Environmental Engineering Reference
In-Depth Information
An additional challenge was that the overall pace of wind power develop-
ment in Denmark was decidedly declining. As Table 4.3 illustrates, in 1990,
79 MW of installed capacity was added. Between 1991, 1992, and 1993, the
annual pace of expansion tailed of to 62 MW, 43 MW, and 32 MW, respectively.
Irrespective of whether this decline can be attributed to elimination of the
investment subsidy,
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increased public opposition to wind power,
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or cheaper
oil, this trend did not go unnoticed in government circles. Consequently, near
the end of 1992, the government adopted a new policy riposte.
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Under a new subsidy program, in addition to receiving 85% of the retail
electricity price from utilities, wind power generators were entitled to receive
€0.013 per kWh as a carbon tax reimbursement and €0.023 per kWh as a
production incentive. Generation facilities owned by electricity utilities were
ineligible for the production incentive.
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hese additional subsidies rep-
resented an attempt to replace the termination of the investment subsidy,
which rewarded turbine construction with a policy tool (a feed-in tarif) that
would best encourage the desired goal of enhanced wind power production.
he comparative efectiveness of this tool would prove to be highly inluential
in regard to the formulation of wind power policy in other nations.
In 1993, a number of further initiatives were announced which indi-
cated that government planners were beginning to take a strategically
methodological approach to wind power development. he Ministry of
Environment and Energy ordered all Danish municipalities to undertake
wind power potential studies, assigning a deadline of June 1995.
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It also
commissioned an updated economic survey of privately owned wind tur-
bines, a study into the external costs of wind power from a social perspec-
tive, an exercise charting conditions for ofshore wind turbine installation,
an evaluation of R&D efectiveness, and a study investigating more efective
ways to promote rural wind power development.
It merits repeating that 1993 was a mediocre year for wind power devel-
opment in Denmark with only 32 MW added. Some have attributed the
sluggish market response to the policy reforms of 1992 to tax reforms that
disrupted market dynamics.
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Although there may have been a degree of
truth to this, it is equally possible that 1993's laccid performance can be
explained by a lag in market response to the policy change in late 1992.
Simply put, policy change takes time to afect behavior.
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Guided by indings of a specially commissioned study released in February
1994, which favored bolstering rural wind power development, the gov-
ernment also announced a new turbine replacement investment subsidy
program in May 1994. he scheme ofered a tax credit of up to 15% of the
original investment cost for upgrading existing turbines to larger capacity
models. In conjunction with the subsidies announced in 1992, this program
