Relief and worry as reform put on hold

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The Danish wind market reform, previously planned for launch January 1, has been put on hold by the Danish Energy Agency, bringing quiet sighs of relief from existing wind turbine owners as well as an urgent call for clarity on the future market situation from wind turbine manufacturers.

The reform, which will inject an element of competition into the green power supply busiess by moving the wind market away from reliance on fixed subsidies and toward a trading system of green power credits, would have otherwise engaged one in six Danish wind turbine owners and 600 million kWh at the turn of the new year (Windpower Monthly, December 1999). But by early last month the energy agency had still failed to produce any details about how the actual market rules would function -- particularly those revolving around the complex two-part trading system for green electricity and green power certificates. In addition, the European Commission had still not approved the general plan of the Danish reform by December.

With the postponement came an announcement from Danish minister of energy Svend Auken that the current system for subsidies and payment to wind turbine generation -- for existing machines only -- will be extended "into 2000." No specific time frame has been given.

High and dry

While existing turbine owners are relieved that they will not be stranded in a non-existent market come the new year, investors in new wind plant have been left high and dry. Auken confirms that they cannot be certain of a specific income stream for the rest of the year. They are not part of the transitional arrangement for turbines financed under the old systtem and are therefore dependent on income from sale of green certificates to top up the reform law's guaranteed payment of DKK 0.33/kWh plus a DKK 0.10/kWh energy tax. Without green certificate income, financing projects is highly uncertain.

"All this insecurity means there will not be sold a single wind turbine in Denmark after the new year," warns wind industry association chairman, Karl Gustav Nielsen of Vestas Wind Systems. He claims that despite the postponement, there is still no market. "We sought clarity on tariff rules for new wind turbines. As it is, investment in wind power after the new year is to be based on nothing more than expectations and guesses about the future market structure," says Nielsen.

He warns that if all the clouds of uncertainty are not blown away, the domestic market will collapse, with severe consequences for markets abroad. "The eyes of the world are these days focussed on Denmark and the coming market for trade with green certificates," Nielsen told Auken in mid December. "If the Danish wind market is halted in its tracks, that will be the worst possible signal to send abroad."

Together with Flemming Tranæs of the Danish wind turbine owners association, Nielsen is calling on politicians to set a new market reform launch date as soon as possible. He hopes the extra time will give the government a chance to complete a thorough plan of how the free market should work.

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