Recently the government of Denmark committed to shifting half of its total energy consumption to renewable resources in a decade — and to go to 100% renewables by 2050.
On March 22 the Danish Ministry of Climate, Energy and Buildings released an agreement to meet half of that nation’s electricity need with wind power by 2020. Currently wind power can serve only a quarter of Denmark’s 1.5 million households.
This agreement also covers energy use for heating, industry, and transportation — not just residential electricity service. It implies that Denmark could cut energy consumption by 12% by 2020 (compared to 2006 usage).
- Biomass power generationwill help meet demand currently served by coal-fired power plants.
- Heating.35 million Danish Kroner (about €4.75 million) will be spent to promote renewable heating technologies, such geothermal energy and large heat pumps.
- On-site renewable generation(such as solar panels) will be deployed at more buildings.
- Better boilers.Existing oil-fired boilers will be phased out and new oil-fired boilers will be banned. By 2015, 42 million DKK (about €5.65 million) will be available to help convert existing oil and gas boilers to renewable technologies.
- Industrial facilitiesmust start using more renewable energy for production process. 30 million DKK (about €4 million) will be spent to promote industrial cogeneration.
- Energy efficiencywill play a key role in expanding the role of renewables. This will involve strategies for conducting and subsidizing renovations and new construction for all types of buildings.
- Smart grid deployment.The agreement acknowledges that achieving these large-scale goals requires an “intelligent energy system.” So Denmark will create a strategy that will mandate hourly recording for electricity meters.
- R&D efforts will support and test strategies to move Denmark to 100% renewable energy.
How will Denmark finance this considerable undertaking?
- Energy distribution tariffswill partially compensate energy companies’ efforts to improve energy efficiency.
- Public Service Obligation.This charge, which is included in the transmission and distribution cost that appears on a customer’s energy bill, will help fund expansion of the power grid to connect more renewable generation. The PSO normally increases as wholesale power prices decline.
- Auctions for subsidieswill allow winning companies to operate specified services to the extended grid for period of time.
- A new “security of supply” tax on space heating will fund some energy innovation projects such biogas, industrial cogeneration, and renewables for business and rental properties. It will also help compensate for reduced revenues due to lower fossil fuel consumption. This will help keep Denmark economically competitive.
These big changes are just part of how Denmark’s ambitious climate and energy targets are shifting fundamental conditions for its power generation, power grid, and the role of consumers in the energy market.