Denmark closes 'open door' offshore wind scheme after failure to reconcile policy with EU rules
Denmark closes 'open door' offshore wind scheme after failure to reconcile policy with EU rules | Windpower Monthly
The ‘open-door’ scheme was designed to give developers a route to Denmark’s offshore wind market without the need to compete in government-run tenders as is the case in other countries.
It gave developers the option to submit applications for offshore wind farms of their chosen capacity and in a specific area of their choosing – rather than in areas and of capacities specified by the national government.
The policy was suspended earlier this year over concerns about its compliance with state aid and competition rules in the EU, pending a review, in a move described as “absurd” by wind industry body WindEurope.
'Not possible' to reconcile policy
The country’s energy and climate minister Lars Aagaard confirmed the ministry had failed to reconcile the policy with EU regulations and was now seeking to “establish a new bidding zone which complies with EU rules”.
“We have tested all options for adjusting the open-door scheme so that it could contribute to securing more green electricity quickly and before 2030. Unfortunately, it has turned out not to be possible,” Aagaard said.
Denmark previously rejected dozens of projects applied for under the open door scheme earlier this year.
Remaining projects rejected
The ministry’s decision now means the remaining projects submitted under the scheme, which includes Ørsted and Copenhagen Infrastructure Partner (CIP)’s 1100MW Vikinge Banke, have now been rejected.
Denmark continues to target a 55% share of renewables in its entire energy mix by 2030.
The country currently has around 7.3GW of wind power capacity – of which 5GW is onshore – which generates around 50% of its electricity. The government recently announced its intention to free up onshore wind development in the country by making more land available in Danish municipalities and improving compensation for communities that agree to host new onshore wind and solar projects.
Denmark’s climate ministry said on Monday (18 December) that it was seeking the “establishment of a new bidding zone”, named DK3, that will enter into force in line with commissioning Bornholm Energy Island in the Danish North Sea, planned 2030.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.