Market Status: Offshore - Denmark - High expectations as 600MW lined up

Offshore wind could return Denmark to the development rate that saw 2.5GW of wind capacity installed on land in the seven years from 1996.

Construction of 600MW offshore and a rekindling of the market onshore should see a combined 400MW of new wind power a year built in Denmark over the next three years.

Last year, 237MW was added off Denmark's coast in a series of projects bringing offshore wind capacity to about 640MW. The largest addition by far was the 209MW Horns Rev II project off the west coast of Denmark. Its 90 Siemens 2.3MW turbines are located in the North Sea, north of the Vestas turbines at Horns Rev I.

In comparison with Horns Rev, with its combined capacity of 367MW, the only other notable offshore project completed in Denmark in 2009 is a veritable minnow: seven Vestas 3MW turbines installed off the island of Sprogo. The project's highly visible location, however, has garnered it much attention. The turbines stand within full view of the thousands of travellers who daily traverse the 20 kilometre bridge over the Great Belt that separates the two halves of Denmark. Another 7MW of near-shore projects in small groups were also completed in Denmark last year.

This year will see the completion of the 207MW Rodsand II project of 90 Siemens 2.3MW turbines off Denmark's Baltic Sea coastline in the south-east of the country. And in two years, a 400MW offshore wind farm near the island of Anholt in the centre of the Kattegat Sea between Denmark and Sweden is scheduled to come online.

Anholt, like the Horns Rev and Rodsand projects before it, is sponsored by the Danish government. Companies must tender their interest in building it by April. The tender opens the way for two configurations: either 174 turbines rated at 2.3MW each or 80 5MW machines. If the timetable for Anholt holds, Denmark will set a new standard for the speed at which a large offshore wind farm can be built from start to finish.

Purchase prices for the latest government-sponsored projects vary from EUR69/MWh for the first 50,000 hours of full-load operation at Horns Rev II (achievable in a period of about 12 years) to EUR84/MWh for Rodsand II, paid under the same conditions as for Horns Rev II.

Energy policy

This year, Denmark will shape its energy policy, which will contain plans for meeting the requirements of the EU's renewable energy directive. Offshore wind is expected to play a significant role, as potential locations for offshore wind farms have already been mapped out by the Danish energy agency and provide for 4.6GW in 23 projects in Danish waters.

Most locations featured on the prioritised list are in the Danish North Sea, but the Danish portion of the massive 1.8GW Krieger's Flak project in the Baltic Sea is expected to be the next one on which a political decision will be made. Krieger's Flak straddles waters of Germany, Sweden and Denmark, and companies from all three countries are involved in its development.

The project includes a three-way transmission connection between the participating countries to not only take power ashore from the wind farm but also to strengthen grid connection across the Baltic Sea. It is this aspect of the project that has attracted the likelihood of a EUR150 million EU grant.

Peter Jorgensen, from Danish transmission system operator (TSO), the Danish co-ordinator for Krieger's Flak, was expecting a decision on the EU grant by the end of last month. The process has been delayed after the Swedish TSO, Svenska Kraftnat, pulled out of the project in January, saying that the market structure for wind power in Sweden was not robust enough to make Krieger's Flak a commercial investment.

"We'll continue without Swedish turbines and the connection to Sweden, but prepare to couple them in later," says Jorgensen. He forecasts that a decision on investment will come in 2012 and that the Krieger's Flak transmission network is likely to be operational between 2014 and 2016.

Speaking for Swedish utility Vattenfall, Arne Rahbek says his company has definitely not given up on Krieger's Flak following Svenska Kraftnat's withdrawal. Once all the permits are in place, Vattenfall will make its investment decision. The company's major investment in the UK offshore market is not instead of investing in Krieger's Flak, he says, even though the UK market is clearly the most attractive for offshore wind.

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