The electricity certificate is a market-based support system for renewable electricity production. The system came into force on 1 May 2003 and is intended to increase the production of renewable electricity and to make the production more cost-efficient.
For each MWh produced from renewable resources, electricity producers have the opportunity to be granted an electricity certificate by the Government. The certificates can be sold on an open market to electricity consumers - mostly via electricity suppliers - who have to fulfil a quota obligation of certificated electricity. The quota is set in proportion to total electricity use. Energy-intensive industry is exempt from the requirement.
The demand is thus regulated by means of the quota, while the supply is unregulated. The price is determined freely on the market for certificates. Only new power plants or plants which have undergone recent significant changes are entitled to certificates.
The renewable energy sources include wind, solar, wave, geothermal certain hydro, certain biofuels, and peat in CHP plants.
The objective of the Swedish electricity certificate system is to increase the production of renewable electricity with 25 TWh by year 2020 compared to year 2002. Between 2002 and 2011, the production of renewable electricity increased by approximately 13 TWh, principally by means of biopower and wind power.
Since 1 January 2012, Sweden and Norway share a common electricity certificates market, implying that certificates may be traded between borders. The objective of the common certificates market is to increase the production of renewable electricity with 26,4 TWh by 2020, compared to 2012. This corresponds to approximately 10% of total electricity production in both countries. For consumers who fail to buy enough certificates, there is a financial penalty.