New Danish energy policy announced -- Dismal tale of waning wind capacity

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During 2008 Denmark will lose its long-held third place in the European wind power rankings and may even slip to as far as seventh. For the first time since 1976, both Denmark's installed wind power capacity and the number of operating wind turbines dropped in 2007. A net reduction of 54 wind turbines and 11.5 MW brought Danish wind power capacity down to 3124 MW, provided by 5212 turbines. Together they produced 7.7 TWh, enough to meet 19.9% of national electricity consumption in 2007, achieved a 26% capacity factor and provide 56.2% of the annual CO2 reduction Denmark has committed to.

Cross party agreement on a new energy policy should prevent any further decline in capacity. Announced late last month, the agreement is for 20% of Denmark's energy to come from renewable energy by 2012. A new renewable energy law will force local authorities to find sites for new wind development, improve wind power purchase price regulations, create a system of compensation payments for neighbours to new wind turbines, and establish a fund to assist investment in wind projects by local communities and citizens.

Of the 1300 MW of new wind to be built by 2012, 750 MW is already under way in two offshore projects -- one building and the other out to tender (page 104) -- and an existing program for replacing old turbines with new. The remaining 550 MW is to be made up of 400 MW offshore and 150 MW of new turbines on land.

Price subsidy

The onshore development is to be stimulated by a purchase price subsidy of EUR 0.033/kWh, to be paid in addition to the sales price achieved on the wholesale market for electricity generated during the first 22,000 hours of "full capacity" operation, likely to be reached after about ten years in service dependent on how much or little the wind blows at each site. The new prices go into effect immediately, which will allow 18 utility-scale wind turbines installed in Denmark during 2007, but not connected to the grid to ensure they qualified for any new subsidy, to go online. The remaining provisions of the law come into force from January 1, 2009.

The existing repowering program aims for a number of old turbines to be replaced with 350 MW of new capacity between 2004 and 2009, but has failed to produce more than 19 MW to date. The program is now to be extended, with a fixed price extra subsidy applicable of EUR 0.01/kWh for the first 12,000 hours of "full load" operation. Previously the support was EUR 0.016/kWh, but was reduced if purchase prices on the wholesale electricity market reached more than EUR 0.035/kWh and disappeared once they hit EUR 0.051/kWh.

A series of regulations are intended to smooth the way through the permitting process for new wind plant. Local authorities are obliged to find locations for 75 MW in both 2010 and 2011 and a central government "task force" will take action if any authority defies the obligation. A dedicated green fund of DKK 10 million (EUR 1.3 million) is being formed to assist local investment in new projects. Lastly, neighbours to new wind turbines are to be "secured compensation for loss of property value," a sum to be paid by the project's owner after a "concrete, individual evaluation of the loss of value of the concerned property" during the project planning phase.

The compensation clause was championed by the right-wing Danish People's Party, which since 2001 has secured the government its majority in parliament and has a veto right over Danish energy policy. Any such blanket compensation regulation would be poison to new wind power development, says the Danish association of wind turbine owners, unless there are clear rules for the distances involved for qualification for compensation payments and the size of the compensation sum.

The potential of biomass for electricity production seems to have caught the government's eye instead of further major investment in wind power. The Danish wind turbine industry asked last month whether energy and climate policy in Denmark is the responsibility of the agricultural minister or the climate change minister.

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