Government launches partial rescue plan for danish market

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Danish energy minister Jann Sjursen has at long last stepped in to assist the flagging wind power market at home. Up to DKK 10 million ($1.5 million) has been set aside annually for aiding the replacement of old wind turbines with newer and more cost effective models. The programme has two aims -- firstly to promote the relocation of wind turbines "sited without due consideration" and secondly to get wind energy development moving again.

The energy minister's announcement follows intensive campaigning by both wind turbine owners and manufacturers in Denmark. Sales of turbines on the domestic market have fallen sharply in recent years, leading to demands for higher payments for wind produced kilowatt hours and a more proactive siting policy.

In arguments in support of these measures, the Danish Association of Windmill Manufacturers warns that only 200-300 MW of new capacity will ever be installed in Denmark -- out of a potential of over 2000 MW, unless the government intervenes. The association bases its conclusions on a recent government report into the economics of wind turbine ownership. Compared with just two years ago the value of wind turbine investments has fallen dramatically (see table) for wind turbine co-operatives, the most widespread model for wind energy development in Denmark. "A family which in 1993 bought a share of a collectively owned wind turbine has an investment worth 33% less today than the same investment in 1991. This is one of the main conclusion in the report," says the association in its February information bulletin.

The average price paid for wind energy today is just DKK 0.58/kWh -- a reduction in the past three years of DKK 0.052/kWh averaged across the country. The loss doubles, however, for owners in areas where most wind turbines are installed, along the windy west and north-west coasts, because electricity prices are particularly low in these regions. The reductions are a result of falling oil and coal prices -- wind power prices in Denmark are calculated at 85% of the actual price of electricity supplied to consumers. Customer electricity bills, however, have increased in the same period, with higher taxes and higher standing charges. The manufacturers argue that some of this income to the state should be used to bolster wind power payments -- especially since public opinion surveys have repeatedly revealed that Danes want to pay more for cleaner power.

The reduced wind tariffs mean that only the windiest sites -- affording maximum yield for each invested cent -- are economically viable. Although there are sites in Denmark for 2172 additional megawatt of wind power plant, only 353 MW of these are windy enough for economic investment in a wind turbine, states the bulletin. The problem is further exacerbated by planning restraints. Local authorities have each been asked by the environment ministry to draw up plans for wind plant zones. But so far the plans have concentrated more on finding areas not suitable for wind plant. Experience to date suggests that of the 353 MW of potentially viable sites, just 200-300 MW will get planning permission, says the association.

Although the programme for replacement of old wind turbines with larger models might help the problem, wind lobbyists point out that local authorities are often unwilling to grant planning permission for replacement of a small machine with one which might be more dominating in the landscape. They argue that a siting policy giving higher priority to wind plant is essential. Energy minister Sjursen, however, appears unmoved by these arguments, referring planning matters to the environment ministry. He is not prepared to say how many new wind turbines, or additional megawatt, will be installed as a result of his new programme.

The Danish government's energy plan, Energi 2000, sets a goal for Denmark of 1500 MW of wind power by 2005. This is the amount of installed wind capacity required to offset 20% of C02 emissions at 1988 levels. The association points out that 70-80 MW of new wind plant must be added each year to the existing 480 MW if the government's target is to be reached. In 1993 just 29 MW was installed.

Economic sense in green taxes

The arguments put forward by the wind turbine manufacturers are backed by two independent economists, Professor Torben M. Andersen of Aarhus University and Christen Sørensen of Odense University. They argue that green taxes are far healthier for the economy than tying markets up in rules and regulations. In principle, they say, people should pay the real costs of a product, including the external costs connected with pollution.

"It is not necessarily the case that economic growth is on a collision course with the aim of a cleaner environment. If, as part of the process of growth, new technologies and energy sources are constantly developed, there will be no conflict between the two aims," says Andersen.

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