Wind power in denmark
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Wind Power in Denmark. How did it start?. 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. Wind Power in Denmark. Federal Authorities –

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Wind Power in Denmark

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Wind power in denmark

Wind Power in Denmark

How did it start?

October 2004


Wind power in denmark1

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


Wind power in denmark2

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 = owner’s cost

    • Outside designated area = utility cost

    • Cost of balancing, substation & transmission is shared by all consumers


Wind power in denmark3

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


Alternative finance structures

Alternative Finance Structures

  • Emerging Markets

    • Down Payment and full recourse loan based on Owner’s 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


Alternative finance structures1

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

Alternative Finance Structures


Soft loans

Soft Loans

  • Improves Project Viability (IRR)

  • Government bureaucracy

  • Time consuming reports, documentation and delays

  • Project Viability

  • Full recourse loan

  • Acceptable guarantor required


Alternative finance structures2

Alternative Finance Structures

Contract

Buyer/Borrower

Vestas

Recourse Agreement

Payments

Loan

Vestas Bank

AfDB

Guarantee

Grant

Danida


Alternative finance structures3

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


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