Degree of reliance on imported energy:
Electricity imports were 11.7 TWh and exports were 10.38 TWh, resulting in net exports in 2011 of -1.32 TWh. In 2011 there was a large import from Norway and Sweden and export to Germany.
Main sources of Energy:
Net production in Denmark in 2011 was 33.4 TWh, out of these 30 % was wind power and the rest was thermal.
Over the past decade, Denmark has developed an enviable record of growing the share of renewable energy in its total primary energy supply (TPES). Since 2000, it increased at an average rate of 6.6% per year reaching 19.4% of TPES in 2009. Estimates indicate that production of renewable energy increased by a further 13% in 2010.
Biomass and waste is the largest renewable energy source, representing 17.1% of TPES in 2010, followed by wind, which contributed 3.4%, with a negligible contribution from other sources. Sources of biomass include fuel wood and vegetal products such as straw, which represent 12% of TPES, followed by waste, which represents approximately 5% of TPES, with the remainder coming from biofuels.
Extent of the network:
As in most countries, the electricity grid was built after the Second World War and designed for central generation, which was characteristic of the energy system. As a consequence, Denmark’s transmission network operator has experienced problems to balance its grid and several times the system was close to a breakdown (Jensen 2002). This is why the expansion and transformation of the grid is one of the main topics of the Danish electricity agenda. Denmark is a pioneering country when it comes to implementing and testing new network concepts. The transmission operator Energinet.dk is currently implementing the cell concept, shifting more responsibilities for network control to the distribution networks and enabling islanding of individual cells.
The supply system is historically robust, with only few system failures. Nevertheless, the European objectives on renewable energy could pose a challenge to the supply system. ENTSO-E has predicted power balance problems for Denmark in winters starting from 2016. The Great Belt interconnection between Eastern and Western Denmark has operated from August 2010. Despite intensive usage, existing price differences between Danish regions may make further expansion of capacity necessary.
Potential for Renewable Energy:
Over the last few years, large solar installations for district heating have been established in a number of locations in Denmark. The contribution from solar energy is expected to be 16 ktoe by 2020 as opposed to 10 ktoe in 2005 (0.4 PJ in 2005, 0.7 in 2020)
Denmark is one of the most aggressive countries in the world for wind power and has a relatively long history using it. Since 1988 Denmark has built nearly 3,400 MW of wind capacity. Currently, wind power provides about 20% of Denmark’s electricity through more than 5,200 wind turbines, and this is an increase from 2% in 1990. The vast majority of this wind turbine-generated electricity is onshore, but as available land is becoming scarce, an increasing number of wind turbines are found in offshore wind farms.
According to the Danish Energy Agency, this aggressive approach to wind power has reduced the country’s dependence on fossil fuels and has made Denmark one of the largest European energy technology exporters. Their data show that since 1980 Danish GDP (Gross Domestic Product) has increased by 78%, their energy consumption has remained flat, and their CO2 emissions have decreased by more than most any other European country.
Denmark’s goal is to meet 50% of its electricity needs with wind energy by 2025, including a near doubling of their wind power capacity to 6,000 MW. They are also investing in the infrastructure to support electric cars, so that wind power will be powering some of their transportation needs.
Biomass and Biogas
In 2010, solid biomass and biogas contributed 3,400 GWh to gross renewable electricity production, representing 26% of total gross renewable electricity production. All of this electricity was generated in the form of CHP. Biomass‐fuelled CHP plants have been a common part of the Danish electricity and district heating supply for decades. There are over 200 district heating plants and 15 CHP plants fuelled by solid biomass and 30 biogas‐fired CHP plants.
Biomass consumption (wood and straw) in the Danish electricity sector is divided between both power stations and local CHP plants. Around two‐thirds of the straw and wood is consumed by power stations, while one‐third is fired at the 15 or so small local biomass plants. Some 147 local CHP plants – with a combined capacity of 80 MW – use biogas as a fuel. In 2010, power generation from biofuels totalled 3,068 GWh. It has remained relatively stable from one year to the next, but biofuels‐based power generating capacity has been increasing in Denmark in recent years.
Denmark is a leader in terms of energy produced from waste, followed by Switzerland and far ahead of IEA third‐ and fourth‐placed Sweden and Austria. In terms of consumption, 91% of waste is used in CHP plants and the remaining part in heat‐only plants. In 2009, nearly half of solid biomass supply was used for heating purposes in the residential sector, 29% in CHP plants, and 17% in heat-producing plants.
Hydropower makes a very small contribution to renewable electricity supply. Denmark has 38 small‐scale hydroelectric power plants, which in 2009 generated a total of 19,795 MWh. The largest plant, Tangeværket at Gudenåen, has an installed capacity of 3.9 MW.
Potential for Energy Efficiency:
Energy efficiency has improved significantly in Denmark compared to 1990 levels, with a 26.3% decrease being recorded as of 2010, and overall final-consumer efficiency having been improved by 20.2%. All sectors of the economy contributed to this improvement, however, more recent improvements (as with many other EU nations) have been more modest. In response to this, the March 2012 energy agreement sets out large investments through to 2020 in energy efficiency, as well as in renewable energy and the energy system as a whole. Through 2013 and 2014, energy savings obligations for energy companies are increasing to 2.6% of final consumption excluding transport, rising to 2.9% in 2015-2020. Extensive building retrofitting has also been proposed to improve the efficiency of existing building stock. Public sector energy conservation and the increase of biofuel proportions in fuels used for transport have also been identified as key areas for development, with a 10% target for biofuel proportions in transport fuels established in the Energy Agreement 2012.
In 2010, at the generation level, the market was dominated by two big players, Dong Energy and Vattenfall, who together accounted for almost two thirds of the total capacity. The remaining third was provided by a large number of smaller companies, including cooperatives and municipal companies. Market integration with neighbouring markets is adequate. In the Nordic countries, roughly 75% of energy is traded on the power exchange, Nord Pool Spot (NPS). Volume coupling is used by the EMCC on the borders with Germany. In November 2010 this coupling was extended to the Central Western Europe region, and about 60% of Europe’s electricity is connected via this new coupling. Danish electricity is traded on the Nord Pool power exchange. The country is divided into two market areas, East and West. The average wholesale price in 2011 for baseload power was EUR 49.4/MWh for the East (a decrease of 13.5% compared to 2010) and EUR 48.0/MWh for the West (an increase of 3.3%).
The price is often lower in the West than in the East due to its high level of wind generation with low marginal costs. In terms of liquidity, volumes traded on Nord Pool are the highest of all European power exchanges. Danish volumes reached 28 TWh (11 TWh for the East and 17 TWh for the West), representing 81% of the national electricity consumption.
There are a total of 55 suppliers of electricity to households in Denmark. Each of the 33 supply obligation companies has been granted a concession for a specific geographic region where they supply households and small businesses that have not concluded an individual contract. Between 90 and 95% of the Danish households and small businesses are supply obligation customers.
Structure / extent of competition:
The Danish electricity market is fully liberalised and all consumers have thereby access to free choice of supplier. There are no barriers for entry to the market and the suppliers do not need any permits or to be registered to participate in the market. At the moment there are 25-30 suppliers offering electricity products in the liberalised market. In Denmark there are regulations of consumer prices via an obligation to supply product. The consumers are not tied to this product though, due to the liberalised market.
Many new players have entered the electricity market since the liberalisation. The most important step towards the free electricity market was taken in 1999 with an EU directive on full liberalisation of electricity markets. This led to the unbundling of the transmission grid from electricity generation. The grid is now independent, and all electricity market players have equal opportunity to use it.
Denmark has a state-owned TSO, Energinet.dk, which owns and operates the transmission networks for both electricity and gas. The model chosen is ownership unbundling and the certification procedure for Energinet.dk has been completed. For electricity, there are another twelve or ten regional network operators, which are fully or partly vertically integrated with other companies engaged in competitive activities, such as trading, production and generation with effect from 1 January 2012, the 10 regional transmission companies were bought by the Danish TSO, Energinet. dk. Hence, complete ownership unbundling of regional transmission companies and DSOs has been achieved. There are 77 electricity DSOs and three gas DSOs, most of which are fully or partly vertically integrated.
Existence of an energy framework and programmes to promote sustainable energy:
Energy Strategy 2050: From Coal, Oil, and Gas to Green Energy
The hallmark of Denmark’s energy policy is independence from fossil fuels. In fact, the Danish Government’s February 2011 Energy Plan, called “Energy Strategy 2050: From Coal, Oil, and Gas to Green Energy”, states this overall goal in its title. The plan states its main goal is independence from coal, oil, and gas by 2050, which in turn will result in Denmark maintaining a secure stable supply of affordable energy and helping to limit global climate change. In addition, achieving this goal will provide economic opportunities for Danish green energy technologies within its own borders as well as in the global market, and will minimize Denmark competing for a shrinking supply of fossil fuel supplies, many of which are in unstable countries.
In March 2012 a new political agreement on energy was reached in Denmark. This Energy Agreement is an important step towards fulfilling the 2050 target. 95% of the members of Parliament -i.e. all parties but one- stand behind this Agreement. The Agreement contains a wide range of ambitious initiatives, bringing Denmark a good step closer to the target of 100% renewable energy in 2050. The Agreement covers the period 2012 – 2020.
National Renewable Energy Action Plan
In 2020, the Danish Renewable Energy Action Plan expects almost 52% of total electricity consumption to be met by renewables. Almost 60% of this will be wind, with biomass, essentially, making up the rest.
The NREAP thus indicates that Denmark is on track to meet and, indeed, exceed its 30% RES target by 0.4 percentage points. In the long term, Danish plans are for 100% renewables. The document indicates that the excess RES is available for use in co-operation mechanisms with other Member States. Denmark’s action plan focuses to a large extent on managing consumption, and only a very slight increase in electricity demand is expected between 2010 and 2020. Moreover, the plan indicates that future policies aim to reduce energy consumption in 2020 by 4% compared to 2006.
The Agreement lists a large number of actions to be taken during the period 2012 – 2020. These actions will result in more than 35% renewable energy in final energy consumption in 2020. As the Agreement does not go beyond 2020, it does not lay out in detail the path from 2020 to 2050, which will lead to 100% renewable energy in 2050. The Agreement includes 62 actions covering the following areas: energy efficiency, renewable energy for electricity production, district heating, combined heat and power production, use of renewable energy in households and industries, smart grids, biogas production, use of electricity and renewable energy for transport, research, development and demonstration and finally financing of the Agreement.
Feed-in tariff (see below section “regulatory framework”)
Current energy debates or legislation:
Denmark has become one of the better-equipped electric vehicles owner nations per capita, but it only has 280 charging points. Electric car sales have dropped more recently, and the government drastically downgraded its expectations – from 400,000 electric vehicles on its roads by 2020 to only 200,000.
Denmark's government has decided to enter strategic partnerships to develop infrastructure for vehicles to run on electricity, as well as natural gas and hydrogen – and to have 5,000 charging points by the end of 2013 and 200,000 in place by 2020.
Major energy studies:
Nordic Energy Research
Nordic Energy Research is the platform for joint Nordic Energy Research and policy development under the auspices of Nordic Council of Ministers. It promotes cooperation in research and policy between Denmark, Finland, Iceland, Norway and Sweden.
Role of government:
Danish Ministry of Climate, Energy and Building
The Danish Ministry of Climate, Energy and Building (previously known as the Ministry of Climate and Energy), established in November 2007, was created as a part of the government's increased efforts to promote a greener and more sustainable society. The ministry is responsible for national and international efforts to mitigate climate change, as well as for energy, national geological surveys in Denmark and Greenland, and for meteorology.
Danish Energy Agency (DEA)
The Danish Energy Agency (DEA) was established in 1976, and is an agency under the Ministry of Climate, Energy and Building. It is responsible for all tasks related to the production, transmission and utilisation of energy, and its impact on climate change. Its principal function is to ensure the legal and political framework for reliable, affordable and clean supply of energy in Denmark.
Government agencies in sustainable energy:
Danish Energy Saving Trust
The Danish Energy Saving Trust is an independent body established in 2010 as a trust under the auspices of the Ministry of Climate, Energy and Building, replacing the Danish Electricity Saving Trust. The scope of the previous organisation's work has been expanded from electricity savings to cover savings and more efficient use of all forms of energy in every sector other than transport.
Commission on Climate Change Policy
The independent Danish Commission on Climate Change Policy was established by government in 2007 and was charged with the task of identifying the long‐term climate and energy policies needed to achieve independence from fossil fuels. The Climate Commission’s proceedings were attended by the Ministry of Climate, Energy and Building, the Ministry of Economic and Business Affairs, the Ministry of the Environment and the Ministry of Finance. The Commission published its findings in September 2010 and ceased activities in November 2011.
Energy planning procedures:
In late November, Denmark launched a new bidding round for the construction of 450MW of offshore wind capacity across six sites, plus 50MW capacity for the testing of new turbines. However, this news came as a revised connection timetable was released for existing pipeline projects, which showed delays of more than a year for at least 1.5GW of offshore capacity, specifically the 600MW Kriegers Flak and 400MW Horns Rev projects, plus 500MW of nearshore capacity. These persistent delays, combined with broader grid issues, threaten the country’s ability to meet its ambitious wind energy targets, resulting in a fall down the rankings in the wind index.
The Danish transmission system operator Energinet.dk is responsible for planning the Danish electricity network. The TSO published network expansion projects as part of the yearly system plans. Scenarios used in the grid planning process are developed first by the TSO, with collaboration from external experts in the field. Market simulation and internal grid modelling is then done by Energinet.dk, informing the production of an expansion plan. This plan is then submitted to the Ministry of Climate, Energy and Buildings (MoCEB) for review, with a mandated 6-week lag period before project implementation can begin following plan submission.
Generally, projects to not need approval from the MoCEB, byt in individual cases the Ministry can mandate the necessity of project approval. The current plan is known as Systemplan 2011, and takes into account the October 2011 renewable energy targets of 100% renewable energy supply in 2050, and electricity and heat supply being 100% renewable in 2035.
Energy regulator Date of creation:
The Danish Energy Regulatory Authority (DERA) regulates the Danish markets for electricity, natural gas and district heating.
Degree of independence:
The board of DERA consists of a chairman, six ordinary members, and two alternates. All board members shall neither seek nor follow any instruction from any public or private entity. The Minister of Climate and Energy formally appoints the members of the board, but the Minister has no powers of instruction in relation to the board members.
The secretariat consists of three individual energy divisions (natural gas, electricity, and heating). The secretariat of DERA is managed by Director General Finn Dehlbæk.
Regulatory framework for sustainable energy:
Within the last few years, there have been several changes in support of renewables in Denmark. In 2008 was adopted the Agreement on Energy (VE-Lov) and introduced a mixed support:
- A Feed-in Tariff (FIT) for electricity from biogas or gasification from biomass (min. 94% of biogas) - 0.745 DKK/kWh (approx. 10 cEUR/kWh) for 20 years.
- A Feed-in Premium (FIP) paid on the top of the electricity market price for electricity from biogas and other fuels (max. 94% biogas) - 0.405 DKK/kWh (approx. 5.5 cEUR/kWh) for 20 years.
Both tariffs are indexed on 1 January of each year since 2009 on the basis of 60% increases in the consumer price index in the previous calendar year when compared to 2007. If the market price with surcharge exceeds the limit, the difference is deducted from the future payments. The next step was taken in 2009 within the Agreement on Green Growth in which biogas is promoted in several points.
- 50% of manure has to be utilised via anaerobic digestion by 2020
- Every municipality is obliged to point out localities approved for the construction of biogas plants
- Financial support to plants: 20% of governmental subsidy and 60% loan from municipality for investment
- Equal opportunities for biogas as natural gas supplier.
Due to insufficient support and the global financial crisis, the Danish biogas sector remained stagnating. In March 2012 the Government signed the Agreement on Energy (VE-Lov amended in June 2012), which increased FIPs not only for electricity production but also enabled other biogas uses (injection, use as a transport fuel, use for industrial processes) to be inside the support scheme. Moreover, gas companies owned by municipalities are now allowed to invest in production and a special task force has been created to support local authorities in implementing biogas projects in the years 2012-2015. According to Agreement 2012, the new FIT for biogas consists of three elements:
- Basic – flat rate paid for every kWh or GJ of energy produced from biogas, respectively to utilisation
- New - will be decreasing with the rise of natural gas price, paid on the top of the basic tariff. The reference price was set at approx. 53.2 DKK/GJ on the NordPool gas market.
- Temporary - will be reduced by 2 DKK annually through the years from 2016 to 2020.
The maximum support in the form of FIT for biogas production shall not exceed the fixed sum of 75 DKK/GJ (for transport and industry), 115 DKK/GJ (injection) or 1.15 DKK/kWh (cogeneration). The FIT for electricity is given in DKK/kWh, biogas for other purposes is given in DKK/GJ. Producers of electricity from biogas combusted with other energy sources (natural gas) will receive FIP on top of the market electricity price, and two bonuses: new and temporary one. Operators of 100% biogas CHP plants can choose once a year (until 1st of October) between a fixed support (FIT) and a premium. Both basic tariffs are indexed since 2013 on a same basis as it is defined in the VE-Lov 2008 (see: Legislation). In case of CHP with maximum 94% of biogas together with another fuel (for example diesel, biodiesel, natural gas, etc.) will receive only a FIP on the top of the market price.
In the electricity market, the regulation focuses on the network companies. However, DERA also sets the allowed price for electricity companies with an obligation to supply (i.e. the companies that supply customers who have not chosen their own supplier in the free market).
In the natural gas market, the regulation also focuses on the network companies. Natural gas can be stored in underground storages, and DERA also controls the prices and access conditions of the two Danish storage facilities. Finally, DERA sets the price for natural gas supplied by the natural gas companies with an obligation to supply. The network companies are natural monopolies, and DERA focuses on ensuring that these companies are run efficiently and with a high degree of consumer protection.
In the district heating market, both production and network companies are monopolies and regulated as non-profit undertakings. DERA monitors their prices and delivery terms, and DERA takes regulatory action if the prices and terms of the network companies are not in line with the non-profit regime – or if they are unfair in any other way.
Role of government department in energy regulation:
No government department takes an active role in energy regulation, although DERA has access to secretariat assistance from a special body within the Danish Competition and Consumer Authority for cases relating to breaches of market rules.
The overall conditions for the integration of electricity from renewable energy sources in Denmark are considered to be good. No severe barriers have been detected.
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