Market Status: Denmark - Land shortage opens door for offshore opportunities

DENMARK: Evidence that offshore wind will play a key role in achieving Denmark's ambitious renewable electricity target will arrive later this year with the completion of the country's biggest offshore wind farm, the 400MW Dursland Anholt project.

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Developed by Dong Energy with 111 Siemens 3.6MW turbines, Djursland Anholt is estimated to cost around DKK 10 billion (EUR1.34 billion).

Last year Denmark sourced around 25% of its electricity from wind, but only 8.1% was generated by offshore wind farms. The Danish Climate Commission calls for the development of 200MW of offshore wind per year from 2015 to 2025. "We need so much more wind power," says commission chair Katherine Richardson. "It is just not feasible that we will get that much more on land."

Denmark's 12 existing offshore wind farms currently represent 867MW of installed capacity. The country's offshore development slowed between 2003 and 2008 after almost a decade of positive development, but 2009 saw a renewed interest in offshore activity with the 209MW Horns Rev II wind farm.

In October 2010, Rodsand II, south of the Lolland island in central Denmark, added 207MW of capacity. Spanning 34 square kilometres with 90 115-metre-high turbines, Rodsand II produces 800GWh of electricity per year, supplying 200,000 households that were previously powered by coal-fired plants.

Rodsand II only attracted one bidder when the call for proposals was announced in 2005. Jan Hylleberg, CEO of the Danish Wind Industry Association believes this is because investors worry about the return on their investment in a small country such as Denmark and on hidden extras that make the system appear inflexible.

"Wind farm developers have to pay a penalty if they are late in opening or erecting the turbines," he explains. "We need to brush up Danish law so we can be attractive for investors to invest in our offshore industry. Ten years ago, we were one of the few countries in Europe to have an offshore wind industry, but today it's much more competitive."

The Danish government is due to revise its energy policy and, with a general election due this year, Hylleberg believes the country must offer developers and investors a competitive package if it is to encourage investment in its offshore wind sector.

Securing finance for offshore projects will determine whether or not the country succeeds in expanding in this area. Denmark will hold the EU presidency next year and Hylleberg hopes the Danish government will then be able to drive discussions on financing for offshore grids, which remains a thorny issue.

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