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Denmark

Denmark

Waiting for action after fine words on policy -- Denmark still marking time

This will be a decisive year, not only for Danish wind power but also for national wind energy policy. Two-thousand-and seven marks the last chance for the country's five-year old program for replacement of old turbines with new to get properly under way before it runs out in 2009. The program, into is third year, provides financial incentives for decommissioning of turbines with rated capacities of less than 450 kW provided the owner invests in new wind technology. Problems with site permitting for new machines have so far prevented the program from having the desired effect of increasing installed wind capacity while reducing the number of turbines dotting the landscape.

Getting the program properly underway looks like being the first real test of how seriously the government's recently declared intention of higher targets for renewable energy should be taken. Nobody expects the political negotiations on how to double wind power's share of electricity supply -- from today's 20% -- to be completed before the middle of the year. After that, potential new initiatives have to be implemented. So despite a broad cross-party agreement on renewables in principle, it could be years before that gets translated into action.

At the close of 2006, 5274 operational turbines in Denmark supplied 3137 MW of generating capacity -- 19 fewer turbines but 7.8 MW more capacity than at the end of 2005. Of the 350 MW targeted for replacement by the government's repowering program, 320 MW is still outstanding. New turbines that replace old machines win a bonus incentive payment of EUR 0.016/kWh.

Zoning plans

But for the program to get going requires that Denmark's local authorities complete their wind power zoning plans. Only then can developers seek construction permits and only when a permit is granted will they place orders for wind turbines. Current waiting lists for turbines are more than a year long. Environment minister Connie Hedegaard is now threatening to take over the zoning process from local authorities unless they act immediately.

Payment for electricity produced by newly installed turbines outside the repowering program in Denmark -- and for all turbines more than ten years old -- is now the lowest in Europe, says the Danish turbine owners association. As such, there is little incentive for investors, whose only option is to sell wind power at market prices, topped up by a small incentive to bring payment to about EUR 0.04/kWh. Should market prices rise, the government has capped the price for wind power at EUR 0.048/kWh, which turbine owners say is unreasonable and leaves them questioning the entire credibility of government thinking. The task ahead of both government and parliament is not only developing a new wind power action plan, but winning back the trust of investors, who need convincing that it will not suddenly change its mind again.

Ironically, wind turbines are partly responsible for keeping market prices low, although the main responsibility for that lies in well stocked hydro reservoirs in Sweden and Norway, which are linked to Denmark's power system. But plenty of wind at the end of last year also pressed market prices down. The Danish wind turbine owners association is discussing implementing a protest action and stopping turbines when the wind is blowing hardest to prevent market prices from nose-diving. That action would lose owners little money, but should open political eyes to their predicament, the association feels. The losers would be the Danish economy and electricity consumers, who in 2006 saved in the region of EUR 134 million on lower electricity prices thanks to wind power (Windpower Monthly, February 2007). The answer to that dilemma lies with politicians.

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