13 BEYOND WIND: NEW CHALLENGES TO THE EXPANSION …
327
Community participation in wind power development has become
enshrined into law in Denmark (Oteman et al. 2014). The current law
on renewable energy (VE-loven) requires that project developers must
offer a 20% ownership share to residents in the area where the wind
project is developed. Members of the local community are also granted
protection against household valuation losses, in case the value of the
household falls more than 1% because of siting windmills. Local developers can obtain state loans to finance feasibility studies for the siting of
wind projects. Finally, municipalities that host wind power projects obtain
a grant per installed MW, which must be geared toward cultural initiatives
and “green” projects.
Electricity market reform was first implemented in Denmark in 1999.
Key pre-market reform economic incentives for producers included a
combination of power purchase agreements, production subsidies, tax
credits, and carbon taxation refunds. Thus, during the first two decades
of Danish wind power development, producers obtained an almost fixed
feed-in tariff without exposure to market conditions, in which approximately half of the payments were governmental subsidies. The high
feed-in tariff meant it was quite profitable to establish wind turbines in
Denmark (Meyer 2004; Morthorst 2000).
Following electricity market reform, Denmark proposed to adopt a
tradeable certificate market, together with renewable quotas imposed on
selected consumers. Wind producers’ revenue would be the sum of electricity prices plus the selling price of the tradeable certificate. However,
the system was never put in practice. An EU-level decision determined
that feed-in tariffs were not in conflict with EU state aid rules or the
EU internal market in electricity. Instead, a series of transitional renewable support schemes were put in place, creating considerable uncertainty
among investors (Meyer 2004). In fact, the number of onshore wind
turbines peaked in Denmark in 2001 and capacity additions stagnated
between 2003 and 2008, with a slight decrease in installed capacity
happening between 2006 and 2007—see Fig. 13.3 (Danish Energy
Agency 2016). In parallel, both the number of offshore wind installations
and installed capacity kept growing during the 2000s.
One possible explanation for the relatively better performance of
offshore wind development from the late 1990s onwards is the simplification and transparency of siting, tender processing, and permitting.
According to the Danish framework, there is a one-stop-shop concept,
where the Danish Energy Agency is the main point of contact for
327
Community participation in wind power development has become
enshrined into law in Denmark (Oteman et al. 2014). The current law
on renewable energy (VE-loven) requires that project developers must
offer a 20% ownership share to residents in the area where the wind
project is developed. Members of the local community are also granted
protection against household valuation losses, in case the value of the
household falls more than 1% because of siting windmills. Local developers can obtain state loans to finance feasibility studies for the siting of
wind projects. Finally, municipalities that host wind power projects obtain
a grant per installed MW, which must be geared toward cultural initiatives
and “green” projects.
Electricity market reform was first implemented in Denmark in 1999.
Key pre-market reform economic incentives for producers included a
combination of power purchase agreements, production subsidies, tax
credits, and carbon taxation refunds. Thus, during the first two decades
of Danish wind power development, producers obtained an almost fixed
feed-in tariff without exposure to market conditions, in which approximately half of the payments were governmental subsidies. The high
feed-in tariff meant it was quite profitable to establish wind turbines in
Denmark (Meyer 2004; Morthorst 2000).
Following electricity market reform, Denmark proposed to adopt a
tradeable certificate market, together with renewable quotas imposed on
selected consumers. Wind producers’ revenue would be the sum of electricity prices plus the selling price of the tradeable certificate. However,
the system was never put in practice. An EU-level decision determined
that feed-in tariffs were not in conflict with EU state aid rules or the
EU internal market in electricity. Instead, a series of transitional renewable support schemes were put in place, creating considerable uncertainty
among investors (Meyer 2004). In fact, the number of onshore wind
turbines peaked in Denmark in 2001 and capacity additions stagnated
between 2003 and 2008, with a slight decrease in installed capacity
happening between 2006 and 2007—see Fig. 13.3 (Danish Energy
Agency 2016). In parallel, both the number of offshore wind installations
and installed capacity kept growing during the 2000s.
One possible explanation for the relatively better performance of
offshore wind development from the late 1990s onwards is the simplification and transparency of siting, tender processing, and permitting.
According to the Danish framework, there is a one-stop-shop concept,
where the Danish Energy Agency is the main point of contact for