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

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  • Slide 1
  • Renewable Energy Technology Deployment and Danish Experiences Senior Policy Advisor Annette Schou
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  • 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
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  • 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
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  • 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 CO 2 reduced substantially: 35 % lower in 2004 compared to 1980
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  • Three Main Reasons for De-coupling E conomic Growth and Energy Consumption District Heating and CHP Energy Savings Renewable Energy Particular emphasis on wind power in this presentation
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  • Renewable Energy in Denmark Highest contribution to electricity from new renewables in EU
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  • 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)
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  • 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
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  • Challenge: To Feed the Grid with Wind Power (Western Denmark as an example)
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  • 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
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  • 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
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  • Production Cost at Danish On-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.
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  • Need to Diversify Support Mechanisms Danish experience shows advantages with an evolution in support mechanisms oInvestment grants oFixed feed in tariff oMarket 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
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  • 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
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  • 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 (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 Eurocent per kWh (excl. tax)
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  • 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: oReduce the use of fossil fuels by at least 15%. oThe 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. oEnergy saving efforts will be increased by 1.25% annually with a view to holding overall energy consumption static until 2025.