries have stopped completely.
Skjevdal cannot rule out layoffs. While they have ongoing work from final project phases, he said if all small hydropower stops, layoffs become only a matter of time.
Jon Olav Volden of Njord Vannkraft described the situation as critical. His entrepreneurial company has built five small power plants over four years. With full stop signals until conditions are clarified, he predicts tough times ahead.
Volden explained these are marginal projects that cannot proceed without clear financial calculations. His company turns over about 90 million kroner annually but may need to close if no projects emerge.
State Secretary Ellen Reitan said the tax proposal went through consultation to ensure good process. She encouraged affected companies to respond to the consultation.
Reitan stated the proposal keeps the Labor Party's tax promise by maintaining overall tax levels. She believes it will improve the tax system and follows recommendations from expert committees.
The government argues extraordinary returns from natural resources should benefit the community. Reitan said projects profitable before the resource tax should remain profitable afterward.
Industry representatives question why Norway would repeatedly create uncertainty in a valuable national industry. They sense an underlying agenda against these power plants.
This marks another cycle of uncertainty for Norway's small hydropower sector, which faces similar debates every few years. The immediate project freeze shows how tax policy changes can halt industry activity overnight.