Wind and Ocean 2008 Final

8/3/2019 Wind and Ocean 2008 Final

1/177

Energy from Wind and Ocean a European Market Study October 2008

_________________________________________________________________________________________

1

ENERGY FROM WIND AND OCEAN

A EUROPEAN MARKET STUDY

2008

Innovation Norway

Coordinated by:Pernille Holtedahl

Innovation Norway London


2/177


_________________________________________________________________________________________

2

FOREWORD

Innovation Norway is proud to present the second edition of our report on market conditions for wind-and ocean- based renewable energy in Europe. Like last years version, this report aims to give

Norwegian companies - offering products and services in the value chain of renewable energy - an

overview of market possibilities and limitations in the most relevant markets in Europe. We hope youwill find the report a helpful tool in choosing the right market for your company.

Again our colleagues in Innovation Norway's offices in Europe have invested a substantial amount oftime and effort in putting together this report -under the excellent supervision of Dr. Pernille Holtedahlin IN London, who has been in charge of receiving, adjusting and compiling the material.

Thank you!

Energetic regards,

Line Amlund Hagen Bergny Irene DahlSector responsible CoordinatorEnergy & Environment Wind&Ocean Multiclient programme


3/177


_________________________________________________________________________________________

3

Innovation Norway contributors to the report(by order of chapter)

Peder W. OlstadAdviser, Denmark

[email protected]

Tina NordlanderCountry manager, [email protected]

Madis RausiSenior Adviser, [email protected]

Iris StempfleConsultant, Germany:

[email protected]

Pernille HoltedahlSenior Advisor, [email protected]

Patrick DalyConsultant, [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


4/177


_________________________________________________________________________________________

4

Oleg KosineConsultant, [email protected]

Elisabeth S. MeyerCountry Manager, [email protected] Emanuela Teani,Consultant, Italy

Rodrigo Ballesteros-Cruz

Senior adviser, [email protected]

Rita AbecasisCommercial Manager, [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


5/177


_________________________________________________________________________________________

5

ACRONYMS

CCS - Carbon capture and storage

JI - Joint Implementation. One of the Flexible Mechanisms of the Kyoto Protocol, whereby

renewable energy projects can earn income from CO2 credits

NEF - New Energy Finance

PE - Private Equity

R&D - Research and Development

R,D & D Research, Demonstration and Development

RE - Renewable Energy

RES - Renewable Energy Sources

RES -E - Renewable Energy Sources - electricity

VC - Venture Capital


6/177


_________________________________________________________________________________________

6

Table of Contents

Table of Contents ....................................................................................................... 60. Summary............................................................................................................. 9

0.1 Wind Energy in the World........................................................................... 100.2 Wave and Tidal Power in the World ........................................................... 110.3 Renewable energy in Europe - Wind.......................................................... 110.4 Renewable energy in Europe - Wave and Tidal ......................................... 150.5 Country-by-Country Snapshots .................................................................. 17

1. Denmark............................................................................................................ 201.1 Energy supply and demand........................................................................ 201.2 Wind status and future potential.............................................................. 211.3 Wave status now and future potential ..................................................... 241.4 Price ........................................................................................................... 241.5 Relevant locations for offshore wind energy............................................... 25

1.6 Political climate for renewable energy from wind and ocean...................... 271.7 Incentives for developing / utilising new technology................................... 271.8 Key players ................................................................................................ 291.9 Market Entry............................................................................................... 29

2. Sweden ............................................................................................................. 312.1 Energy demand and supply........................................................................ 312.2 Wind status now and future potential ...................................................... 322.3 Wave and Tidal status now and future potential...................................... 342.4 Price ........................................................................................................... 352.5 Relevant locations for wind and ocean based renewable energy............... 362.6 Political climate for renewable energy from wind and ocean...................... 37

2.7 Incentives for developing / utilising new technology................................... 372.8 Key Players................................................................................................ 392.9 Market entry ............................................................................................... 41

3. Lithuania............................................................................................................ 423.1 Energy demand and supply........................................................................ 423.2 Wind status now and future potential ...................................................... 443.3 Price ........................................................................................................... 473.4 Relevant locations for wind-based renewable energy ................................ 483.5 Political climate for renewable energy from wind........................................ 503.6 Incentives for developing / utilising new technology................................... 503.7 Key Players................................................................................................ 51

3.8 Market Entry............................................................................................... 524. Latvia................................................................................................................. 54

4.1 Energy demand and supply........................................................................ 544.2 Wind - status now and future potential ...................................................... 554.3 Price.......................................................................................................... 584.4 Relevant locations for wind and ocean based renewable energy.............. 584.5 Political climate for renewable energy from wind and ocean...................... 614.6 Incentives for developing / utilising new technology................................... 614.7 Key Players ............................................................................................... 624.8 Market entry ............................................................................................... 63

5. Estonia .............................................................................................................. 655.1 Energy demand and supply........................................................................ 655.2 Wind status now and future potential ...................................................... 66


7/177


_________________________________________________________________________________________

7

5.3 Price ........................................................................................................... 675.4 Relevant locations for wind based renewable energy ................................ 685.5 Political climate for renewable energy from wind........................................ 715.6 Incentives for developing / utilising new technology................................... 725.7 Key players ................................................................................................ 73

5.8 Market entry ............................................................................................... 746. Netherlands ....................................................................................................... 756.1 Energy demand and supply........................................................................ 756.2 Wind status now and future potential energy .......................................... 766.3 Wave and Tidal status now and future potential...................................... 776.4 Price ........................................................................................................... 776.5 Relevant locations for wind energy............................................................. 776.6 Political climate for renewable energy from wind and ocean...................... 796.7 Incentives for developing / utilising new technology................................... 796.8 Key Players................................................................................................ 806.9 Market entry ............................................................................................... 81

7. Germany............................................................................................................ 837.1 Energy demand and supply........................................................................ 837.2 Wind status now and future potential ...................................................... 847.3 Wave and Tidal status now and future potential...................................... 887.4 Price ........................................................................................................... 897.5 Relevant locations for wind and ocean based renewable energy............... 907.6 Political climate for renewable energy from wind and ocean...................... 927.7 Incentives for developing/ utilising new technology.................................... 937.8 Key players ................................................................................................ 957.9 Market entry ............................................................................................... 96

8. United Kingdom................................................................................................. 978.1 Energy demand and supply........................................................................ 978.2 Wind status now and future potential ..................................................... 1008.3 Wave status now and future potential ..................................................... 1018.4 Tidal status now and future potential...................................................... 1018.5 Price .......................................................................................................... 1028.5 Relevant locations for wind and ocean based renewable energy..............1038.6 Political climate for renewable energy from wind and ocean.....................1058.7 Incentives for developing / utilising new technology.................................. 1068.8 Key Players............................................................................................... 1088.9 Market entry .............................................................................................. 110

9. Ireland .............................................................................................................. 1129.1 Energy Demand and Supply ..................................................................... 1129.2 Wind-Current Status and potential. ........................................................... 1149.3 Wave and TidalCurrent Status and potential ......................................... 1149.4 Price of Electricity Generated from renewable sources.............................1179.5 Relevant Locations for wind and ocean based renewable energy ............1179.6 Political climate for renewable energy from wind and ocean.....................1189.7 Incentives for developing /utilising new technology................................... 1189.8 Key Players............................................................................................... 1219.9 Market entry .............................................................................................. 123

10. France ............................................................................................................ 125

10.1 Energy demand and supply....................................................................... 12510.2 Wind status now and future potential ..................................................... 125


8/177


_________________________________________________________________________________________

8

10.3 Wave and Tidal status now and future potential..................................... 12810.4 Prices ........................................................................................................ 12910.5 Relevant locations for wind and ocean based renewable energy..............12910.6 Political climate for renewable energy from wind and ocean.....................13110.7 Incentives for developing / utilising new technology.................................. 131

10.8 Key Players............................................................................................... 13210.9 Market entry .............................................................................................. 13311. Italy................................................................................................................. 134

11.1 Energy demand and supply....................................................................... 13411.2 Wind: Status now and future potential....................................................... 13611.3 Wave and Tidal current status and potential .......................................... 13811.4 Price .......................................................................................................... 14011.5 Relevant Locations for Wind Projects........................................................ 14111.6 Political climate for wind energy ................................................................ 14311.7 Incentives for developing/utilising new technologies ................................. 14311.8 Key Players............................................................................................... 146

11.9 Market Entry.............................................................................................. 14712. Spain .............................................................................................................. 149

12.1 Energy demand and supply....................................................................... 14912.2 Wind status now and future potential ..................................................... 14912.3 Wave and Tidal status now and future potential..................................... 15312.5 Relevant locations for wind and ocean based renewable energy..............15612.6 Political climate for renewable energy from wind and ocean.....................15812.7 Incentives for developing / utilising new technology.................................. 15812.8 Key Players............................................................................................... 16012.9 Market entry .............................................................................................. 161

13. Portugal .......................................................................................................... 16313.1 Energy demand and supply....................................................................... 16313.2 Wind status now and future potential .................................................... 16513.3 Wave status now and future potential .................................................... 16713.4 Price .......................................................................................................... 16813.5 Relevant locations for wind and ocean based renewable energy..............16913.6 Political climate for renewable energy from wind and ocean.....................17313.7 Incentives for developing / utilising new technology.................................. 17313.8 Key Players............................................................................................... 17513.9 Market entry .............................................................................................. 176


9/177


_________________________________________________________________________________________

9

0. Summary

In spite of the ongoing financial crisis and a global economic slowdown, interest in renewable energyhas remained strong. In fact, Global Trends in Sustainable Energy Investment 2008 (UNEP) reportsthat $148.4 billion was invested in sustainable energy in 2007, up 60% from 2006. And although this

figure will be lower for 2008, due to the drying-up of credit, long-term prospects for the sector arestill relatively good.

For investments, forces are currently pulling in different directions: on the one hand, the credit crunchand financial turmoil are making capital more difficult to come by. On the other hand, high oil priceshave been making investments in renewables more attractive. And the underlying pressure towardsreducing CO2 emission continues to give momentum to the sector, irrespective of day-to-daydevelopments. Figure 1 shows how NEX the WilderHill NewEnergy Global Innovation Index. -closely follows the AMEX oil index, and how this last years drop follows a spectacularly positivedevelopment since 2002.

Figure 1: New energy investments

Source: New Energy Finance, Sep. 23 2008

New investments have varied greatly from one technology to another: According to New EnergyFinance (NEF)1, wind, solar and biofuels attracted 75% of VC/PE investments in Q2 2008. Wave and

tidal energy are at a very different stage of development, but are attracting seed- and other types ofcapital and will be a very interesting space to watch in the years to come.

Over the next few decades, European countries will need to substantially invest in renewable energyresources. This is due to several factors:

Efforts to combat climate change imply that some fossil-fired power plants are closed at theend of their cycled and replaced by cleaner sources

The EU RES directive dictates that member countries on average should have 20% of theirelectricity from renewable sources by 2020.

Concerns over energy security and dependence on other countries supply of fossil fuels is athird reason for promoting local, renewable sources

1 Source: Monthly Briefing, July 2008


10/177


_________________________________________________________________________________________

10

0.1 Wind Energy in the World

This is a study of market conditions for wind, wave and tidal energy in a subset of European countries.However, to place our countries in a larger context we will briefly look at some global trends for wind,

by far the most developed renewable source for power. Figure 2 and Figure 3 show global installedwind capacity and the largest wind market additions respectively. They show a distinct positive trend

that took off in the mid-1990s in Denmark and Germany, and that since continued in the new marketsof Spain, the US, and now China and India. The market for wind is highly concentrated: the top 10markets cover 85% of the total market for wind.

Figure 2: Installed wind power in the world

Source: GWEC

Figure 3: Top ten capacity installers (MW in 2007)

Source: GWEC


11/177


_________________________________________________________________________________________

11

0.2 Wave and Tidal Power in the World

Figure 4: Global potential for wave and tidal power 2

Source: IEA

Marine renewables differ radically from wind in that they are relatively new and immaturetechnologies. Where wind is near commercial, wave and tidal are at the testing stage. Thus, thechallenges and uncertainties facing this sub-industry are greater, but the opportunities and rewards are

potentially great. Figure 4 shows the potential for wave (in red) and tidal (in blue) power worldwide.

The global wave and tidal resources are theoretically immense. The International Energy Agency3estimates that tidal power could produce 200 TWh per year while wave power could contribute

between 8000 and 80,000 TWh per year. Estimates differ widely depending on what assumptions aremade. What is certain, however, is that it will take technological advancements, political commitmentand considerable and predictable financial support and in order for the potential to be unleashed. TheUK and Portugal are the most advanced of the European nations in the exploration of wave and tidalenergy.

0.3 Renewable energy in Europe - Wind

Europe has historically been the worlds strongest market for wind energy - Figure 5 shows windpower penetration in EU-27 countries. Deployment continues at a high pace but countries outsideEurope, such as China and the US, are the biggest growth markets.

2 Source: Renewable Energy R&D priorities, IEA 2006 /(Fornybar Energi 2007NVE, Enova, IN, NRC)3 Renewable Energy: R&D priorities, IEA 2006


12/177


_________________________________________________________________________________________

12

Figure 5: Wind Capacity per capita in 2007 (KW/1,000 pop.)

Source: EurObserER 2008

Figure 6, although being an aggregated map, gives a good overall idea of wind resources in Europe.Clearly, the North Sea surrounding Scandinavia, the UK and Ireland, the Atlantic Coast of thecontinent, parts of the Baltic Sea and areas inland adjacent to these offer the best conditions. Inaddition there are some pockets in the Mediterranean region.

Figure 6: Windy Europe


13/177


_________________________________________________________________________________________

13

However, sometimes support mechanisms can make up for a lack of natural resources. That is thecase for Italy, where much development is taking place, in spite of only moderate wind strengths.

Table 1 shows the total wind price and incentive levels per MWh in each of the countries studied inthis report4. It is clear that in this regard Italy, the UK and Portugal offer developers a good return ontheir investments with support to onshore wind in the UK at 66/MWh on top of the wholesale priceas an example.

Table 1: Wind tariff levels by country

Country / MWh totalincomeonshore wind

Incentive /MWh totalincomeoffshore wind

Incentive

Italy 197 138 217 152UK 120 66 153 99Germany 92* 150France 82 130

Portugal 75

Spain 73-74 35 < 170 < 87Netherlands 28-88

Latvia < 100Lithuania 87

Estonia** 74 (54)Denmark*** 77 37 i)Sweden 56 24 56 24

Ireland 57 140Compiled by Innovation Norway, based on the best available information at that moment (2008 or most recent figures). Dataon incentive levels were not always possible to obtain - depending on whether feed-in tariffs or a green certificates systemwere used. Tariff systems are not always directly comparable. Individual chapters should be consulted for fuller details oneach countrys system.*Tariff applies to first year, then decreasing 1% per year**Two systems exist, the 74 figure is the feed-in tariff***Assume wholesale power price in Denmark of 40/MWhi) Public tender: lowest price

Tariff structures, natural resources and government commitment are among the factors influencing theErnst &Young Renewable Attractiveness indices. Table 2 and Table 3 show how the countriesincluded in this report perform in the onshore and offshore wind sectors.

4 Data on incentive levels were not always possible to obtain - depending on whether feed-in tariffs or a greencertificates system were used.


14/177


_________________________________________________________________________________________

14

Table 2 Onshore Wind Attractiveness5

Country Onshore wind score

USA 77

India 76

China 72

Spain 70

Canada 67

Germany 67

UK 64

Italy 64

Greece 63

Portugal 63

France 60

Ireland 60

Sweden 52

Netherlands 51

Norway 50

Denmark 49

According to Ernst&Youngs ranking, the most attractive European onshore wind market is Spain,followed by Germany. The UK and Italy follow in third place.

The Baltic countries are not ranked by E&Y. However, in a similar ranking carried out by EmergingEnergy Research last year6, Estonia ranks as number 16, Lithuania 22 and Latvia 30 (bottom ofEuropean ranking), all well below the countries ranked in Table 2. As tariff levels have increased inthe Baltic states, the low ranking may have improved some since then.

5 Adapted from Ernst&Young Energy Onshore Wind Attractiveness Index, Q2 2008. A note on the E&Yindeces: Max. possible score is 100 and is a weighted average of various factors, such as planning and gridconnection issues, tariff incentives, resource quality, access to finance, etc. For more detail, seehttp://www.ey.com/GLOBAL/content.nsf/International/Oil_Gas_Renewable_Energy_Attractiveness_Indices.6http://www.emerging-energy.com/


15/177


_________________________________________________________________________________________

15

Table 3 Offshore Wind Attractiveness7

Country Offshore wind score

UK 71

Germany 70

Denmark 60

Ireland 59

China 59

Belgium 57

US 56

France 54

Sweden 52

Norway 50

Netherlands 50

Spain 50

Italy 46

Portugal 46

According to Table 3, the UK and Germany are the best places in Europe to build offshore windprojects. The two countries have large and unexploited wind resources, which coupled with a generoustariff system and strong offshore regimes make them likely to be at the forefront of offshoredevelopment in the years to come.

0.4 Renewable energy in Europe - Wave and Tidal

It was France that in the late 1960s installed the worlds first industrial-scale tidal barrage, but it is theUK that is currently at the forefront of developments. That is partly a result of a conscious decision bythe Government not to lose out the leadership in this sector to another country (reference is often made

to having missed out on wind to Denmark and Germany). The UKs access to resources, combinedwith the Governments commitment to renewables deployment and CO2 reduction, make it the leaderin the field of marine renewables. But this is a race that can equally well be won by other countrieswith a more dynamic can-do attitude, such as Ireland and Portugal. In fact, the first and so far onlycommercial offshore wave installation is installed off the coast of Portugal.

Figure 7 shows the distribution of wave and tidal projects by type of project: there is a lot of activity inthe wave and tidal current sectors, and part-scale testing projects dominate.

7Adapted from Ernst&Young Energy Offshore Wind Attractiveness Index, Q2 2008


16/177


_________________________________________________________________________________________

16

Figure 7 Distribution of wave projects by type

Source: IEA- Ocean Energy Systems, 2008

As for the geographical distribution of technology development, the UK dominates by far, followed bythe US see Figure 8

Figure 8: Geographical distribution of projects

Source: IEA- Ocean Energy Systems, 2008

Some countries have already determined a support level for wave and tidal energy: Italy has thehighest tariff, but since projects are virtually non-existent, it is not of much relevance. Portugalcurrently gives 250/MWh (for the first 5MW), with Ireland following closely after legislation was

passed this year that ensured 220/MWh. The UK is likely to decide in favour of giving wave andtidal projects 2 renewable obligation certificates (ROCs) which brings remuneration to approximately


17/177


_________________________________________________________________________________________

17

186/MWh, while Scotland has proposed 5 and 3 ROCs for wave and tidal respectively, which wouldmake it the highest-paying environment by far.

Table 4: Countries with special tariffs for wave and tidal energy

Country /MWh waveand tidal

Italy 340

Portugal 250UK 186 (235/340*)Ireland 220Denmark 80**France 72-107

*proposed Scotland**First 10 years, then 40 for following 10 years

0.5 Country-by-Country Snapshots

Almost all the countries surveyed in this study face at least three obstacles in the development ofrenewable energy. One is insufficient grid capacity, or coverage, to incorporate new sources of supply.The second are complicated and time-consuming permitting processes. Thirdly, projects faceincreasing capital costs and supply chain shortages of for instance turbines. The price of steel, energyand capital are contributing to this. Nevertheless, the medium- to long-term outlook for thedeployment of renewables remains positive, largely because of the need for new and cleaner sourcesof energy and the lack of alternatives. All the countries reviewed in this study offer potential for wind-and ocean-based technologies, in one way or another, as the remainder of this section highlights.

Denmark

Electricity production based on renewable sources is an important pillar of Danish energy supply, withwind power alone accounting for 20 %. The country is perceived as one of the pioneers of wind energydevelopments, although recently its leading position has been threatened by better opportunitieselsewhere. Onshore wind opportunities are limited and its offshore regime still falls short of that ofGermany and the UK. Wave energy is on the rise in Denmark, but is still a very small market.Independently of pricing mechanisms, technology providers and developers may find the Danishmarket interesting, as it can offer access to a complete value chain of sub-suppliers and professionalservices and research sites, based on decades of experience.

Estonia, Latvia and Lithuania

The three Baltic States, although different in some respects, have a lot in common when it comes tonatural resources and tariff levels, and as such are treated together in this summary. Compared to othercountries reviewed in this study, they score relatively low on wind attractiveness (see section 3),

although offshore offers some hope. They generally score low because of moderate-only resources andlow prices, although there is income potential from CO2 credits (JI). Furthermore, most of the plannedconcessions until 2010 have already been given (Lithuania and Estonia). Norwegian companies mayfind it easier to enter the Baltic markets than other European countries due to a certain geographickinship and the current involvement of Norwegian actors.


18/177


_________________________________________________________________________________________

18

France

Frances wind and ocean-based natural resource potential is very good and remains relativelyunexploited. The country has been a latecomer to the wind scene, but the country is now ranked 3rd ininstalled capacity in Europe, and offshore sites are being explored. The worlds oldest tidal power

plant is located in French waters it was built in 1966 and has a capacity of 240 MW, and three newtidal projects are now under consideration. The largest obstacle to entering the French market remainsthe established national champions and strong national interests, making partnering with a local

player a necessary strategy for foreign companies.

Germany

Germany is one of the world leaders in renewable energy development. Due to a generous supportscheme and a subsequent rapid development of onshore wind energy, suitable wind onshore sites forgreen-field development are nearly exhausted. However, offshore wind developments are taking offand the new tariff of 150/MWh is likely to trigger rapid growth. The market will see six 5 MWturbines commissioned in 2008 as part of the first phase of Alpha Ventus, the markets firstcommercial offshore wind plant and by year-end 2020, the total installed base in German waters isexpected to be over 6 GW. Germany is also important as the home to an important manufacturing

sector: German wind turbine producers control 22% of the global market

8

.Concerning wave and tidal,Germany cannot offer profitable sites but can contribute with suppliers and sub-contractors.

Ireland

Ireland is a small open economy with a largely underdeveloped renewable energy sector. Both onshoreand offshore wind projects are in the pipeline for approval and Ireland is viewed by many developersas a promising new market. Wind and wave resources are among the best in Europe, and pricesupports have been significantly increased in the past year. Testing opportunities for marine devicesexist and earlier this year a tidal device was connected to the grid in Strangford Lough.

Italy

The Italian potential for electricity from wind energy is estimated to 10 GW, which equals 1/5 of the

total electrical demand. The resources are concentrated in the Southern part of the country and only afraction of the potential has been developed. In 2007, Italys installed capacity increased by 30% to2,700 MW, and the prospects for 2008 are even higher. These positive developments are largely due toa generous tariff scheme and take place in spite of cumbersome licensing procedures and localopposition to projects in some regions. Wave and tidal energy are deemed not to have a great potentialin Italian Waters.

Netherlands

The Dutch market for wind is relatively small, and given the (small) countrys competing demands onland, onshore developments are limited. Offshore potential is promising, but hopes for this sector weredashed this year as the Government failed to increase the tariff. Lastly, some tidal and wave deviceshave been tested in Dutch waters, but the activity level in this sector is currently low. The Government

has traditionally been very supportive of renewable energy, but unless the support regime changes,project developers are likely to focus on other markets.

Portugal

Portugal has experienced a great expansion in wind energy over the past five years, and is now the 4thlargest wind market in Europe on a per-capita basis. Offshore wind remains unexploited, although the

potential is relatively good, as is the potential for wave power. In fact, the worlds only existingcommercial wave farm is situated in Portuguese waters, and the tariff level for this technology is thehighest in Europe. In summary, the Portuguese market is characterised by very good resource

potential, ambitious Government goals for the sector, and a relatively generous support system.

8 GWEC, Sep.2008


19/177


_________________________________________________________________________________________

19

Spain

Spain is one of the European Champions of wind energy and had the strongest European growthmarket in 2007. It is ranked as the most attractive onshore wind market in Europe by Ernst&Young.This qualification is the result of good wind resources, but above all a very positive political and

business climate that has endorsed a massive deployment of wind farms throughout the country. Thisgrowth has led to important industrial developments as demonstrated by the fact that the two largestwind farm operators in the world are Spanish (Iberdrola and Acciona). There has been less interest inoffshore development, partly because of legal constraints but these have now been removed.Similarly, wave and tidal power remain largely unexploited although test centres are being built on thenorthern coast.

Sweden

Interest in wind projects in Sweden is on the increase - in fact, the Government in 2008 proposed anew planning target of 30 TWh wind power by 2020, of which 10 TWh are to be offshore. However,the target is likely to remain a target only unless incentives are improved, as the tariff level is lowcompared to many other European countries. In the long term, both wave and offshore wind hold

potential and a large research programme has been set up by the Swedish Energy Agency to support

technical developments. Statkrafts increasing involvement in the market combined withcultural/linguistic advantages could make Sweden an interesting market for Norwegian technologydevelopers.

UK

The United Kingdom has among the best wind and marine resources in the world. In addition, it has astable and positive regulatory environment, generous tariff structure and several large research

programmes for new technologies. Another important driver of UK renewable energy is the concernover energy security and the need for new production capacity with low CO2 emissions. The UKoffshore wind market and wave and tidal developments in Scotland make this one of the most relevantand important markets for Norwegian players.


20/177


_________________________________________________________________________________________

20

1. Denmark

1.1 Energy supply and demand

Over the past decade, Denmark has changed from a net energy importer to a net energy exporter: thecountry's total energy production now exceeds its consumption by more than 30%. In 2005, Denmark

was the only EU Member State self-sufficient in energy. This is the result of thirty years of focusedenergy policy, implemented after the 1973 oil crisis. The change has primarily been caused by theexploitation of oil and gas deposits in the North Sea coastal areas.

Energy production based on renewable energy sources is an important pillar in the Danish energysupply and a central element in fulfilling the government's long-term vision of making Denmarkcompletely independent of fossil fuels. The share of renewable energy in overall energy consumptionhas sharply increased since 1980. In 1980 the share of renewable energy was 3%, in 1990 it was 6%and preliminary figures for 2007 show a 16% share.9 As shown in Figure 9 the contribution ofrenewable energy to overall energy consumption comprises several forms of renewable energy, and towhich various forms of biomass constitute the largest share.

Figure 9: Contribution of renewable energy to overall energy consumption

Renewable energy accounts for about 28% of domestic electricity generated. Renewable energy inDenmark includes wind, waste, biomass, biogas, heat pumps, solar and geothermal energy10. In 2007,wind-power production accounted for 19.7% of domestic electricity supply against 16.8% the previous

year; this is due to better wind conditions. Figure 10 illustrates the electricity production by fuels andFigure 3 illustrates wind power capacity and percentage share of electricity supply from 1980-2006.

9http://www.cop15.dk/en/menu/About-Denmark/The-Danish-Example/

10http://www.ambottawa.um.dk/NR/rdonlyres/8A89D4E5-1E40-4042-BA20-1B983B0EB40B/0/renewable.pdf


21/177


_________________________________________________________________________________________

21

Figure 10: Electricity production by fuels

Figure 11: Wind capacity and share of electricity supply11

1.2 Wind status and future potential

Denmark has a long tradition of exploiting wind power and has been at the forefront of wind energy

development. With over 20,000 people employed in the wind sector, a combined turnover of 3 billionfor the manufactures, and companies occupying more than 40% of the world market for wind turbines,Denmark is perceived as the worlds leading wind energy cluster and one of the global knowledgecentres for wind-technology development. Thus, there is access to a complete value chain of sub-suppliers and professional services. Most of the turbines manufactured in Denmark are exported.

The total installed power and the number of turbines in Denmark had a continuous increase until 2002.In the period from 2001 to 2003 a replacement agreement was carried out, whereby smaller and badly

placed turbines were replaced with bigger turbines. 1,300 old turbines with a capacity of about 100MW were replaced by 300 new turbines with a capacity of 300 MW. In 2004 a new replacementagreement running to 2009 was introduced. The agreement involves replacing old 175 MW turbineswith 350 MW turbines. However, the agreement has until now had a limited effect. In 2006, only 8

11 Danish Energy Authority


22/177


_________________________________________________________________________________________

22

MW of net new capacities was installed. Figure 4 shows the number of windturbines and the windcapacity in Denmark. By the end of January 2007 there was 5.267 turbines installed in Denmark witha total power of 3.135 MW.

Figure 12: Wind power installed capacity

Wind-power production in Denmark had a steady increase until 2005. In 2006, the output from windinstallations decreased, due to wind conditions. Figures from 2007 show a significantly better yearforwind than 2006. In 2007, wind turbines produced 7,173 GWh or 17.4 per cent more than in 2006.12

The majority of the wind farms onshore are located in Jutland. This is mainly due to the areasexcellent wind resources.

Figure 13: Location of onshore wind farms and wind farm density, Denmark

12http://www.energistyrelsen.dk/sw67789.asp


23/177


_________________________________________________________________________________________

23

Offshore Wind

Looking at the offshore market13, Denmark is a major player as well. Of the total capacity installedoffshore globally, Denmark hosts roughly half, but has recently been overtaken by the UK. The firstoffshore wind farm in the world was constructed (Vindeby) in Denmark 1991. Today 215 turbines are

placed offshore. This is equal to approximately 4 % of all installed turbines in Denmark and 13 % oftotal wind power production.14 Permits for the establishment of new offshore wind farms are subject todecision by the Minister of Transport and Energy after tendering or application 15

Figure 14 outlines current offshore wind farms in Denmark along with information concerning theseparate plants including wind turbines, the nominal capacity and the production year. Farms 9 and 10respectively are two new offshore farms, each of 200 MW, which recently have been approved: TheHorns Rev II and Rdsand II. The Horns Rev II will have 95 wind turbines; Rdsand II will have 92wind turbines. These farms are expected to be connected to the grid in 2009-2010. Additionally andnot shown in figure 6, the Danish Parliament approved in August 2008 the construction of Denmarkslargest offshore wind turbine park, which will be placed in Djursland-Anholt in the Kattegat strait ofthe North Sea and with a capacity of 400 MW. It is expected to be in operation in 2012.

Figure 14: Offshore Windfarms in Denmark

13 Note the difference between shallow water offshore (10-40 m.) and deep water offshore. This paragraph refers

to developments in shallow waters.14http://www.windpower.org/composite-1171.htm

15http://www.ens.dk/sw23781.asp


24/177


_________________________________________________________________________________________

24

The Danish Energy Authority has prepared projections to 2025 in the report Future Offshore WindPower Sites 2025, and gives an estimate of the offshore potential of some 4,600 MW. This capacitycould generate approximately 18 TWh, which correspond to approximately 60 % of domesticelectricity consumption or just over 8 % of total energy consumption in 2025.

Figure 7 shows high and low scenarios for possible wind-power development in Denmark. Whenoffshore turbines at Horns Rev II and Rdsand II are installed in 2009-10, it is expected that wind

power will account for 25 % of total electricity consumption. The bars show possible wind powerdevelopments and the lines show possible electricity consumption.

1.3 Wave status now and future potential

Wave energy is on the rise in Denmark, but is still a very small market, compared to the oil & gas andoffshore wind markets. According to the Danish Energy Authority, wave power is perceived as a

promising technology, but for the time being not commercially competitive. However, Denmarkstrives to develop a position in wave energy similar to the world-leading position it has in windenergy. The annual wave energy potential in Danish waters is estimated to approximately 30 TWh. 16Of the two categories of wave plants onshore and offshore the relatively flat coast in Denmarkmeans that only offshore installations are interesting.

Denmark has been conducting research on wave energy since the 70s and there was a large state-supported research programme carried out from 1997 2002. This spawned about 50 ideas for newdevices, making Denmark the most active region within development of wave energy, and stimulatedentrepreneurial developments in the years to follow. Several promising new devices developed inDenmark are now aiming for commercialization, among others Wave Starand Wave Dragon.

Wave Staris designed to cut into the wave and exploit the entire length of waves. A test plant in scale1:10 is today placed in Nissum Bedding. It is expected is to be installed at Horns Rev in scale 1:2 at awater depth of 9 meters and grid connected in 2010. This model is estimated to have an output of 500KW. In July 2008, Wave Star Energy, the company that has developed Wave Star, was granted DKK20 million (approximately 2.7 million) through the public EUPD programme (Programme forEnergy, technology Development and Demonstration). www.wavestarenergy.com/

Wave Dragon is an offshore floating device that captures ocean waves in an elevated reservoir, thenconverts that reservoir's stored energy into electricity by running the water through a hydroelectric

turbine as it is returned to the ocean. According to the company Wave Dragon, British and Portugueseinvestors are willing to invest approximately 150m in the companys energy device over a two- tothree years period. Wave Dragon intents to deploy its 7MW devise, which will be the world largestfull-scale plant, off Welsh waters in August 2009. If this is successful, 10 plants are planned built andestablished in Portugal. For more information see: http://www.wavedragon.net

1.4 Price

The Danish electricity market was liberalised in accordance with a decision of the Parliament at theend of the 1990s. Production and trading in electricity is thus subject to competition. The electricity

16

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V4S-4MJJC29-1&_user=634332&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_userid=634332&md5=dfd42365a64a50685bd8568646c994a0
http://www.wavestarenergy.com/http://www.wavedragon.net/http://www.wavedragon.net/http://www.wavestarenergy.com/


25/177


_________________________________________________________________________________________

25

grid and its operation are subject to public price regulation, and all users of the system may make useof this infrastructure. Electricity from Danish electricity producers is sold on market conditions eithervia bilateral agreements, via Nord Pool (the Nordic power exchange) or other power exchanges. Themarket price for electricity in Denmark is defined as the spot market price at Nord Pool in the areawhere the generator is connected to the grid.

As of February 2008, new wind turbines on land will in addition to the market price, get anenvironmental fixed premium of 0.25 DKK/kWh (0.034 EUR) for 22,000 peak load hours + 0.023DKK/kWh (0.003 EUR) in balancing costs, bringing the total subsidy to approximately c3.7/kWh 17

This is an increase from the foregoing years. The new subsidy is valid for projects built in 2008-11.

Note that subsidies for wind depend on when the turbine is connected to the grid and its age. 18 Detailsof the subsidy rules, for existing plants and wind mills, accordingly to grid connection date and age,can be found at http://www.ens.dk/sw23781.asp

As for offshore wind, Denmark operates a system based on a public tender where the feed-in price is part of the tendering process. Thus the projects are subsidised according to separate rules and the

subsidy depends on what was requested by the interested parties.

19

On the basis of an assessment ofapplicants financial, legal and technical qualifications, a number of pre-qualified applicants are askedto submit tenders to the Danish Energy Authority. The principal criterion determining who goes aheadin the tendering is the level of subsidy requested by the applicant. 20

For wave power, new plants are eligible for a subsidy that together with the market price will ensure atariff of 60 re/kWh (0.08 EUR) for 10 years and 40 re/kWh (0.054 EUR) for the following 10 years.

1.5 Relevant locations for offshore wind energy

The Danish government intends for new wind energy capacity, both onshore and offshore, to continueto be established in an economically viable way. However, since most of the onshore potential has

been exploited, future large-scale additions are likely to be offshore.

In the report Future Offshore Wind Power Sites 2025, which was published in April 2007, theDanish Energy Authority charts a number of possible offshore areas where offshore wind power could

be build to an overall capacity of some 4,600 MW. The basis for selecting these areas has changedsignificantly during the last decade due to a number of new nature protected areas in Danish waters,the rise in shipping traffic and the fact that todays turbines are significantly higher and have a greatervisual impact. The report examined in detail 23 specific possible sites each of 44 square kilometres toan overall area of 1012 square kilometres divided between 7 offshore areas. It calls for a strategic

planning at sea and that any forthcoming expansion of offshore wind farm should take place in aprioritized order. Figure 15 shows proposed offshore sites in pink.

Figure 15: Possible offshore sites for wind power in Denmark.21

17http://www.ens.dk/graphics/UK_Energy_Policy/Danish_energy_policy/Political_agreements/21Feb2008%20Agreement/Agreement-21022008-final%28ENG%29.pdf18http://www.ens.dk/sw23781.asp19

http://www.ens.dk/sw23777.asp20http://www.folketinget.dk/samling/20051/almdel/EPU/Bilag/37/213664.PDF

21 Future Offshore Wind Power Sites - 2025
http://www.ens.dk/sw23781.asphttp://www.ens.dk/sw23781.asp


26/177


_________________________________________________________________________________________

26

As shown in Table 5, it is recommended that the first farms should be constructed at Djursland-Anholtin the Kattegat and Horns Rev in the North Sea. As written above, the wind farm at Djursland-Anholtwas approved in Parlament in August 2008. The prioritisation of Horns Rev depends on the closerevaluation of the nature conservation interests. From an economic standpoint, an expansion inJammerbugten off the coast at Ringkbing in the North Sea would be almost identical. Finally, thereport recommends sites at Store Middelgrund in the Kattegat and Kriegers Flak and Rnne Banke inthe Baltic Sea.

Assuming complete construction of all the recommended farms, the analysis shows an overallinvestment level for the areas of between 2.15 and 3 million per installed MW including gridconnection and grid reinforcement onshore, of which investment in the actual installations amounts to

1.7-2.4 million per MW for water depths between 10 and 40 metres.

Table 5: List of potential offshore sites


27/177


_________________________________________________________________________________________

27

1.6 Political climate for renewable energy from wind and ocean

Since the first oil crisis in 1973, energy policy has occupied a relatively significant position in the political debate in Denmark. With international sustainability targets, such as the reduction of CO2emissions, this has further been emphasized. The tools of Denmarks energy policy have includedsubsidies for energy savings, green energy taxes, liberalization of the electricity and gas markets, and

introduction of CO2 quotas.Over the last 25 years, Denmarks economy has grown by around 75% - with nearly stable energyconsumption. Experience from Denmark shows that with a persistent and active energy policy focusedon increasing energy efficiency it is possible to maintain high economic growth while at the same timereducing the dependency on fossil fuels and safeguarding the environment. At the same time, thecomposition of the energy consumption has changed significantly as a result of a political effort to

promote the use of renewable energy.

The Government expects significant increases in the use of renewable energy in the years to come -primarily from offshore wind turbines in addition to the replacement of the onshore wind turbines andpotentially wave energy. However, there is some local opposition, in particular related to the onshore

replacement agreement and the location of offshore wind farms.

In January 2007, the Danish Government presented a new long-term strategy entitled A visionaryDanish energy policy 2025 - with the overall vision that Denmark in the long term should becomeentirely independent of fossil fuels (coal, oil and natural gas) and replace this by the use of renewableenergy. Additionally, The Government will counteract rises in the overall energy consumption; whichhas been kept almost static since 1972. Targets for 2025 outlined in the report include doubling theshare of renewable energy in the energy mix, so that more than half of the electricity consumed will besupplied by renewable energy. Today renewable energy in total covers over 28 % of the electricitygenerated; witch is the highest contribution to electricity from new renewable in EU.

In February 2008, the Danish government and a large majority in Parliament entered into an

agreement on Danish energy policy for the years 2008-11. The agreement establishes a number ofinitiatives aimed to lower Denmark's dependence on fossil fuels (coal, oil and gas) through energysavings and renewable energy targets, with the objective of 20% gross energy consumption fromrenewable energy sources by 201122. The governments goal is that renewable energy shouldcomprise at least 30% of gross energy consumption in 2025, i.e., twice as much as today.

1.7 Incentives for developing / utilising new technology

In order to meet its RE targets outlined in A visionary Danish energy policy, the Government will provide incentives for further research. In January 2008, the Energy Research Programme wasreplaced by EUDP (Programme for Energy, Technology Development and Demonstration).23 The new

programme will focus on demonstrating energy technology on a larger scale and the government has

decided to double public funding for research, development and demonstration of energy technologyso that from 2010 an annual total of DKK 1 bn. will be earmarked for this purpose. 24 EUDP grantsfunding twice a year and in 2008 approximately DKK 140 million will be granted. 25 Foreigncompanies located in Denmark are eligible for financial support through EUDP.26 Additionally,

22 The full agreement can be found at www.ens.dk A fact sheet can be found athttp://ens.dk/graphics/UK_Energy_Policy/Danish_energy_policy/Political_agreements/21Feb2008%20Agreement/Factsheet_RE_UK_21022008.pdf23 For more information see http://www.ens.dk/sw64890.asp24http://www2.mst.dk/common/Udgivramme/Frame.asp?pg=http://www2.mst.dk/Udgiv/publikationer/2007/978-87-7052-490-2/html/sum.htm and http://www.ens.dk/sw64890.asp25

http://www.ens.dk/graphics/Energipolitik/forskning_udvikling/tilskud/EFP/Skemaer_og_regler/2008/08%2006%2027%20PM%20tilsagn.doc26 For additional information and guidance on how to apply see: http://www.ens.dk/sw43941.asp


28/177


_________________________________________________________________________________________

28

national research councils and the newly established High Technology Foundation(http://www.hoejteknologifonden.dk) may also provide funds for energy research.

The development of wind power in Denmark has been characterized by a close collaboration betweenpublicly financed research and industry in key areas such as research and development, certification,testing, and the preparation of standards. In line with this, there is a long tradition in the wind energyfield for public-private sector cooperation for a partnership to build on, for example the DanishResearch Consortium for Wind Energy.27

Wind Turbine Certification Scheme

Wind turbines installed in Denmark must fulfil the Danish Wind Turbine Certification Scheme witchis administrated by the Danish Energy Authority. All documents related to the certification schemecan be found on www.wt-certification.dk

Test Facilities

Located in Hurup Thy, Nordic Folkecenter for Renewable Energy, runs the only test station for waveenergy in Denmark. The test station can be rented by inventors, who wish to test their wave powermodels. http://www.folkecenter.dk/en/

Capital

Financial institutions compete efficiently on the wind energy market, and different financial packageshave been developed. However, regarding the development of wave projects, the main obstacle is

private risk capital, especially for demonstration projects.

Support Guidance, Consulting services

The Danish Energy Authority is an Authority under the Ministry of Transport and Energy. The DanishEnergy Authority carries out tasks, nationally and internationally, in relation to the production, supplyand consumption of energy. This means that the Authority is responsible for the whole chain of taskslinked to the production of energy and its transportation through pipelines to the stage where oil,natural gas, heat, electricity etc. are utilised for energy services by the consumer. www.ens.dk

Energinet.dkis the owner of the overall infrastructure, maintains the security of supply and ensures thesmooth operation of the market for electricity and gas in Denmark. Energinet.dk owns the gastransmission grid and the 400 kV electricity transmission grids and is a co-owner of the internationalconnections between Denmark and the Nordic countries and Germany. Furthermore, the company hasat its disposal the 132 kV and 150 kV electricity grids and has access to natural gas storage facilities.

The Danish Council for Strategic Research funds research within politically prioritised research areas.The Council helps strengthen the interaction between public and private-sector research. TheProgramme Commission on Sustainable Energy and Environment is part of the Danish Council forStrategic Research, responsible for allocating funding to: systematised renewable energy, energy andenvironment and environmental technology.28

Ris National Laboratory and its Wind Energy Department is the largest researchinstitution for windenergy in Denmark. Ris has formed a consortium with the Technical University of Denmark (DTU),

27 http://www.risoe.dk/rispubl/art/2007_183_paper.pdf28

For more information see: http://fi.dk/site/english/councils-commissions-committees/the-danish-council-for-

strategic-research
http://www.hoejteknologifonden.dk/http://www.wt-certification.dk/http://www.folkecenter.dk/en/http://www.ens.dk/http://www.ens.dk/http://www.folkecenter.dk/en/http://www.wt-certification.dk/http://www.hoejteknologifonden.dk/


29/177


_________________________________________________________________________________________

29

Aalborg University (AAU), and the Danish Hydraulic Institute (DHI). The cross-disciplinaryconsortium is intended to improve the network and coordination among research, education, andindustry. www.risoe.dk

Invest in Denmark assists foreign companies who consider establishing business activities inDenmark. Renewable energy is a key area. Their services are free of charge. www.investindk.com

Danish Wind Turbine Owners Association represents the owners www.dkvind.dk

Danish Wind Industry Association represents the manufactures www.windpower.org

Blgekraftforeningen An association for promoting Danish wave energy projects.www.waveenergy.dk

1.8 Key players

Manufactures

The major Denmark-based manufacturers of large commercial wind turbines are Siemens Wind PowerAS and Vestas Wind Systems AS. The sales by these two wind turbine manufactures were 2,290 MW in2004 and with a world marked share of more than 40 per cent. Gaia Wind Energy AS is a companythat produces wind turbines for households.

The most important suppliers of major components for wind turbines are LM Glasfiber A/S, a leading producer of composite blades for wind turbines; Mita Teknik A/S, which produces controller andcommunication systems; and Svendborg Brakes A/S, a leading vendor of mechanical braking systems.

Utilities Dong Energy is a leading Nordic utility company headquartered in Denmark. The company is theresult of the merger between DONG, Elsam, ENERGI E2, Frederiksberg Forsyning and the electricaldepartment of Kbenhavns Energi. DONG was the 12th largest wind operator in the world in 2006.

1.9 Market Entry

As outlined in this study, Denmark is at the forefront of the development of renewable energyresources, and every year renewable energy accounts for an increasing part of domestic energyconsumption. The new initiatives aiming to fulfil the Energy Strategy 2025 will strengthen renewableenergy R, D&D in Denmark. It is expected that focus will be on increased demonstration of newtechnologies. Development of future offshore wind will depend strongly on political decisions, mainly

regarding location and size of the wind farms.

The Danish renewable market strengths can be summarized as follows:

Danish companies possess 40 % of the worlds wind power market with a combined turnoverof 3 bn. for manufactures.

Renewable energy is a top priority for the government, who has, in order to achieve itsambitious goals, outlined a favourable political framework.

Extraordinarily strong acceptance and motivation to buy renewable energy in the Danishsociety.

Access to a complete value chain of sub-suppliers and professional services as well as highlyqualified employees and research sites.

Strong research activities including public-private cooperation.
http://www.risoe.dk/http://www.investindk.com/http://www.dkvind.dk/http://www.windpower.org/http://www.waveenergy.dk/http://www.waveenergy.dk/http://www.windpower.org/http://www.dkvind.dk/http://www.investindk.com/http://www.risoe.dk/


30/177


_________________________________________________________________________________________

30

The most significant weakness of the Danish RE market at present is the low tariff paid to producers,in particular in wave energy.

For Norwegian companies interested in the Danish wind power market, the best initial approach wouldbe a market visit. It is important to meet relevant key actors in Denmark, private companies as well asscience parks, authorities, etc. As Denmark is one of the market wind industry leader, the IN office inCopenhagen can organise programs for exchange of know-how between the two countries. We believethat there might be a potential market for Norwegian sub-contractors in Denmark.

In December 2009, the Danish government will host the 15th UN Climate Summit (COP15) with thegoal of achieving a post-Kyoto agreement. As a frontrunner in renewable energy and effective energy

production, and a host to a milestone Summit, all eyes will be turned on the Nordic countries.

During the period up to the UN Climate Summit, there will be several profiling possibilities forNorwegian companies in Copenhagen see the list in Table 6

Table 6: List of conferences and exhibitions in Denmark

Date: Arrangement More info25. 26.11.2008

Nordic Climate Solutions, Bella Center www.nordicclimatesolutions.com

24.05 26.05.2009

World Business Summit on Climate Change www.copenhagenclimatecouncil.com

September2009

Nordic Climate Solutions, Bella Center www.nordicclimatesolutions.com

30.11 11.12.2009

COP15 Kbenhavn www.cop15.dk

05. 06.12.2009

Bright Green, Dansk Industri, Parken www.di.dk

For further information:

The Danish Wind Industry Association www.windpower.org

Danish Energy Authority www.ens.dk

Energy Policy Statement 2006

Offshore Center Denmark, http://www.offshorecenter.dk/

Energy Center Denmark, Fakta om Blgeenergi

http://www.windpower.org/composite-1461.htm

http://www.offshorecenter.dk/underside.asp?h_id=11&u_id=33

http://www.folkecenter.net/gb/

http://www.waveenergy.dk/
http://www.nordicclimatesolutions.com/http://www.copenhagenclimatecouncil.com/http://www.nordicclimatesolutions.com/http://www.cop15.dk/http://www.di.dk/http://www.windpower.org/http://www.ens.dk/http://www.offshorecenter.dk/http://www.windpower.org/composite-1461.htmhttp://www.offshorecenter.dk/underside.asp?h_id=11&u_id=33http://www.folkecenter.net/gb/http://www.waveenergy.dk/http://www.waveenergy.dk/http://www.folkecenter.net/gb/http://www.offshorecenter.dk/underside.asp?h_id=11&u_id=33http://www.windpower.org/composite-1461.htmhttp://www.offshorecenter.dk/http://www.ens.dk/http://www.windpower.org/http://www.di.dk/http://www.cop15.dk/http://www.nordicclimatesolutions.com/http://www.copenhagenclimatecouncil.com/http://www.nordicclimatesolutions.com/


31/177


_________________________________________________________________________________________

31

2. Sweden

2.1 Energy demand and supply

Sweden has set an objective of increasing the production of electricity from renewable energy sources

by 17 TWh by 2016 relative to the production level in 2002. This objective is part of the countrysoverall objective of moving Sweden towards a more ecologically sustainable energy system.

However a new call from the EU for member states to increase their proportion of renewable energyhas given Sweden a new requirement of 49% renewable energy consumption by 2020. Sweden isalready one of the EU's best performers in renewable energy, due to its hydropower assets. But nowthere is a need to increase activities further in order to realise these ambitious requirements.

Figure 16 Total Energy supply in Sweden, 19702007, excluding net electricity export 29.

0

100

200

300

400

500

600

700

1970 1975 1980 1985 1990 1995 2000 2005

Nuclear power2

Hydro power, gross1

Heat pumps in district heating

Biofuels, peat

Coal and coke

Natural gas, gasworks gas

Crude oil and oil products

Note: 1) Includes wind power up to and including 19962) Calculated in accordance with the UN/ECE method for energy supply from nuclear power.

Total electricity use in Sweden in 200630 was 146,1 TWh, which, given Swedens small population ishigh in an international comparison (a per capita usage of almost 17 000 kWh).

Nuclear power supplied 46% of the countrys electricity; hydro power supplied about 44% and theremaining 10 % was made up of fossil-fuelled and biofuel-based production and wind power.

29Energy Agency: Energy in Sweden 2006

30Energy Agency: Energy in Sweden 2007 :http://www.swedishenergyagency.se/web/biblshop_eng.nsf/frameset.main?ReadForm&Doc=


32/177


_________________________________________________________________________________________

32

Figure 17: Supply of electricity from renewable sources31

2003 2004 2005 2006 2007ApprovedPlants[pieces]1)

1 597 1 759 1 848 1 909 2 088

Hydro Power 966 1 040 1 060 1 075 1 094Wind Power 543 613 668 706 8593)Biofuels 87 105 118 125 131Solar Power 1 1 2 3 4

Installedeffekt [MW]2)

4 049 4 161 4 471 4 765 5 066

Hydro Power 491 504 517 540 558Wind Power 401 472 530 583 831Biofuels 3 157 3 185 3 424 3 643 3 676Solar Power 0,008 0,008 0,011 0,036 0,043

1) Number of plants that has received more than 0 certificate during respective year2) Based on the plants that has received more than 0 certificate3) The total 859 plants contains 1003 unitsSource: Svenska Kraftnts certificate system, Cesar

According to production statistics, the total electricity production from wind power 2007 was1 432 GWh32.

2.2 Wind status now and future potential

StatusWind power production is steadily increasing its proportion in the energy mix and will have to play a

key role if Sweden is to increase its proportion of renewable electricity. In 2005 the production wasless than 1 %, or 988 GWh. Statistics of 2008 shows that 999 GWh already was produced during thefirst half year and the forecast indicates a production around 2 TWh for 2008. Annual reports on wind

power plants in operation as well as monthly reports with operational statistics for registered plants areavailable at www.vindenergi.org.

The Swedish Energy Agency has during spring 2008 proposed a new planning target of 30 TWh windpower in Sweden by 2020. Of this, 20 TWh relates to onshore wind power. Half should be planned for2010 at the latest, and the remainder for 2012. When it comes to offshore wind power, approximately10 TWh is already planned. The Swedish parliament is due to take decision to this proposal in late2008.

The Swedish Energy Agency has transformed the national targets into regional targets, taking windenergy resources and regional electricity consumption into account. The purpose of the target is toclarify wind power installations on regional and local planning levels and to reduce planning and

permitting obstacles.

However the current support system is not likely to be good enough to realise the proposed targets. Infact, it is estimated that wind energy will contribute approximately 7 to 8 TWh in 2015. Without achange in quotas in the electricity certificate system, further expansion by 2020 will be marginal.

PotentialA research study on the physical potential for wind power in Sweden33 was released in 2007. The

31Energy Agency: Energy in Sweden 2006

32Vindforsk, Annual report 2007: http://www.vindenergi.org/driftuppfolj.htm
http://www.vindenergi.org/http://www.vindenergi.org/


33/177


_________________________________________________________________________________________

33

results, based on a GIS-analysis, show that the total technical potential for wind power is 510 TWh peryear on land and 46 TWh per year at sea. The calculated technical potential is, however, theoreticalsince the number of MW per square kilometre may be considered to be relatively high. This case stillshows a quite large available potential, considerably larger than what can be built by 2020. Much ofthe expected growth in wind energy deployment will be in forest areas and in the northern parts ofSweden in the low-fjlls The interest in those regions is caused by the rather good wind potentialestimated by the Swedish wind mapping.

It is interesting to note that the technical potential for wind power in forest areas have resulted in anumber of new joint ventures. Best known perhaps is the one between Statkraft and the forestcompany SCA where the goal is to exploit wind power in northern Sweden

Planned projectsHistorically, the wind business has been dominated by small companies and co-operative ownershiparrangements. This is now rapidly changing as investments are increasing, giving more space to morediverse stakeholders such as utilities, real estate companies, forest owners etc.

The average size of wind plants in 2007 was around 2-3 MW

34

but the trend in the market is towardinvestment in bigger plants and there are a number of big projects available in late planning stages

Some interesting projects to highlight are:

Stora Middelgrund: Universal Wind Offshore http://www.universalwindoffshore.se/The Swedish government has in June 2008 approved a 860 MW wind farm off the country's south-western coast, but has attached a number of environmental conditions that have to be fulfilled beforeconstruction can go ahead. The construction amounts 108 wind turbines for an area covering 60 squarekilometres. The plant will be able to produce 3 TWh per year, doubling the country's current wind

power output.

Kriegers Flak: Vattenfall http://www.vattenfall.se/kriegersflak, has applied for a permit to build oneof Northern Europes largest offshore wind farms, located between Germany and Sweden. Fullydeveloped, the farm will involve 128 wind turbines of 5 MW each with a combined yearly generationcapacity of about 2.1 TWh .

The E.ON offshore wind farm Utgrunden II, which was planned to be built with support from themarket introduction program, has been postponed. All necessary permits were in place, andconstruction was planned to start in 2007. However, E.ON concluded that the costs for building the

park were too high considering their calculated revenue35.

Vindpark Vnern: will be built in the lake of Vnern, the largest lake in Sweden. The park is givenfinancial support from the Swedish Energy Agency with 40 million SEK (3.7 million). Five of the ten

turbines will be in operation in 2008 and the final five during 2009.

33 Vindkraft i framtiden Mjlig utveckling i Sverige till 2020: Elforsk rapport 08:1734 Med Vindkraft I tankarna Vindkraft I Sverige 2020: Svensk Vindenergi35

IEA Wind Energy 2006 Annual Report, Sweden
http://www.universalwindoffshore.se/http://www.vattenfall.se/kriegersflakhttp://www.vattenfall.se/kriegersflakhttp://www.universalwindoffshore.se/


34/177


_________________________________________________________________________________________

34

Figure 18: List of wind power projects > 20 MW in late planning stages

2.3 Wave and Tidal status now and future potential

StatusOcean energy is still in the early stages of development in Sweden and there are so far no plants incommercial use. Most of the wave activities so far have been focused around the University ofUppsala where professor Mats Lejon, is actively engaged in R&D and pilots of both wave and tidal

power. Mats Lejon is also one of the owners of the companies Seabased and Current Power whichboth are spin-offs from research from the University of Uppsala.

There are a couple of research projects ongoing, the best known being the Islandsberg project36 in theLysekils area. The project is co-financed by the Swedish Energy Agency, Vattenfall, GoteborgsEnergi, Frankenbergs Energi and developed in cooperation with Uppsala University. The technologyconcept is based on a permanent magnet linear generator driven by a buoy at the sea surface. The first

phase showed promising results and the theoretical calculations of power output have been confirmed.The project just received phase 2-financing for a period of 5 years, for a bigger scale test. Although theresults have been promising, industry representatives think that it will take some years before the

technology can be brought into full commercial use.36

http://www.el.angstrom.uu.se/frameset.html?/forskningsprojekt/Islandsberg_E.html

In productionUnder construction

Have necessary permits

Facts on the Lillegrund Wind farm:

In June 2008 the Lillgrund offshore windfarm in resund was put in production byVattenfall.

Lillegrund increases Swedens windproduction by 30 %. The wind farmconsists of 48 units and has a joint capacity

of 110 MW, corresponding to approx. 0.3TWh per annum.

The wind farm was built with financialassistance from the state by the specialfunding program for technicaldevelopment in coordination with marketintroduction for large-scale plants offshoreand in arctic areas.


35/177


_________________________________________________________________________________________

35

Vattenfall, the Swedish Energy Agency and the Seabased Industry AB Company are performing alocalization study aiming at constructing a wave power plant of 1015 MW in a wave energy park.The wave energy park the Bohus project will consist of buoy clusters and will produceapproximately 50 GWh annually. The project will start during 2008, and will be fully developed 2010.

In mid 2008 the investment company Midroc New Technolgy, together with Saab and VerdaneCapital invested in the Gothenburg-based company Minesto AB www.minesto.com. They have a newtidal concept called Deep Green: it is a marine power plant that extracts electricity from slow oceaniccurrents at great depths

To further increase research in Ocean energy, Statkraft invested 90 MSEK in a Nordic Researchnetwork in the wave area involving the Universities in Trondheim, Uppsala and Copenhagen. Thisnetwork is likely to bring about new possibilities for cross-border research and is expected to speed updevelopment in this area.

PotentialThere is no official evaluation done on the wave potential, possible because this technology is in an

early development phase. However in the industry there are a lot of different opinions of the futurepotential.

Vattenfall estimates the annual wave energy potential to be 1520 TWh around the coasts ofSweden37. Other numbers have been arrived at by Energiledargruppen: They calculate that the BalticSea has a potential of 8 TWh and 2 TWh on the west coast38. It should be noted that most economicestimates to date presume that wave energy plants with a power of less than 20 kW per unit would not

be economically viable. Calculations show that the solution with buoy and a linear generator iseconomical also for units down to 10 kW if they are grouped in plants giving an aggregate of 10 MWin total output39. The generators best suited for Swedish waters are probably those with a capacity ofabout 10 KW.40

2.4 Price

Sweden introduced an Electricity Certificate system in 2003. Its objective was to increase the use ofelectricity from renewable energy sources by 17 TWh/year in 2016 compared with 2002. The systemis intended to support the development of new production in the long term by creating competition

between different types of renewable electricity production41. Electricity producers receive onecertificate for each MWh of renewable electricity that they produce. However a new production unitcan only receive certificates for a period of 15 years.

The demand for certificates is created by requirements under The Electricity Certificates Actthat all electricity suppliers and certain electricity users are required to purchase certificate equivalentto a certain proportion of their electricity sales or use, known as their quota obligation. The size of this

obligation increases from year to year. As the certificate system increases the cost of electricity tousers, there is an exception for energy-intensive industry.42.

The Swedish electricity certificate system applies today only to electricity produced in Sweden. Areview in 2012 will consider the opportunities for an international market. The existing scheme isvalid to 2030.

37 Vattenfall forskning och utveckling 2006 Frnybar Energi38 http://www.energiledargruppen.com/?goto=visa_referat&id=6539http://www.seabased.com/engelsk/40http://www.energimyndigheten.se/web/biblshop_eng.nsf/FilAtkomst/ET2007_23.pdf/$FILE/ET2007_23.pdf?OpenElement41

Qualifying renewables are electricity from: wind power, solar energy, geothermal energy, certain biofuels,

wave energy, certain hydropower and peat in cogeneration plants.42 A Electricity Intense Company is defined as one that use at least 40 MwH of electricity for each MSEK ofsales value of companys output per year
http://www.minesto.com/http://www.minesto.com/


36/177


_________________________________________________________________________________________

36

The price of the certificate is determined by supply and demand, and can vary from one transaction toanother. The average certificateprice for 2007 was approximately 21. Between January and June2008 it was approximately 24.43

Figure 19: Breakdown of total revenue (56 /MWh average) for a plant owner in 2007

To be able to reach the new ambitious target for 2020 Sweden needs to realise a bigger portionoffshore wind. This has led the government to indicate that it will soon propose a subsidy regime foroffshore, and it has hinted that this will be in the form of a feed-in tariff. A proposal is expected in theautumn of 2008.

2.5 Relevant locations for wind and ocean based renewable energy

In 2004, 49 geographical areas in 13 Swedish counties were identified as areas of national interest forelectricity production from wind energy44. However, new research connected to wind mapping, doneby scientist in Uppsala according to the MIUU-model45 showed that the conditions in the interior ofSweden were more favourable for wind power than previously thought. Large areas of the interior ofthe north of Sweden, together with the southern Swedish highlands, have been identified as suchareas.46 In the light of these results, the Swedish Energy Agency will shortly review and indicate newareas suitable for wind energy.

There has so far not yet been carried out any official mapping of suitable locations for wave power.

Issues related to the location of projectsThe permitting process is seen as the main obstacle to a fast development of wind power in Sweden.

For small projects, there is no approval procedure. The only requirement is to register the plant andhave the building permit approved by the municipality. For projects over 25 MW, the approvalprocedure is handled by the County Administration if it is an onshore permit and in the EnvironmentalCourts if it is an offshore permit. Approval includes application procedures related to both theEnvironmental Act and the Planning and Building Act. A comprehensive guideline on the frameworkand relevant procedures is to be found at Swedish Energy Agency site47:

43https://elcertifikat.svk.se/

44IEA Wind Energy 2006 Annual Report, Sweden

45SwedishEnergy Agency:

Http://www.energimyndigheten.se/WEB/STEMEx01Swe.nsf/F_PreGen01?ReadForm&MenuSelect=05CEC0C7711739A1C1257299003D2B0146Swedish Energy

Documents

Wind and Ocean 2008 Final