Wind Energy in Denmark
The Policy in Brief
The Policy in Brief Economic Instrument: Wind turbine investment subsidy, electricity tax repayment and funding for research and development in wind technology
Problem: Energy production from non-renewable or polluting sources
Goal: 10% of national energy production from wind power by the year 2000
Description: Denmark's wind energy program is a leading example of how government support can make an alternative energy source commercially viable. Subsidies for privately owned wind turbines stimulated demand and created a customer base for a wind energy industry, while government funded R & D led to more reliable and cost effective wind turbines. The program created a thriving new industry in wind turbines Administering Institutions: Ministry of Energy and National Energy Research Centre Key Stakeholders: Ministry of Energy, National Energy Research Centre, power generating companies, private investors including some 50,000 Danish families.
Denmark has, within the last 15 years, invested more in wind energy than any other European country. This is consistent with Denmark's long tradition of using wind as an energy source. The first wind turbine which generated electricity was built in 1891. Today's wind energy program is part of an overall energy plan published in 1976. The main objective of investing in wind energy in 1976 was to make Denmark less dependent on imported energy supply. Subsequently, environmental arguments have become increasingly important.
An investment subsidy introduced in 1979 covered 30% of investment costs in wind turbines, subject to approval by the National Energy Research Centre. The investment subsidy was not only a stimulus for the construction of wind turbines but also a stimulus for market forces to better develop a wind turbine industry. Wind turbines became an attractive investment, and manufacturers enjoyed a customer base of 200 to 300 wind turbines per year. By 1989 government support was no longer necessary to make private investment in wind turbines attractive, and the subsidy was abolished. Small- and medium-sized wind turbines quickly became reliable and cost-effective. Technological problems associated with large wind turbines were more complicated than expected, however, and large wind turbines (1,000 kW or more) are still not commercially viable due to technical problems. Subsidies were only used to stimulate the development of privately owned wind turbines. No direct financial support was given for wind power investments to the larger power generating companies, though support was provided indirectly for research and development. At present, privately owned wind turbines represent about 80% of the installed capacity.
One of the main drawbacks of wind energy is, of course, that electricity can only be produced where there is wind. In Denmark this problem was avoided by connecting the private wind turbines to the national grid, allowing fluctuations to average out and so provide a constant supply. The requirement that only wind turbines approved by the Test Station for wind turbines at the National Energy Research Centre could be granted the subsidy speeded up the development of wind turbines for private ownership, including both small- and medium-sized wind turbines. The Test Station became a technological centre where manufacturers and others could get advice, leading to larger, more reliable and more cost-effective wind turbines.
Electricity produced from wind energy is currently not only environmentally friendly but also competitive in price to conventionally generated electricity.
Some Further Reading
Association of Danish Windmill Manufacturers (ADWM) (1991). Wind Power in the 90s - Pure Energy, ADWM.
Energy Trends (1993). Energy and Environmental Data, Aalborg.
Fraenkel, P. and Bokalders, V. (1993). Electricity from the Wind, in Renewable Energy for Development, Vol. 6 No.1.
Return to Public Expenditure Instruments list, or
Return to Energy and Automotive industry section.