Danish community and wind power feature

 

 By

Aedan Kernan

In 2020, 50% of Denmark’s electricity will be supplied by wind, balanced by thousands of small-scale bio-energy generators. How can it be managed? Local, community ownership is the future, according to Professor Frede Hvelplund of Aalborg University.
Power to the Community Denmark’s Parliament has agreed a route to 100% renewable energy by 2050. The first milestone will be reached in 2020, when they plan to supply 50% of electricity from wind power. Three quarters of the planned 2,000 MW of new wind capacity will be built offshore. That still means 500 MW of additional wind capacity must be added onshore – and that 500 MW may prove difficult to deliver.

Community self-help

Wind power in Denmark was developed by community groups during the oil crises of the 1970s. According to Professor Hvelplund, local communities in Denmark, or local businesses, had a long tradition of building their own power generation plants. Community generation used to provide Denmark with some of the cheapest electricity in Europe. Most of Denmark’s district heating systems are cooperatives or owned by municipalities.
The community ethos of the wind industry was protected by legislation that gave those living within 3 kilometers of a wind turbine a right to invest in the project. It also restricted investment by those outside the immediate area.
It was that popular community support that sustained Denmark’s wind industry through the 1980s when a falling oil price made the future of the wind turbine business economically questionable. Popular enthusiasm for wind turbines, was not shared by the large-scale utilities. They did not welcome this intermittent small-scale and distributed power source onto their centralized fossil-fuel powered grid. At a time when the U.S. wind industry was in full retreat the Danish wind industry continued to benefit from capital subsidies, a feed-in tariff and a right to grid-connection. Community wind projects played an important role in the industry’s strong growth from the early 1990s through to 2004. In 1990, the Danish government had set a wind capacity target of 1,500 MW by 2005. In fact, 3,000 MW of onshore wind turbines were already installed by 2003. Danes installed 600 MW of wind power in the year 2000 alone. By 2004, 100,000 Danish households owned shares in projects that added up to 23% of the nation’s wind power capacity.

Unleashing market forces

The late 1990s also saw a change in the political mood in Denmark that affected the wind industry, says Hvelplund. Many parliamentarians came to believe that community rights to shares in wind farms and restrictions on outside investment were interfering with the operations of a free market and adding to the capital costs of wind farm development. At the same time, wind turbines were becoming larger and more expensive, making it more difficult to raise the required funding from the community alone. The requirements for local involvement were relaxed and the access for remote investors was increased. Planning regulations were also tightened up, leaving local planning authorities with less discretion on where wind farms could be placed.
Taking the chains off market forces did not deliver a boom in the Danish wind industry. In fact, it was quite the reverse. Between 2004 and 2006, less than 40 MW of new wind capacity was added in Denmark. Local opposition to proposed wind projects grew and became an increasingly important political force. Most of the increase in Danish wind power capacity in the years after 2005 was due to the construction of large offshore wind farms.
In 2006 the government set a goal of 100% of power from renewable sources by 2050. In 2008, steps were taken to restore the former commitment to local involvement in wind developments. Developers are required to offer 20% of a project to the people living within a 3 km radius of the site. If locals don’t buy, the 20% can be bought by people in the municipality. There is also compensation for visual or aural issues.
But Hvelplund does not believe the 2008 legislation goes far enough to restore the popular enthusiasm wind projects enjoyed in the late 1970s. Onshore wind delivers electricity at around one third of the price of offshore projects. It makes sense to develop as much onshore as possible, he argues. If communities are to give their support they will want a decisive say in developments in their locality and they will want to see the economic benefits from the wind projects distributed in their communities. He would like to see local communities having a right to a 60% controlling share of any new projects.
Hvelplund does not accept that investors will be reluctant to provide capital to a project if they do not end up with control. Nor does he accept the argument that the scale of investment needed is too great for local communities to deliver. If the investment is attractive enough, he says, the money will not be hard to find. “Small companies, households and the municipalities in the region, together with the electricity distribution company, can easily find the money for this kind of investment.”
At present there are restrictions on how municipalities spend any surpluses they earn from their district heating activities. Hvelplund would like to see that restriction removed in order to let them invest not only in generation but also in improving the energy efficiency of local buildings.

Managing distributed power generation

The ambitious goals of the Danish Energy Agreement add another argument for community involvement, says Hvelplund. The Agreement envisages an electricity system where 50% of energy needs will be met by intermittent wind and over 35% is generated from bio-energy. That system cannot be managed in the traditional way a grid powered by centralized coal plants was managed, he argues. Instead, it will require careful coordination between some kind of central authority and local generators.
“The key is to reduce the management transaction costs by encouraging common ownership of a range of technologies,” says Hvelplund. In other words, national grid management will be a lot easier if the municipality that owns the biogas-powered district heating system also owns the local wind farm.
“We need more modern types of ownership than this strange ownership-at-a-distance that we have at the moment, given the pressing management and technical challenges before us.”

(Source: leonardo - energy )