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Denmark

Denmark

Price evidence in Denmark again -- Wind power a profitable export

The extra cost of pollution free electricity from Denmark's 5200 wind turbines amounted to less than EUR 0.001/kWh on consumer bills in 2007. Wind power fed into the market depressed prices to the extent that consumers saved EUR 168.4 million on the national electricity bill, or EUR 0.005/kWh. Since the savings almost made up for the EUR 0.006/kWh levied on Danish consumers to pay for wind power, the actual cost for wind energy was minimal. The reduction in consumer price is less in years of relatively weak winds, such as in 2006 when wind power saved consumers EUR 0.002/kWh, but in overall terms electricity from wind plant is now cheaper than from coal-fired plant.

The conclusion on consumers prices comes from Poul Morthorst, a senior researcher at the Danish Technical University's National Laboratory for Sustainable Energy, more commonly known as Risø after the town in which the lab is located, while the news on overall price is contained in a Danish government report, released to counter an oft repeated myth that excess wind production in Denmark is exported at dumping prices.

Morthorst has regularly charted the beneficial effect of wind power on the market price of electricity in Denmark (Windpower Monthly, November 2007), an effect now also being felt in Germany and even in Texas, as wind penetration in both regions increases. The impact on prices of Denmark's wind power, which provides 20% of the country's electricity over a year, is also felt in the Scandinavian markets the country is linked to, though the full benefits are hindered by transmission bottlenecks.

"This is still a statistical analysis, so of course there is some uncertainty attached to the results which can also be influenced by other factors," says Morthorst. "On the other hand it is clear that the more wind turbines that come online, the more that market prices are depressed -- and more so in years of good winds."

He points out that his analysis is based on actual electricity sales prices on the Scandinavian power exchange, NordPool, while it should more accurately be based on prices bid into the exchange. If the analysis was based on bid prices, he believes it would show even better savings for consumers.

Meantime, the Danish energy agency reports that compared with fossil fuel-based electricity, wind power today is far cheaper and has been so for the past three years. The conclusion is based on an analysis of wind power generation and Denmark's combined heat and power (CHP) generation and the regional prices of electricity. Wind power, says the agency, is between EUR 0.005/kWh and EUR 0.009/kWh cheaper than electricity from central and decentralised CHP plant.

The analysis also confirms what previous studies have established: that while on occasion electricity has been exported from Denmark at dumping prices in periods of strong winds, it is a rare occurrence and any loss is far outweighed by gains from exports at other times. Furthermore, "free" exports in practice never occur. State-owned Energinet.dk shares the difference between a price of zero and the price of electricity in the destination market with its counterparts in those markets.

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