Denmark

Denmark

Developers stay away from Denmark’s technology-neutral renewables tender

Danish wind industry group says tender flop confirms growing appeal of subsidy-free projects

Over the remainder of this decade, Denmark will need to install more than 700MW of onshore wind and solar annually to achieve its green transition goals, according to Wind Denmark (pic credit: Vattenfall)
Over the remainder of this decade, Denmark will need to install more than 700MW of onshore wind and solar annually to achieve its green transition goals, according to Wind Denmark (pic credit: Vattenfall)

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The Danish Energy Agency received no bids for the latest technology-neutral tender round for 2021. 

The auction ran from 23 August to 22 October and had an overall cap of DKK 1.2 billion (€161 million), which corresponds to a capacity limit of the equivalent of 429MW onshore wind. It pitted onshore and offshore wind against solar PV, hydropower and wave power.

Wind Denmark welcomed the fact that no developers chose to participate in the tender, underlining the risks associated with subsidy money. Subsidies for onshore wind in the last tender of 2019 were as low as DKK 10/MWh (€1.34/MWh).

“The result of the tender can therefore be seen as another milestone on the road to grant freedom,” said Martin Risum Bøndergaard, political director of Wind Denmark.

This does not mean that wind energy will just continue to thrive, however. “There is still a significant need to improve the framework for renewable energy,” he added, pointing in particular to grid connection charges and difficulties in obtaining permits to build.

Over the remainder of this decade, Denmark will need to install more than 700MW of onshore wind and solar annually to achieve its green transition goals. This is nearly three times what has been achieved in the past, Bøndergaard said.

The tender employed a two-sided Contracts for Difference (CfD) model, where the price premium can vary from year to year but remains fixed within each calendar year, and aid is awarded for 20 years.

The future of the next three planned technology-neutral tenders hinges on a decision due in the first half of 2022. The Danish Energy Agency will conduct an analysis to assess the status of renewable-energy projects in Denmark, including how projects can best secure funding, hedge risk and attract investors.

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