Denmark, long admired for its strides in renewable energy, has presented its new agreement to transform the country into a net energy exporter whilst trying to overcome the universal ‘Not-in-my-backyard’ attitude keeping many developers worldwide from breaking new ground. The deal, which comes in the wake of the newly amended European Renewable Energy Directive, rewards local communities and next-door neighbors of renewable energy parks in a move to increase local support and positive sentiment towards new onshore projects, but how does the deal affect developers looking for new land in the country?
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Denmark’s strategic agreement
In a transformative move, Denmark has unveiled a strategic agreement to reshape its onshore renewable energy landscape and boost annual kilowatt hours from 12 to 50 billion by 2030. The agreement aims to facilitate the establishment of expansive onshore energy parks by offering a roadmap for smoother processes and faster permitting for greenfield developers. In addition, the agreement unveiled 32 pre-screened areas earmarked as potential energy parks. From a developer’s perspective, the positive aspect is the effort to simplify and expedite permitting procedures, coupled with initiatives to garner local community support for new projects. However, the flip side is that developers will bear the responsibility for making the latter initiatives a reality through increased contributions to the local “Grøn Pulje” (Green fund).
Balancing community support and developer contributions
The agreement addresses the common challenge faced by developers worldwide: Community relations and support for renewable projects. Recognizing the impact of these projects on local communities is crucial for gaining wider acceptance and support. Consequently, the new agreement guarantees a 50% increase in compensation, known as the ‘VE-bonus’ (Renewable Energy Bonus), for residents near solar and wind farms, bringing the annual compensation up from 9,000 DKK.
“It should be a winning case to have an energy park. Solar panels and wind turbines fill the landscape, and they should be erected in harmony with the surroundings. And we pave the way for green power centers that can create local development and growth. This should happen simultaneously with neighbors and local communities benefiting more from the gains of renewable energy.”
– Minister of Climate, Energy and Utilities, Lars Aagaard
In addition to compensating affected residents, the agreement promises a 150% increase in contributions to the ‘Grøn Pulje,’ a fund administered by local municipalities and funded by developers paying a fixed rate per installed MW (125,000 DKK per installed MW in 2023). This will still be a one-off payment that developers pay upon connection to the grid. The new agreement will require developers to contribute an additional 2.5 billion DKK (totaling 4.5 billion DKK by 2030). This funding will support increased resident compensation (1.2 billion DKK) and municipality projects aimed at enhancing local community well-being through initiatives like forestry projects, city parks, and nature walks (3.3 billion DKK).
Blueprint for success?
Denmark’s commitment to quadrupling onshore energy production is a beacon of hope, particularly for the revival of onshore wind, which has nearly ground to a halt. In 2023, only 14 onshore wind turbines with a total capacity of 53 MW are expected to be installed, a stark contrast to the 53 turbines installed in 2020. The story differs for solar photovoltaic capacity, with 3,372 MW of grid-connected capacity installed by June’s end (up from 1,366 MW in 2022).
While the new agreement’s outline appears promising and has been received well, its success greatly hinges on whether developers will seize the opportunity, considering the promise of faster and easier permitting will bring increased financial contributions.
The question remains: Is this a viable blueprint for success? Only time will tell.
You can also read:
How a Danish IPP and developer overcame NIMBY by going on the offense.
Facts about the agreements
- Quadrupling renewable energy on land will contribute up to 1,3% of Denmark’s area compared to 0,5% today.
- Area protection for energy parks eases – taking into account nature and culture etc. – to bring more areas into play for energy parks.
- Favorable conditions are given for the placement of PtX plants and companies such as manufacturing companies in connection with facilities in the energy parks, where special considerations speak for this placement.
- Designation of areas for larger energy parks based on ongoing application rounds and dialogue with municipalities and the possibility of faster and easier establishment by full or partial stake takeover of planning and authority processing
- Grøn Pulje increases by 150% for the benefit of local communities
- VE-bonus for neighbors increase by 50% – up to 5000 DKK extra per year in neighbor bonus
- One entry to the authority processing in the nature and environment area
To read the new agreement in full, please visit the Ministry of Climate, Energy and Utilities
