Denmark

Denmark

Denmark - Sector waits for new energy act to end limbo

DENMARK: The year ahead is one of promise for Denmark's wind sector following the political limbo caused by 2011's general election. Revised energy legislation is due in the first half of this year, and the industry is keen to find out when the new act will take effect and what difference - if any - it will make.

Denmark's newly elected government is boasting that wind energy will meet half of the country's electricity demand by 2020. Last year, however, was unremarkable for Denmark's wind-energy sector. Instead of the projected 200-250MW additional capacity, 178MW was added and 56MW was decommissioned.

"I would call 2011 a year of waiting," says Jan Hylleberg, chief executive of the Danish Wind Energy Association. A decision on the new energy act had been expected but never came, leaving the sector somewhat in limbo, Hylleberg complains.

However, the new Danish government has confirmed its commitment to the country's long-term renewable-energy and CO2 emissions targets. The CO2 reduction target has in fact risen from 30 to 40%. And wind power is meant to play a major role in the country's goal to phase out fossil fuels entirely by 2050. Today, 28% of Denmark's gross electricity consumption comes from wind. The 50% wind target by 2020, according to Hylleberg, means an extra 500MW onshore over the next ten years, in addition to the approved offshore developments.

The eurozone crisis also played a role in slowing down last year's wind development. Danish wind exports - and the profits of the country's large companies such as Vestas - both suffered. "The European market is developing too slowly," says Hylleberg. "We need to see more investments in the European grid if we want our wind-energy sector to grow."

On a positive note, 2011 saw a new source of financing - pension funds - being injected into Danish offshore wind projects. Two of the country's biggest pension funds, PensionDanmark and PKA, have invested in the 400MW Anholt wind farm, Denmark's largest offshore project, which is expected to come online by 2013. "This trend just started in 2011 and gives us hope for future financing," adds Hylleberg.

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