Renewable Energy Technology Deployment and Danish Experiences

1
Renewable Energy Technology Deployment and
Danish Experiences

• Senior Policy Advisor
• Annette Schou

2
The Danish Point of Departure

• 1973-74 oil crisis
• 2 countries 99 dependent on imported energy
• Japan
• Denmark (oil and coal)
• Supply situation exacerbated by inefficient
  energy use
• Pollution caused by fossil fuels

3
Today Some 30 Years Later

• Main Results - Denmark
• Net exporter of oil and gas
• Lowest energy consumption per unit of GDP in EU
• Highest contribution to electricity from new
  renewables in EU (world)
• Most efficient clean coal technology world wide

4
Today Some 30 Years Later

• De-coupling economic growth and energy
  consumption

High economic growth GDP 56 since
1980 Primary energy consumption constant 2
higher in 2004 than in 1980 CO2 reduced
substantially 35 lower in 2004 compared to 1980
5
Three Main Reasons for De-coupling Economic
Growth and Energy Consumption

• District Heating and CHP
• Energy Savings
• Renewable Energy

Particular emphasis on wind power in this
presentation
6
Renewable Energy in Denmark

• Highest contribution to electricity from new
  renewables in EU

7
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)
8
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

9
Challenge To Feed the Grid with Wind Power
(Western Denmark as an example)
10
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

11
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

12
Production Cost at DanishOn-shore Wind Power
Plants
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.
13
Need to Diversify Support Mechanisms

• Danish experience shows advantages with an
  evolution in support mechanisms
• Investment grants
• Fixed feed in tariff
• 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
  RD for new wind mills
• Still support of 1.3 Eurocent/kWh for new mills

14
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

15
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 gt 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 (dont
  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)

16
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
• Reduce the use of fossil fuels by at least 15.
• 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.
• Energy saving efforts will be increased by 1.25
  annually with a view to holding overall energy
  consumption static until 2025.