Worst year for wind in two decades -- Denmark's dormant market

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With installation of just four wind turbines with a combined capacity of 5.6 MW, the Danish wind market ground to a virtual halt in 2004 -- for the first time in two decades. It is not expected to be much better in 2005. A market structure that has reduced the purchase price for electricity from newly installed wind plant to no more than a typical EUR 0.04/kWh, including a carbon tax credit, is to blame.

Moreover, the introduction of a five-year program of incentives for a new round of repowering is not expected to result in much new capacity this year. Regional governments must first decide where they want newer and larger turbines to be located in their areas, a process that could take two years or more. Industry pessimists are saying that just 10 MW will get built in Denmark in 2005.

The government's aim with its wind plant repowering is to replace 900 old turbines with 200 new machines, increasing the wind generation capacity, by 175 MW in the process. Under the program, scrapping a turbine of up to 450 kW in size and investing in a new machine releases a production incentive of EUR 0.016/kWh for the first 12,000 hours of full load operation. The incentive is available for new turbines of up to double the capacity of the replaced machine.

Meantime, the formal procedure for the construction of 200 MW extensions to each of the existing Horns Reef and Nysted offshore wind stations has begun (Windpower Monthly, February 2005). The projects appear to have sound political backing. Both sides of Denmark's political divide underlined their support for extensive further development of wind power during last month's general election campaign, in which the incumbent right-wing coalition government was returned to power on February 8. Pre-election talk referred to 50% of electricity in Denmark sourced from wind power.

Reasons for the political support for wind are not hard to find. First, the Danish wind business provides 20,000 jobs and exports EUR 2.7 billion a year, making it a major industry in the small country. Without a domestic market, wind companies will be increasingly inclined to move production closer to their overseas customers.

Second, Denmark is struggling to meet its EU Kyoto commitment to cut carbon emissions by 21%. In 2004, wind power provided 47% of national CO2 reduction. No other energy technology has shown signs of matching that achievement. But with an operating life of just 20 years, Denmark's wind turbine fleet cannot continue its high contribution to emissions reduction. A viable market is needed for sale of at least 150 MW a year to maintain current levels of wind generation. Not since 1985, however, is so little wind development taking place.

At the end of 2004, Denmark had 3118 MW of operating wind plant, a net increase of 3 MW for the entire year after allowing for decommissioned turbines. During the year, the Danish wind fleet generated 6.58 TWh, 18.8% of Denmark's electricity consumption of 35 TWh, even though 2004 proved to be the sixth year running of lower than normal winds.

Danish wind power statistics no longer make a distinction between "privately owned" and "utility owned" development, but the tradition of community owned wind plant that dominated the market ten years ago has all but disappeared. It is being replaced by private or business investors and a new breed of commercial developer focused on buying old turbines in order to access the government's repowering incentive payment when building new plant.

Denmark still offers a net-metering arrangement for household turbines of up to 25 kW in size. They may sell production excess to their needs at a fixed rate of EUR 0.08/kWh.

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