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Renewable Energy Technology Deployment and Danish Experiences

Renewable Energy Technology Deployment and Danish Experiences Senior Policy Advisor Annette Schou 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

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Renewable Energy Technology Deployment and Danish Experiences

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  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 R&D 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. Lessonslearned 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)

  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 fuelsby 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.

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