DWIA: Danish Energy Minister Could Jeopardise Nearshore Projects

Danish Wind Industry Association warned that the government is creating uncertainty within the country’s industry and energy sectors, following news that Energy Minister Lars Christian Lilleholt wants to abandon nearshore wind farms.

Should that happen, promises made in the Energy Agreement would be broken and the move would cost jobs and harm opportunities for Denmark to ensure cost-effective green transition, according to the association.

The minister considers Public Service Obligations (PSO) levy is too high and therefore wants to reopen the energy agreement and lower the level of ambition for the green transition, the wind industry explained.

Jan Hylleberg, Director of the Danish Wind Industry Association said that this comes less than 14 days after the decision to take the Sejerø Bugt project out of the bidding process and to introduce a new schedule, including a promise to issue the final contract documents next week. “The minister had ample opportunity to terminate the Energy Agreement, if it is what he really wants. Instead, he continues this gradual farcical process by once again casting doubt on whether the industry can invest with confidence in the promises that were given in the Energy Agreement of 2012,” Hylleberg said.

Three pre-qualified companies have each already invested tens of millions and have four months left from having to make a billion-investment decision, which would result in thousands of jobs within the Danish wind industry, the association said.

“If you cut or completely cancel the nearshore tender, it will not only cost Danish jobs. It will send shock waves through the energy sector and cast serious doubts about whether Denmark’s market is safe for future investment. I remind you that there is also a day after tomorrow,” Jan Hylleberg emphasised.

“When the government’s energy commission in a year makes recommendations for cost-effective green transition, it will undoubtedly lead to a need for new licensing rounds. Therefore, it will be a tremendous commercial and energy policy own goal to weaken the confidence in Denmark as an investment country. Uncertainty and mistrust has a price,” Hylleberg warned.

Commenting on the minister’s statement that price for nearshore wind farms have been too high, Hylleberg said that, if the minister would let the industry work in peace, the competition will provide a sharp price below 70 øre/kWh for about 11 years, which will then be the cheapest offshore wind farms built in Europe.

The subsidy for nearshore projects will be financed over electricity bills, which is expected to account for around 1 øre/kWh in the PSO levy by 2019, representing less than 0.5 per cent of the total electricity bill for a household, Danish Wind Industry Association said.