Environmental Engineering Reference
In-Depth Information
Meanwhile, back in Denmark, with oil prices beginning to soften, it was
apparent that new policies would be required if wind power development
was to reach a level of commercialization that would provide Denmark with
domestic energy security. herefore, in 1984, legislation was passed which
signiicantly liberalized the wind power generation market. Under the terms
of the legislation, private wind power producers were permitted a tax refund
of €0.037 per kWh.
32
Wind power generators that wished to sell power into
the grid were to receive guaranteed access, with utilities committing to wind
power purchase contracts of at least ten years in duration to purchase wind
power at a price that was equal to 85% of the retail price. Utilities were
also compelled to pay 35% of any grid connection costs.
33
hese policies
amounted to payments to wind power providers of approximately €0.08 per
kWh, ensuring a substantial return on investment.
34
As Table 4.2 illustrates,
by 1985 these policies were fueling progressive market expansion.
It bears mention that wind power projects up to this time could be char-
acterized as small projects owned by individuals or collective groups of indi-
viduals, because of regulations which encouraged local investment. With
hundreds of wind power turbines springing up around the country, con-
cerns over the adverse aesthetic impacts of these turbines were beginning to
emerge.
35
Consequently, the government decided to take steps to encourage
concentrated development through wind farms. To support private wind
farm development, an enhanced subsidy was announced that provided up
to 50% of the capital costs for approved wind power projects.
36
In 1985, an agreement between Denmark's utilities and the Danish
Ministry of Energy that had been under negotiation since the late 1970s was
concluded. It compelled utilities to develop 100 MW of wind power between
1986 and 1990, efectively tripling installed capacity in Denmark.
37
his
voluntary agreement, which received no inancial support from the govern-
ment,
38
underpinned an expectation that the government envisaged utili-
ties playing a greater role in supporting wind power development.
39
here
was incentive for utilities to cooperate in this voluntary manner in order
to stave-of formal government mandates—and given that the majority
of Denmark's utilities were not-for-proit entities owned by municipalities
and communities, there was a degree of reluctant acquiescence, because the
adverse inancial impact of premium-priced wind power would eventually
be passed along to the end-consumer.
In 1986, with the pace of wind power development heating up, the gov-
ernment introduced two curious initiatives that seemed directed at rein-
ing in the pace of development. First, it reduced the tax credit subsidy that
was initiated in 1979 from 20% to 15% for both individual projects and
wind farms.
40
Second, it introduced revised legislation that narrowed the
