THE DANISH WIND INDUSTRY

by Soren Krohn, Director General, Danish Wind Turbine Manufacturers' Association

1995 was another record-breaking year for Danish wind turbine manufacturers. Total turnover for the industry, including sales of components to foreign manufacturers and servicing, exceeded DKK 4,000 million, equivalent to 500 million ECU. In the last fifteen years a total of 16,000 Danish turbines have been produced, representing more than 2,500 megawatts of installed capacity.

Export sales made a dramatic leap forward in 1995, increasing by 50%. The year before they were still chasing the 1985 record, when the California "wind rush" created a boom in overseas orders. Around the world, Danish manufacturers sold their turbines last year into 20 different countries. The two largest markets, Germany and India, each accounted for roughly 30% of sales.

Alongside this buoyant export picture, the market inside Denmark itself accounted for about 17% of sales. Nonetheless, for the second year in a row, the growth rate at home even exceeded the export rate. Although this revival in the Danish market came from a historically low level, and was partly due to power companies being late in fulfilling previous years' investment plans, the wind industry is now much more optimistic about the medium term outlook in Denmark.

Vagn Trend Poulsen, chief executive and principal shareholder of the Nordtank Energy Group, says that government action has been responsible for lifting the gloom which had descended on the Danish renewable energy market. "The string of initiatives from the Minister of the Environment and Energy is beginning to give tangible results," he says. "One of the more important initiatives is the executive order requiring all Danish municipalities to do proper planning for wind turbines. Although the results may not be obvious in 1996, I am confident that the coming years will see more solid growth on the home market."

The industry is also an increasingly important employer. The Danish Wind Turbine Manufacturers' Association estimates that total direct and indirect employment in the wind energy sector reached 9,000 people in 1995. About 85% of the industry's output comes from four large manufacturers - Vestas, Micon, Nordtank and Bonus. All of these companies are engaged in the development of megawatt-sized machines, of which prototypes are already in operation. At the same time, each manufacturer has been developing several turbine models in the 500-750 kW range, optimised for different wind regimes.

On the research side, the Riso National Laboratory for Wind Power is heading several research groups, primarily in the field of aerodynamics, structural dynamics and aeroacoustics. The world's largest rotor blade manufacturer, LM Glasfiber, and the largest turbine manufacturer, Vestas Wind Systems, are participating in this work.

Environmental concerns

The fact that Denmark was one of the first countries to develop a wind energy market has been both a blessing and a curse. The launching of the industry in the 1970s and early 1980s starting with smaller turbines, allowed Danish manufacturers to gain important experience, gradually building up volume production as well as scaling up and revising earlier designs.

On the other hand, some of the best windy sites in Denmark were occupied 10-15 years ago by smaller turbines in the 25-75 kW range. This occurred at a time when far less attention was given to visual and audible environmental concerns, causing local resistance to wind power development. Some of the early mistakes in turbine siting led a number of local authorities to embark on an extremely restrictive overall policy. The situation became even more complicated with multiple layers of planning authorities overruling one another at the municipal, regional and national level.

In order to provide sufficient space for the further development of wind power, the Danish Ministry of the Environment and Energy has now ordered all Danish municipalities to issue a local plan for the siting of wind turbines in their area. Roughly half the municipalities complied with last summer's deadline for completing their plans. Even those that didn't, citing lack of wind resource as the primary reason, are still by and large willing to accept applications on an ad hoc basis.

While the municipalities are finalising their plans, an extensive survey of the areas currently available for wind turbines in Denmark has been completed by E&M; Data, a well-known software developer and data base provider for the wind industry. With some 3,800 wind turbines already in operation, and systematic monthly reporting of production figures from the Danish Wind Turbine Owners' Association, the E&M; study includes exact coordinates for each and every turbine in Denmark, and fairly complete production figures.

Preliminary estimates using the new software tools suggest there will be sufficient inland sites for the Danish government's wind power programme, once the municipal planning process is completed.

Government target

Denmark will have at least 1,500 Megawatts of wind power on line by the year 2005, providing 10% of the country's electricity demand. This is now confirmed as the official target by the Danish Minister of the Environment and Energy, Svend Auken. With an installed capacity of 620 MW, wind currently satisfies about 3.7% of Danish electricity consumption.

Announcing a series of initiatives to promote renewable energy, wind was top of the Minister's list of ways to reduce CO2 emissions from electrical power generation. Wind is also seen as the cheapest way for society to reduce emissions. The cost of reducing CO2 using wind power is currently around 6-13 ECU per tonne on average although it may reach zero at the better wind turbine sites. Furthermore, the potential energy available from the wind is far larger than for other renewables such as biogas.

The official government costing of wind power (not counting environmental benefits) puts wind at the very top of the performance league of renewable energy sources. The nearest competitor, solar heating, is ten times more expensive for the same yield in terms of CO2.

An executive order from the government will also oblige the Danish power utilities to double their currently installed base of some 200 MW of onshore wind energy before the year 2000. The companies are well behind schedule in fulfilling their obligations under earlier voluntary undertakings, and the new plan has been negotiated with them as part of a clear warning that the government intends to stick to its year 2000 deadline. The order will be followed by others leading up to the eventual 10% target.

In addition to the onshore programme, the Ministry of the Environment has announced a programme for building new, large wind parks offshore. Technology development and lack of suitable locations on land (beyond the 10% target) are mentioned as the most important reasons for building offshore schemes.

The offshore energy potential is huge. Four locations in reasonably shallow waters (5-10 metre depths) could provide sites for some 8,000 MW of wind power capacity, theoretically covering more than 50% of present Danish electricity consumption.

Denmark's second 5 MW offshore wind park, located at Tuno Knob in the Kattegat Sea and using Vestas 500 kW machines, was inaugurated in the summer of 1995. The energy output from the park has exceeded the expectations of the owner, the Midtkraft power company, lowering the costs per kilowatt-hour by more than 10% of what was originally estimated. These promising results, together with the three year flawless operating experience of the 450 kW Bonus machines in a 5 MW park in the Baltic Sea, has encouraged the Ministry to exploit the economies of scale in building large wind parks offshore.

Although a number of Danish research institutions have been studying offshore wind power for over ten years, the costs for the pilot projects are still relatively high. In the case of Tuno Knob this is partly due to extensive studies of the local bird population being carried out over a three year period. The siting of the park was selected by ornithologists in order to get solid research experience from the large population of eider duck Somateria mollissima and common scoter Melanitta nigra in the area. In addition to observations of bird behaviour from a tower located next to the turbines, Danish and Canadian ornithologists are using aerial surveys and even scuba divers to analyse the mussel beds surrounding the turbines.

Cooperative Ownership

The joker in the pack, as far as the short-term outlook for the Danish market is concerned, is the future development of privately owned wind power. Individually or cooperatively owned turbines presently account for 75% of wind electricity output in Denmark.

Government policy towards private turbine owners has been a complicated and delicate political balancing act, due to peculiar national institutional and sociological factors. At present there is a presumption in favour of cooperative owners, and regulations governing turbine ownership are in the process of being liberalised.

Alongside this system, the electricity companies in Denmark, which have a virtual monopoly over generation, transmission and distribution, have not seriously invested in wind. Mostly owned by electricity consumers' cooperatives at the distribution level, they are run by strong bureaucracies plus boards of directors - nominally elected, but in practice appointed among muncipal politicians.

A favourable regulatory system effectively allows the power companies to accumulate tax-free reserves 5 to 10 years before investments are made, thus making them largely independent of the capital market. This has produced some of the lowest electricity prices in Europe, but it has not been conducive to the introduction of new technologies like wind power.

Tax legislation favours cooperative wind turbines owned by local "wind turbine guilds". At present each household can own a share of a turbine corresponding to 150% of their own annual electricity consumption, although this is about to be increased. The profits from wind turbine ownership are only taxed if they exceed the consumer's electricity bill by more than 10%.

People who have suitable land for locating a turbine can own a single machine with no size limit. Private investors in wind power receive DKK .27 per kWh as a refund on their electricity taxes. The tariffs for electricty supply to the grid are set by government regulations at 85% of the average local retail price of electricity (before tax). On average, the turbine owner therefore receives DKK .30 + .27 = DKK .57 per kWh.

Power companies, on the other hand, receive only a refund of DKK .10 per kWh against electricity taxes. On the better sites, production costs are now in the range of DKK .25 to .30 per kWh, thus giving a net cost of DKK .15 to .20 per kWh to utilities. Since new coal fired plant has an average price of some DKK .30 per kWh, wind is becoming an increasingly attractive option for Danish power companies.

This article first appeared in the April 1996 issue of Wind Directions, the newsletter of the European and British Wind Energy Associations. Map reproduced from the magazine Naturlig Energi.