Wind Power in Denmark

1
Wind Power in Denmark

• How did it start?

2
Wind Power in Denmark

• 1st Oil crisis in 1973-74
• Denmark in 1974
• 100 import of oil, gas coal
• 0 domestic hydro, wind and nuclear
• Denmark in 2004
• Net export of oil gas
• 20 wind penetration

3
Wind Power in Denmark

• Federal Authorities
• guidelines for permitting
• Building, environmental, grid connection, tax
• TRANSPARENCY AND PREDICTABILITY
• Avoid local interpretation and unclear rules
• NO special rules for wind unless required
• Regional Authorities
• Develop regional plans for deployment of WTG
• Grid connection
• Within designated area owners cost
• Outside designated area utility cost
• Cost of balancing, substation transmission is
  shared by all consumers

4
Wind Power in Denmark

• Power Purchase Agreement
• Guaranteed right to dispatch
• PPA on take or pay basis
• Fixed price throughout lifetime
• Later only for full load hours (debt repayment
  period)
• After full load normal tarif plus green premium
• Tax depreciation
• No incentives normal rules for depreciation of
  industrial equipment
• Do not invest for tax keep focus on generation

5
Alternative Finance Structures

• Emerging Markets
• Down Payment and full recourse loan based on
  Owners balance sheet
• Officially Supported Export Credits
• Markets conditions
• ECA insurance cover is key for availability of
  credits
• Soft loan
• Grant from donor country
• Developed Markets
• Equity and non-recourse loan based on project
  cash flows

6
Alternative Finance Structures

• Export Credit
• Full recourse loan
• Flexible loan documentation
• Acceptable credit rating of guarantor and/or
  buyer
• Project should be commercially viable

• Project Finance
• Non-recourse loan
• Complex security package
• No guarantor required - only project cash flow
• Project must be bankable
• Expensive and time- consuming due diligence.
• Expensive and time-consuming documentation

7
Soft Loans

• Improves Project Viability (IRR)
• Government bureaucracy
• Time consuming reports, documentation and delays
• Project Viability
• Full recourse loan
• Acceptable guarantor required

8
Alternative Finance Structures
Contract
Buyer/Borrower
Vestas
Recourse Agreement
Payments
Loan
Vestas Bank
AfDB
Guarantee
Grant
Danida
9
Alternative Finance Structures

Contract
Vestas
Buyer/Borrower
Payments
On-lending
Loan
AfDB
Euro Fund
Insurance cover
Local Bank
Vestas bank
Risk Sharing
Local Bank
EKF
EKF