Market Status: Denmark - Nordic wind pioneer slips down the ranks

DENMARK: Installed wind power capacity increased by 80MW on land in Denmark last year and 237 MW offshore, a performance too poor to prevent the country slipping from its long-held third position in the European capacity rankings behind Germany and Spain.

Denmark now lies seventh, with France, Italy, the UK and Portugal all ahead. But completion this year of long-awaited local plans to earmark specific zones for wind development should see more installations in 2010 than in 2009. At the same time, a series of energy policy decisions are expected to include plans for a significant expansion of wind power to 2020.

Denmark's starting point at the beginning of 2010 is 3.48GW of wind capacity provided by 5,109 turbines on land and offshore, a net annual increase of four machines. Much of the new capacity on land was in the form of larger turbines replacing smaller and outdated units. Denmark's wind turbines generated 6.7TWh in 2009, providing 19.4% of the country's electricity needs in a year of relatively poor winds (Winpow Monthly, February 2010).

The government's long-term goal is for a fossil-fuel-free Denmark, although how that is to be achieved is still unknown. But by July 30, the government is to present detailed plans for meeting 30% of national energy demand from renewable sources by 2020 to comply with the EU's renewable energy directive. Denmark's climate commission is also to make its energy policy recommendations this year.

Wind power, as the most abundant of the renewables, is expected to play a major role in meeting the overall goals. To achieve the 30% renewables target, the assumption is that wind will supply at least 50% of Denmark's electricity by 2020. That will require a further 3GW of wind, an installation rate of 300MW a year. Other scenarios project even greater wind penetration.

Complicating the issue is a rapidly aging wind turbine fleet. The average turbine is 13 years old. Many turbines are nearing the 20-year life span for which they were built. If the current 3.4GW of wind is to be retained, 2,000 old turbines need replacing with new models, the equivalent of 200MW of repowering a year in addition to the 300MW a year of new capacity.

The Danish wind market was brought to a halt by the current centre-right government when it came to power in 2001, citing public opposition to further wind development. But an opinion poll conducted last year revealed that public support has increased from 70-80% previously to 91% in favour of more turbines. Moreover, 75% of those surveyed welcome both large and smaller turbines in their locality; just 8% are against.

Electricity generated by wind turbines old enough to no longer qualify for power purchase subsidies under Denmark's expired support system is sold on Nord Pool, Scandinavia's electricity exchange. Spot prices on Nord Pool fell last year, partly a result of growing volumes of wind power driving electricity market prices down. The resulting savings for consumers on electricity purchases more than outweighed the cost of subsidies paid for wind production.

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