Environmental Engineering Reference
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government moved to downgrade support for renewable energy develop-
ment. he annual budget for the Energy Technology Program was reduced
by nearly 70%, and the Development Program for Renewable Energy
Sources was eliminated altogether. 76 Nevertheless, since the prevailing FIT
and turbine replacement subsidy schemes were still in place in early 2002,
developers continued to fast-track projects. 77 As Table 4.4 illustrates, 393
MW of capacity was added in 2002 (including 164 MW in ofshore capacity,
thanks to the 160 MW Horns Rev project). 78
In June 2002, the Rasmussen administration announced that it had shelved
plans for introducing the green certiicate program and instead announced a
new but reduced subsidy program which provided wind power generators with
an added premium of €0.013 per kilowatt hour (guaranteed for 20 years) on
top of the Nordpool pool spot market price for electricity. 79 A separate subsidy
added a scrap premium of €0.023 per kWh for upgrading existing turbines. 80
Keeping true to its political promise to minimize the impact of subsidies on is-
cal health, these new wind power subsidies were to be passed on to electricity
consumers as a Public Service Obligation (PSO) tarif. 81
he scale of reductions in subsidies virtually stopped wind power devel-
opment overnight. In 2003, only 16 MW of onshore capacity was added.
However, thanks to ofshore wind farm installations—catalyzed by the
agreement made with the utilities in 1998 to add 750 MW by 2008—209
MW of ofshore capacity was added (including the huge 166 MW Nysted
ofshore wind farm). Despite elevated ofshore activity, that same year, the
Rasmussen administration announced that utilities would not be bound
to invest in further wind power development as per the 1998 agreement. 82
Consequently, by 2004, the wind power development market in Denmark
was in freefall. hat year, only 8 MW of wind power capacity was added.
he collapse of Denmark's wind power market suddenly became a politi-
cal hot potato for the ruling coalition due to the fact that wind power man-
ufacturing was Denmark's third-largest export industry, providing direct
employment to 6,600 people, indirect employment to a further 15,000
people, and investment income to an estimated 125,000 Danish house-
holds that owned shares in wind turbines. 83 In response, the Rasmussen
administration was forced to backtrack on some of its cutbacks. It partially
reinstated plans for ofshore wind power development by agreeing with
utilities that two new ofshore wind farms of 200 MW capacity each would
be installed by 2007. 84 To facilitate this, a tendering system would be devel-
oped with the winning bid guaranteed a ixed tarif for the equivalent of
up to 50,000 full load hours (approximately 12  years). 85 he government
also partially restored funding for the Energy Technology Program, with a
compromise being that the direction of research would focus on sustainable
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