Renewable Energy Technology Deployment and
Danish Experiences
Senior Policy Advisor Annette Schou
The Danish Point of Departure
1973-74 oil crisis2 countries 99% dependent on imported
energy• Japan• Denmark (oil and coal)
Supply situation exacerbated by inefficient energy use
Pollution caused by fossil fuels
Today – Some 30 Years Later
Main Results - Denmark:
Net exporter of oil and gas Lowest energy consumption per unit of
GDP in EUHighest contribution to electricity from
new renewables in EU (world)Most efficient clean coal technology world
wide
Today – Some 30 Years Later
De-coupling economic growth and energy consumption
60
80
100
120
140
160
1980 1983 1986 1989 1992 1995 1998 2001 2004
Ind
ex Primary Energy
GDP
Intenity
High economic growth: GDP +56 % since 1980Primary energy consumption constant: 2 % higher in 2004 than in 1980CO2 reduced substantially: 35 % lower in 2004 compared to 1980
Three Main Reasons for De-coupling Economic Growth and Energy Consumption
District Heating and CHPEnergy SavingsRenewable Energy Particular emphasis on wind
power in this presentation
Renewable Energy in Denmark
Highest contribution to electricity from new renewables in EU
0
5
10
15
20
25
30
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
RE share of Gross Energy Consumption (%)
RE share of Electricity Supply (%)
Wind Power – a good business
Installed capacity = 3,118 MW (2004). 420 MW is off-shore (529 MW globally)
Wind power supplies almost 20% of the gross electricity consumption (2005)
The Danish wind turbine industry employs 20.000 persons and sells turbines for 4 Billion US$ (2005)
Most of the turbines are exported and Danish wind turbine industry serves 1/3 of the world market (2005)
16 Years of Offshore Wind Experience
• First Danish offshore wind farm 1991
• Strategic mapping 1995
• Capacity now 423 MW.
• 2 x 200 MW wind farms to be established in 2009 and 2010
• Existing and approved off-shore capacity (825 MW) = 8% of total electricity consumption in 2010
• Potentials = 50% of electricity consumption
Challenge: To Feed the Grid with Wind Power (Western Denmark as an example)
Grid Management of Fluctuating Wind Power
Large regional grids (only 2 transmission grids in DK) provide access to back-up capacity.
Nord Pool: Level playing field ensures cost-effective back-up capacity from Nordic region
Short gate closure times to allow trades close to real time
RE electricity is guaranteed transmission and distribution
Further integration of wind power is possible Storage as a future option
High Public Acceptance of Wind Power
Wide spread grass root support (except close neighbours!)
Bi-partisan political support and leadership
Incentives for small-scale local investments in the first years.
Careful involvement of the public in decision procedures. Compulsory public hearing.
BUT: Problem of the past = Oversubsidiation
Production Cost at DanishOn-shore Wind Power Plants
0
1
2
3
4
5
6
7
8
9
10
1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
Eur
o ce
nt p
r. k
Wh
Actual
Estimated
A wind mill on a good site is competitive with a gas-fired power plant by 2010.Feed-in tariffs must be adjusted accordingly or replaced by market tariffs.
Need to Diversify Support Mechanisms
Danish experience shows advantages with an evolution in support mechanismso Investment grantso Fixed feed in tariffo Market based tender (variable premium)
Feed in tariffs have their advantages
Market based systems to be considered on the long time frame
KWh-subsidies gradually replaced by support to R&D for new wind mills
Still support of 1.3 Eurocent/kWh for new mills
Confidence-Building Measures for Investors in Offshore Parks
Screening to mature site suitability
Fixed price in 50,000 full load hours (last tender: almost 7 Eurocent per kWh as fixed price for 12 years without compensation for inflation)
TSO to finance, construct and operate transformer station and sea cable
Security: Grid connection is available in due time
Financial compensation if the power produced is curtailed = Estimated loss from unrealised sale
Contractual agreements – adjustment in tender conditions
One stop shop communication
Lessons learned on RE-deployment
Long-term strategy and commitment needed on development and research programmes.
Develop technical standards. Technology drivers are an important incentive.
Gradually prioritize the deployment efforts - different strategies for different stages of technology development.
Mature stage => more market oriented focus Transparent and confident-building measures for investors Government coordination to facilitate smooth administrative
procedures, credit facilities, appropriate subsidy schemes
Lessons learned from Wind Power: Prices are constantly falling (don’t over-subsidize). Integration of a large capacity of wind is possible. But some support is still needed Total support for wind in DK (19%) increases the total end-
user price by ¾ Eurocent per kWh (excl. tax)
New Danish Energy Strategy in 2007
19 January 2007: The Danish government presented a new long term energy strategy entitled “A Visionary Danish Energy Policy”
Long term vision: Denmark should in the long term become entirely independent of fossil fuels
Targets for 2025:
o Reduce the use of fossil fuels by at least 15%.
o The share of renewable energy must be at least doubled to minimum 30% of total gross energy consumption by 2025. This implies that more than half of the electricity consumed will be supplied by renewable energy and 10% share of 2. generation biofuels in transport by 2020.
o Energy saving efforts will be increased by 1.25% annually with a view to holding overall energy consumption static until 2025.
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