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Denmark cancels planned offshore wind farms because of expense

16 May 2016

On May 13, the Danish government said it would scrap plans to build five offshore wind farms with a total combined capacity of 350-megawatts as their output would be too expensive for consumers. Subsidies for wind power producers rose 63% in 2015 and 2016, according to the leading Danish newspaper Jyllands Posten.

Stock image
Stock image

Lars Christian Lilleholt, energy minister in Denmark's Liberal party government, said: "Since 2012 the cost of our renewables policy has increased dramatically. We cannot accept this, as the private sector and households are paying far too much. Denmark's renewable policy has turned out to be too expensive."

The government estimates it would cost consumers 70 billion Danish kronor ($10.63 billion) to buy electricity from the cancelled wind farms.

Denmark produced more than 40% of its electricity from wind power last year, a world record, and it had a goal of increasing this to 50% by 2020. According to Eurostat, Danish electricity prices are the highest in the EU, with consumers paying a significant premium for the high proportion of wind generated electricity in its energy mix.

In 2015 Lilleholt was faced with angry demands from companies and electricity customers after new figures emerged that showed the cost of green power taxes – the so-called Public Service Obligation (PSO) – would escalate to a record high of 8.4 billion kronor over the year. In response he called for a new spirit of “green realism” to bring down electricity charges.

The proposal to build the five offshore wind farms were part of an Energy Agreement drawn up by the then Government, electricity producers and other stakeholders in 2012. By dropping the offshore wind farm plans, the Government hopes to reduce green taxes on industrial and domestic electricity users by 5 billion kronor up until 2030, according to calculations by the Danish Energy Authority (DEA).

On April 26, Jyllands Posten editor Jørn Mikkelsen published a call to reduce the country’s reliance on wind power.

He said the wind industry had been claiming for more than 40 years that, with only a few more years of subsidies, prices would be comparable with traditionally-generated electricity.

“It is certain that it is not possible to lie to the people forever that wind turbines can compete on equal footing with other forms of energy when the reality is that wind power will require billions in direct and indirect support for ever.”

But Danish Wind Industry Association CEO Jan Hylleberg said the cancellation of the wind farms would have a devastating effect on the country’s successful wind industry, and many thousands could lose their jobs.

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