Wind Energy trends in Denmark - Aisma vitina, ea energy analyses

Wind Energy Trends in Denmark

Aisma Vitina, Ea Energy Analyses

SEAI and IEA Wind Task 26 seminar”The Cost and Value of Wind Energy”

Dublin, May 26, 2014

On the menu

• The particularities of the Danish (wind power) – Early adoption and high penetration

– TSO’s involvement and cost sharing

– Public access to data – and ownership

– Repowering (*)

• Wind energy project cost drivers

• Cost development over time in Denmark

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THE PARTICULARITIES OF THE DANISH WIND POWER

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The particularities of the Danish wind power: Early adoption & high penetration (1)

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33.2%

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Win

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Cu

mu

lati

ve w

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cap

acit

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W)

Onshore capacity [MW] Offshore capacity [MW]

Wind power % in electricity generation

Source: Danish Energy Agency ”Energistatistik 2013”, Energinet.dk

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Source: American Wind Energy Association (based on Berkeley Lab estimates, data from Navigant and EIA)

The particularities of the Danish wind power: Early adoption & high penetration (2)

The particularities of the Danish wind power: TSO’s involvement and cost sharing

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• The developer only pays for the connection from the turbine to the coupling point– Transformers, substations, grid extension – cost socialized (covered by the grid

company/-ies)

• Also for offshore projects– Exploratory studies (geophysical, geotechnical, metaocean and environmental

assessment) carried out by the TSO

• Impact on overall project risk and costs

Source: IEA Task 26 WP1 Report 2011, Energinet.dk. Photo source for the illustration: http://blog.journals.cambridge.org/, http://meship.com/

Wind power project Existing grid infrastructureNew connection line

Paid for by the Developer

Paid for by the Grid company

• Individual turbine-level data starting 1978 reported and published

• A regulation stipulating local residents’ ‘right of purchase’ of 20% of the wind power project shares at cost price– Audited share purchase

offers (incl. cost data) are publicly available

– Contributes to high acceptance rate and availability of sites across the country (terrible noise vs ‘the sound of money being made’)

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The particularities of the Danish wind power: public access to data – and ownership

Interactive map screenshot from http://vindinfo.dk/

WIND ENERGY PROJECT COST DRIVERS

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Wind energy project cost drivers: key factors

• Materials, components, labour– Especially significant in the period leading up to 2008

• Supply-demand dynamics, competitive landscape– Over-supply in the early 2000s, bottle-necks leading

up to 2008

• O&M costs– Increase in turbine size / production, among other

things, decreases per-kWh O&M costs

– More mature technology, higher capacity factors, lower administration and other costs per MW

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Source: Nielsen, P. ”Vindmøllers Økonomi”

Wind energy project cost drivers: size

• Continuous turbine size increase over the past 20 years• In 2012 and 2013 in Denmark, the newly-installed turbines were

predominantly 3 MW

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Source: data from Stamdataregister by the Danish Energy Agency (2004 and 2007 excluded due to limited sample), turbine sizes 100kW+

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Average of Capacity (kW) Average of Rotor diameter (m) Average of Hub height (m)

Wind energy project cost drivers: O&M costs

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Source: Nielsen, P. ”Vindmøllers Økonomi”. Data covers 1996 – 2008, all onshore turbines of nameplate capacity 600 kW+

• For projects 1996-2008 the average lifetime O&M costs (average for years 6-13) estimated at ca.14.5 EUR/MWh (2012 prices)

• For new projects as of 2010, indications of 12.3 EUR/MWh (2012 prices)– Significant reductions in O&M costs over time

Wind energy project cost drivers: Repowering as a new cost category

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Number of turbines by year of establishment

Year of establishment

Number decommissioned

Number existing

Total capacity (kW) by year of establishment

Year of establishment

kW decommissioned

kW existing

Source: Danish Energy Agency, Danish Wind Turbine Owners’ Association

• Introduction of Scrappage Certificates– To continue deployment of wind resource– To facilitate decommissioning of old and poorly sited turbines

• Turbines of 450 kW or less can be replaced with new and more efficient wind turbines at an additional subsidy– Scrappage certificate -> additional subsidy for the newly installed

capacity– Several subsidy regimes depending on the time period:

• 0.02 EUR / kWh for 12 000 FLH of double the decommissioned capacity (upper limit of market price + subsidy at EUR 0.05 / kWh)

• 0.01 EUR / kWh for 12 000 FLH of double the decommissioned capacity (fixed)

• Total pool of decommissioned capacity: 175 MW• Scheme in force: 2005 – 2012• An example from 2013 project proposal Nørhede-Hjortmose (22 *

3.3 MW): compensation of 0.5 M EUR per turbine

13Source: Danish Energy Agency http://www.ens.dk/undergrund-forsyning/vedvarende-energi/vindkraft-vindmoller/vindmoller-pa-land/skrotningsordningen,

Wind energy project cost drivers: Repowering as a new cost category (2)

COST DEVELOPMENT OVER TIME

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Cost development over time in Denmark (onshore)

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500

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€/kW

(20

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Cost of turnkey onshore wind power projects in Denmark 1981 - 2012

Source: Nielsen, P. ”Vindmøllers Økonomi”

Lower demand than expected; oversupply

Steel / material, wage and EBIT increases

Overall price decrease post-2008 crisis

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Cost development over time in Denmark (vis-à-vis other countries): capital cost 2003-2009

Source: Lantz, E., Wiser, R., Hand, M. et al ”IEA Wind Task 26 The Past and Future Cost of Wind Energy”, 2012

Cost development over time in Denmark (vis-à-vis other countries): LCOE 2008

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Source: Schwabe, P., Lensink, S., Hand, M. et al ”IEA Wind Task 26 Multi-national Case Study of the Financial Cost of Wind Energy”, 2011

Aisma VitinaEa Energy Analyses

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Frederiksholms Kanal 41220 Copenhagen

Denmarkwww.eaea.dk

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