The government’s plan to increase the nation’s reliance on green power could expand a black hole that already sucks nearly two billion kroner out of consumers’ pockets annually.
In order to promote construction of wind turbines, the government has agreed to purchase the electricity they generate at a minimum price. The guaranteed prices have had the desired effect: some 5300 wind turbines dot the Danish countryside, producing 18.5 percent of all electricity generated.
The practice has its downside, however. The guaranteed prices for wind power results in an overproduction that cost the state an excess DKK 21.6 billion between 2001 and 2005, according to figures from the National Audit Agency.
Due to the uncertainty of whether the wind will blow, Energinet.dk, the organisation responsible for ensuring that the country can meet its electricity demand, has to keep a reserve of conventionally produced electricity in case the wind dies down. The extra cost is typically passed on to consumers in the form of higher electric bills.
Maintaining that safety net results in a near constant overproduction of energy, reducing wind power’s share of the total amount actually used to power Danish homes and factories to 8.3 percent. The unneeded electricity is exported, normally at a lower price than that paid to windmill owners.
In 2005 alone, the difference amounted to a DKK 1.7 billion loss, according to the National Energy Authority.
By 2025, the government expects to increase renewables’ share of the power supply to 30 percent. By then wind turbines are projected to contribute three times as much energy as they do now, accounting for 60 percent of all power generated in Denmark.
Relying more on renewables will help the nation to meet its’ CO2 emission obligations, but the green ambitions could prove costly, with some calculations putting the economic costs of the package at DKK 5.2 billion annually.
During the presentation of the plan earlier this month the energy minister, Flemming Hansen, said the price was one the government was willing to pay: ‘We don’t know how much this is going to add up to, but we are willing to pay it, no matter how much it costs.’
Energinet.dk expects to invest DKK 3.4 billion to connect new wind turbines to the power grid, with consumers again likely to foot the bill.
‘Right now it’s difficult to put a price tag on this, but it will be something electricity users will notice,’ said Energinet.dk chief executive Peder Ã˜ Andreasen.
Representatives from the Energy Ministry pointed out, however, that some of the investments could be used to make it easier to ship electricity between different regions of Denmark, helping demand meet supply.
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