Denmark

Denmark

MARKET WAKING UP

The Danish market is heading for better times. After four years in the doldrums -- mainly because of falling prices for electricity from wind turbines -- the market is waking from its slumbers. There are three reasons for the improvement. First and foremost payment for wind energy is to increase. Utility association ELSAM, which controls supply in the western half of the country, has announced that it will raise consumer electricity prices by DKK 0.04-0.05/kWh in 1996. Since wind tariffs across the country are set at 85% of the consumer price, payments to wind turbine owners will increase by DKK 0.034-0.0425/kWh, raising their income by nearly 10% from the current national average of DKK 0.54/kWh. This brings the average payment across the country close to DKK 0.60/kWh -- the minimum rate at which wind turbine ownership is financially viable, according to the Danish Association of Windmill Owners. ELSAM explains that the price increase comes because cash reserves built by the utility from profits in earlier years have been reduced and consumers will now have to pay the full production cost for electricity. ELSAM has recently also said that it will be adding DKK 0.01/kWh to the consumer price to pay for putting 2000-2500 kilometres of high voltage cable underground. At the same time the utility expects coal prices to continue their upward trend and the US dollar, in which coal is traded on the world market, to also rise. The impact of higher coal prices will be especially felt by the heavily coal-dependent Danish utilities and cannot fail to be passed on to the consumer. The second reason for the Danish market's new found optimism is the publication soon of zoning plans for wind energy, prepared by regional authorities across the country. Siting of wind turbines has been held up pending the release of these plans, although it is widely accepted that poor economics not siting difficulties have mainly caused the market slump in Denmark. Opinion surveys continue to reveal that popular support for wind power remains undiminished. Thirdly, the country's dynamic energy and environment minister, a heavyweight presence in Danish politics, has given every indication that he will step in and remove legislative blocks to wind turbine ownership, such as the rule limiting a household's financial share in a turbine to the equivalent of its domestic consumption. As the law stands, if a turbine produces more power than consumed by the owners, the income is heavily taxed.

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