Offshore Wind Industry Says Danish Open-Door Scheme Suspension ‘Absurd’ and ‘Bad News’ for European Energy Transition
Updated on 8 February at 14:51 with a comment from European Energy’s CEO.
On 6 February, the Danish Energy Agency (DEA) announced that it had suspended the processing of offshore wind projects under the open-door scheme, saying that this permitting scheme was potentially in breach of EU law. It did not take long for the industry to respond and voice its dismay.
- WindEurope CEO: ‘This decision is completely absurd […]’
- Green Power Denmark CEO says the move is ‘completely unheard of’
- Ørsted CEO says the decision to pause the procedure is ‘deeply concerning‘
- European Energy CEO says the company “will fight for each one of our projects”
As reported on 6 February, Denmark’s Ministry of Climate, Energy and Supply, in dialogue with the government’s State Aid Secretariat, had found that the granting of permits for offshore wind and other renewable energy projects under the open-door scheme may be in breach of EU law. The DEA then put the case processing of all pending cases on hold until the scheme’s relation to EU law has been investigated in more detail, and the same is in effect with any new applications.
Green Power Denmark says that more than 15 GW of generation capacity were ready to be installed under the open-door scheme and WindEurope says that the suspension creates investment uncertainty for 20 GW of offshore wind currently under planning and development.
The industry’s criticism is primarily stemming from the suspension potentially putting at risk offshore wind targets in Denmark and the EU, where not only there are new and increased goals but also cross-country agreements in place and work underway to accelerate offshore wind deployment.
Developers are also in favour of this Danish scheme (which does not award subsidies), as it is deemed to be a good approach in terms of flexibility for projects and their cost-competitiveness. Under the open-door procedure, they can more easily choose the project site and define the generation capacity, and arrange its grid connection. According to WindEurope, developers can also locate their projects close to areas with large electricity demand to facilitate corporate renewable PPAs with industrial off-takers.
Open-Door Scheme Suspension Brings Uncertainty for Offshore Wind and Power-to-X Projects
With the government’s move to halt the process, there is now an increased uncertainty concerning offshore wind investments in Denmark and, with offshore wind being one of the sources that can be used on a large scale for electrolysis, also brings uncertainty in rolling our Power-to-X projects.
Green Power Denmark, in its statement on the same day of the announcement from the Danish government, said the government was creating unease about green investments and weakening trust in Denmark among developers and investors.
“This is completely unheard of. The government suddenly slams the door to the green transition with a bang that sends shock waves through the entire green energy industry. The companies have done a huge preparatory work and are ready to build more green energy, and then the government pulls the plug on the ‘open door’ scheme at the 11th hour. It’s simply not right. It is a break with the way we have historically conducted energy policy in Denmark and creates enormous uncertainty about green investments”, said Kristian Jensen, CEO of Green Power Denmark.
By the end of August 2022, there were 31 applications in the permitting process under the open-door procedure, after the Danish Energy Agency received a total of 47 and rejected 16 of them due to overlap with state land reservations.
Kristian Jensen said the country was now left with only the planned 9 GW of offshore wind that will be awarded through tenders, which have not even started. Much more than this is needed to reach Danish 2030 climate goals, Power-to-X ambitions, and the goal of becoming a net exporter of green power, according to Jensen.
Ørsted’s CEO Mads Nipper said via social media that the company and its partner Copenhagen Infrastructure Partners (CIP) were ready to build up to 5.2 GW of offshore wind capacity there this decade. The projects the two partners have proposed also include Power-to-X capabilities.
“[It] is deeply concerning that we again see an example where massive opportunities are paused and potentially even cancelled. I call on every responsible politician and agency in Denmark and EU to help find a swift resolution! Not to spend time explaining why it is ok to stop what is right to do”, Mads Nipper said.
CEO of European Energy, Knud Erik Andersen, said his company alone had a pipeline of 3.2 GW of offshore projects in jeopardy, which is still just a fraction of what is needed to achieve Danish and EU goals.
“We are ready to build out vast capacities of energy production, and will fight for each one of our projects. The green transition, Denmark’s climate goals, our Power-to-X ambitions, and our drive to become a green exporter of energy, all of these goals are now at risk”, Knud Erik Andersen said via social media. “We urge the politicians and government agencies to quickly find a workable solution, so we can speed up the green transition”.
Green Power Denmark said that projects could have been allowed to continue with feasibility study permits granted for the projects that were “ready in the starting box” while the government works on resolving political issues.
Pausing Open-Door Procedure Contradicting Agreements Denmark Signed, EU Clean Energy Plans
Both European Energy’s and Ørsted’s CEOs, as well as Green Power Denmark and WindEurope have stressed that the suspension (or the potential cancelling) of the scheme will both threaten Danish 2030 targets and have Europe-wide consequences.
“The world and especially Europe desperately needs to roll out renewable energy at an unprecedented speed. And the so-called Open Door Offshore wind scheme in Denmark is one way to achieve that”, Mads Nipper says.
WindEurope deemed the move “bad news for Europe’s energy transition” amid EU’s efforts to strengthen energy security with more renewables and less imported fossil fuels.
“This decision is completely absurd – especially at a time when the EU is determined to facilitate rather than obstruct the build-out of renewables and is seeking a more flexible approach to what governments can and cannot do in support of this. The current Danish approach to offshore wind is perfectly workable and delivers exactly what citizens and companies all over Europe urgently need: more renewable electricity at low cost”, said Giles Dickson, CEO at WindEurope.
WindEurope issued a statement on 7 February in which it said the suspension not only undermined Denmark’s 2030 offshore wind goals, which are central to Europe’s wider targets, but that it also “flies in the face of the EU’s commitment to facilitate (rather than obstruct) the accelerated build-out of renewables”.
The European wind energy organisation pointed to agreements that Denmark has signed on offshore wind with other countries, as well as the EU’s REPowerEU policy.
Namely, Denmark is a signatory of the Esbjerg Declaration, the Marienborg Declarations, and the North Seas Energy Cooperation (NSEC) agreement, all of which set massive offshore wind targets and are planned to support the REPowerEU policy.
As a frontrunner in offshore wind, Denmark has committed to 13 GW by 2030, up from 2.3 GW today, WindEurope says.
“Denmark has been making great progress on offshore wind so far. Many projects essential to delivering Denmark’s 2030 offshore wind target are already under planning or development. Pausing their established and effective “open door” approach to offshore wind development now will seriously undermine these targets. It will create uncertainty for more than 20 GW of wind farms currently under development”, said WindEurope’s CEO Giles Dickson.
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