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Power provider cuts connection to wind; Market uncertainties have given Dong Energy cold feet about a major offshore wind farm

The government’s goal of doubling national reliance on renewable energy by 2025 experienced a serious glitch Tuesday when Dong Energy backed out of plans to build a giant offshore wind farm that would have served as one of cornerstones of the plan.

The Rødsand 2 wind farm, which is expected to be able to generate 200 megawatts of power – two percent of the national energy supply and enough to power 200,000 households annually – will be one of the world’s largest, but according to Dong the project is too expensive and the returns too little to make it commercially viable.

“˜Given the price increases we’ve seen for wind turbines in the past six-months, we fear that the costs of offshore turbines for Rødsand would be very expensive,’ said Niels Bergh-Hansen, the company’s executive vice president.

Dong had secured a fixed price of DKK 0.4999 per kilowatt-hour to produce what amounts to nearly 15 years’ worth of electricity.

The price is nearly double the market price, but the company felt it needed a price guarantee of DKK 1 per kWh to make the investment worthwhile.

Officials from the energy ministry said that the consortium building Rødsand 2 would continue its work without Dong, and expects it to begin generating power in 2010.

Though Dong has been criticised in recent weeks for opposing a number of other plans that would swap its products with environmentally friendly fuels, the company said pulling out of the Rødsand because of price concerns did not mean it was against green energy.

“˜We feel that we’ve been busy with other offshore wind farms,’ Bergh-Hansen said. “˜We operate four out of the world’s seven offshore farms and we’re building three more. When you’ve got that much on your plate, you need to make a decision about what you can drop.’

A recent Energy Authority report found 23 offshore sites in Denmark are suitable for wind farms. Half of the country’s energy needs could be met if all the sites were utilised.

The Copenhagen Post

24 May 2007