Transcript HJK New York 080507 AS

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
 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 EU
 Highest 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
160
140
Primary Energy
Index
120
GDP
Intenity
100
80
60
1980
1983
1986
1989
1992
1995
1998
2001
2004
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
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
Renewable Energy in Denmark
 Highest contribution to electricity from new
renewables in EU
30
25
20
15
10
5
0
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 offshore 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 costeffective 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
Euro cent pr. kWh
Production Cost at Danish
On-shore Wind Power Plants
10
9
8
7
6
5
4
3
Actual
Estimated
2
1
0
1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
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 mechanisms
o Investment grants
o Fixed feed in tariff
o 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 enduser 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.