Environmental Engineering Reference
In-Depth Information
eligibility criteria for these reduced subsidies. A wind turbine owner was
required to live close to the turbine site and could only receive tax credit
for electricity generated from the person's investment that was equal to the
lesser of 150% of the person's annual consumption or 9000 kWh.
41
hese new
restrictions can be considered to be a manifestation of policy learning. he
government was responding to the realization that it was more efective to
provide incentives for electricity generation (the 1984 production subsidies)
than to simply construct a wind turbine (the 1979 investment subsidies).
he repercussions of this seemingly minor policy adjustment illustrate the
precarious nature of policy setting in multistakeholder networks. he reduced
investment subsidy turned out to be a severe blow for Denmark's wind turbine
industry. In conjunction with the expiration of California's renewable energy
support scheme and the declining cost of oil, which reduced the feed-in tar-
if (FIT) paid to wind power providers,
42
the market for wind power systems
collapsed. By the end of 1986, many Danish wind turbine manufacturers had
either declared bankruptcy or merged with other irms. Even Vestas iled for
bankruptcy in October 1986 and was only saved through a restructuring pro-
gram.
43
he government's response to this unintended consequence of the new
policy was to establish the Wind Turbine Guarantee Company, which guaran-
teed long-term inancing to large export projects provided that the turbines
met rigid government standards for quality.
44
his type of policy riposte—
responding to emergent problems with policy adjustments—would become a
regular feature of Danish wind power policy in subsequent years. As an inter-
esting aside, some analysts have contended that the diminished investment
subsidy was actually beneicial in the long run, as it provided the impetus for
Denmark's surviving wind turbine irms to diversify into international mar-
kets, establishing competitive footholds in international markets that diversi-
ied risk and enhanced competitive advantage.
45
he following year, the government continued to send seemingly mixed
messages in regard to wind power development intentions. On the one hand,
the central government requested regional authorities to develop regional
plans for the siting of prospective wind farms and most municipalities began
to actively undertake these eforts.
46
On the other hand, the government fur-
ther reduced the 1979 capital investment subsidy from 15% to 10%.
47
his
further reduction was met with a degree of understandable angst in wind
power development circles. In hindsight, these actions relected a shift in
developmental focus wherein a policy preference was emerging which favored
larger wind farms over small community developments. It is understandable
that a reduction in front-end subsidizes would be viewed as a valid strategy
for reining in excessive subsidization of larger wind power projects, given that
larger wind farms were capable of more cost efective electricity generation. It
