White papers for a green transition WIND ENERGY MOVING AHEAD How Denmark utilises wind in the energy sector INSIDE THIS WHITE PAPER Acting the way the industry needs When dialogue, transparency and flexibility become more than just words Denmark to meet 50% wind energy target in 2020 Cross-border electricity market and good connections to neighbouring markets ensure first-class security of supply Making offshore wind attractive and accessible to investors Offshore wind projects are politically and financially attractive investments Foreword 3 WIND IS A MAJOR PART OF THE SOLUTION Denmark is in the middle of a green transition and wind energy plays a big part in creating an energy system based on renewable energy sources. WIND ENERGY MOVING AHEAD How Denmark utilises wind in the energy sector Version 1.0 Printed March 2015 Front page photo Cover photo showing Anholt Offshore Wind Farm, photo: DONG Energy Editor in Chief State of Green Technical Editor Danish Wind Industry Association Danish Energy Agency: Copenhagen Infrastructure Partners: Danish Energy Association: Danish Ministry of Climate, Energy and Building: Danish Ministry of the Environment: Danish Wind Industry Association: Energinet.dk: Middelgrunden Wind Turbine Cooperative: Siemens Wind Power: Vestas Wind Systems: Contributors Morten Bæk and Peter Sehested Christina Grumstrup Sørensen and Stephanie Bendorff Røpcke Lars Aagaard Rasmus Helveg Petersen Niels Bjørkbom Jan Hylleberg Peder Østermark Andreasen Erik Christiansen Michael Hannibal Anders Vedel © Copyright State of Green 2015 Rasmus Helveg Petersen, Danish Minister for Climate, Energy and Building Right now, Denmark is heading towards a fossil free future in 2050. Since the oil crises in the early 1970s, we have been transforming our national energy system. In the beginning, we wanted to establish a self-sufficient energy supply and later on this evolved into decarbonising and changing the energy system to be based entirely on renewable energy sources. The main reason for this is that we take the strong warnings from the UN Climate Panel seriously. We have to do our part to prevent waking up one day flooded by rising seawater. But the transition also has other major benefits. It creates green jobs and secures our energy supply. Wind energy – a modern technology Since the end of the 1970s, Denmark has been building a high-tech wind energy industry. Wind turbines have undergone such considerable technological advances that wind has become one of the most competitive renewable energy sources. renewable energy production and energy efficiency. The Danish wind industry has a strong outset here. In Denmark, we currently have a total of 13 offshore wind farms. The offshore wind farms are crucial to reach our goal of a fossil free future. Today, onshore wind energy is cheaper than any other source of energy from new plants, while offshore wind still cannot compete economically with onshore. Therefore, it is critical that we keep reducing prices on offshore wind. I feel confident that the industry will be able to keep up. It was the question of energy security that sparked the Danish transition. The recent development in our part of the world shows that the question of energy security is more relevant than ever. Wind energy is a great way to meet this challenge. Renewable energy is a good investment In 2013, Danish export of green energy technology went up by 17.6 %. I see this as a positive sign. In the future, we will see a rising demand for solutions for both There is no entry barrier on wind energy. It is a mature technology, and in terms of integration, a recent study from the International Energy Agency shows that any country will be able to integrate as much as 10% renewable variable energy in their energy systems with no major technical or economic challenges. It makes sense for the climate, it creates jobs and it improves our energy security. ABOUT THIS WHITE PAPER In this White Paper we have gathered lessons learned from different Danish players and legislators within the wind energy sector, supported by state-ofthe-art case examples showing, for instance, how integrating wind, investing in wind and optimising products to make more wind for less money is being done every day. In the light of the Danish energy agreement in March 2012, Denmark has decided to lead the transition to a green growth economy and become entirely independent of fossil fuels by 2050. Completely dependent on imported oil for decades, Denmark was severely affected by the oil crises of the 1970s and it was decided to take a new path. As a result, renewable energy – and in particular wind energy – has become a Danish stronghold. The content of this White Paper is meant to serve as a helpful tool for international stakeholders who wish to get an overview of the Danish way of utilising wind, who want to spot the potentials of wind energy, or who are looking for Danish business partners. Integrating 10, 20, 30, 40 or 50% wind energy or even more in the electricity system is no easy task just as agreeing on the political framework for large investments and getting the citizens on board for new projects is not something easily achievable. But with this White Paper we want to show you that it is feasible through collaboration. We hope you will be inspired. INDEX Wind is a major part of the solution....................................................................................... 3 There is no status quo in the wind industry....................................................................... 6 Cost reductions and alliances are keywords in the Danish wind industry Acting the way the industry needs........................................................................................ 8 When dialogue, transparency and flexibility become more than just words Denmark to meet 50% wind energy target in 2020.....................................................10 A cross-border electricity market and good connections to neighbouring markets ensure first-class security of supply Electrification equals value from wind energy............................................................... 12 Why electrification is necessary for the Danish energy system Bringing the neighbours on board........................................................................................14 A specialised wind turbine task force is assisting the planning process of onshore wind projects. Do you speak wind turbine?....................................................................................................16 Denmark from above.................................................................................................................. 17 Case studies The world’s most depicted offshore windfarm is 50% locally owned.................................. 18 Big scale test facilities help reduce costs................................................................................... 20 Østerild test centre ensures Siemens Wind Power a competitive offshore advantage.........22 Advanced nacelle testing integral part of Vestas product development............................... 24 Making offshore wind attractive and accessible to investors................................................ 26 Sustainable wind export business .............................................................................................. 28 A powerplant at sea ....................................................................................................................... 30 Repowering for a windy future .................................................................................................... 31 6 There is no status quo in the wind industry There is no status quo in the wind industry 7 THERE IS NO STATUS QUO IN THE WIND INDUSTRY Cost reductions and alliances are keywords in the Danish wind industry Companies in the Danish wind industry are at the very forefront of the global wind expansion, driving the continuous development of evermore effective and cost-efficient wind turbines. Jan Hylleberg, CEO, Danish Wind Industry Association What few people believed 40 years ago is now a reality with a booming global industry. Over the years, the wind industry has fine-tuned its ability to harvest energy from the wind in a controlled manner that benefits millions and millions of people. The groundwork for much of the technological development has taken place in Denmark. Today, nearly 500 companies work within the Danish wind energy sector, generating 28,500 jobs (2013) and combined revenue of DKK 80 bn (EUR 10.71 bn) of which more than half is exported. More energy for less money Even though the Danish wind industry has developed into a highly professional and well-established one, the objective has remained the same since the beginning. At the core, all work evolves around reducing the Levelized Cost of Energy (LCOE) - the price of the electricity production over the lifetime of a wind turbine. The wind industry has come far and the technology holds Photo: Keenpress / Wind Power Works huge potential for becoming even cheaper. While the price of wind energy continues to decline, investments are going up. Proof of this is found in Europe, where wind energy capacity was the favoured energy technology in 2014, with a grid connected wind energy more than double that of coal and gas combined. Danish companies are driving the development of a lower LCOE. Strong cross-industry cooperation along with unique testing facilities are creating the foundation for an innovation hub found no were else in the global wind industry. Today, energy from onshore wind turbines is cheaper than energy from new fossil energy plants in many markets, including Denmark, and across the industry efforts are put into reducing the cost of offshore wind in a similar manner. Producing energy offshore requires a new way of thinking and this has led to a new way of organising the industry in Denmark. lliances are vital A Abandoning the idea of wind turbine manufacturers dealing with all of their sub-suppliers, the industry is now moving towards an organisation in clusters offering concentrated and packaged solutions. This entails an even closer collaboration between Danish wind turbine manufacturers and clustered sub-suppliers, enhancing manoeuvrability and the ability to innovate. This development is evidence of the continuous professionalisation of the Danish wind industry that acts as a strong competitive advantage - only to be developed further in the coming years. With wind energy having one of the greatest potentials for integrating more renewable energy across the world, it is unthinkable for the Danish wind industry just to maintain the status quo. The wind industry stands before yet another era of progress that will benefit not only job creation and energy security, but also people and climate. 8 Acting the way the industry needs Acting the way the industry needs “In 2012, the Danish Parliament set a clear course for the energy sector in Denmark having made an overall commitment to a fossil-free future in 2050.” Peter Sehestedt, Danish Energy Agency 9 ACTING THE WAY THE INDUSTRY NEEDS When dialogue, transparency and flexibility become more than just words On the path to becoming a fossil-free nation with large amounts of wind energy in the electricity grid, having the right political framework plays a major role. Denmark leads the way in making political decisions that the industry needs. But how did we get to this point, and what are the big challenges that still remain? Peter Sehestedt, Special Advisor, Danish Energy Agency Denmark has set ambitious political targets for the use of wind energy. In 2010, the Danish Commission on Climate Change Policy presented its recommendations for the total phasing out of fossil fuels. In 2012, the Danish Parliament set a clear course for the energy sector in Denmark having made an overall commitment to a fossil-free future in 2050. Set in place in 2012, the current energy agreement includes a target of applying 1,900 MW of new capacity from onshore and offshore wind. By the end of 2021, this capacity needs to be realised. As a result, wind energy is expected to cover 51% of Danish electricity consumption in 2020. The industry-friendly Danish tender approach for setting up offshore windfarms is a result of many adaptations over time. It consists of three parts: A strategic offshore planning process with transparent tender procedures A guaranteed timely establishment of grid connection A fixed settlement price and the one-stop-shop permitting procedure Photo: Danish Energy Agency The agreement secures a substantial expansion of the Danish wind energy capacity offshore, near-shore and onshore. The offshore expansion alone corresponds to the annual electricity consumption of 1.4 million average Danish households. The first step to establish more offshore wind farms is a strong and smooth planning phase, which reflects the importance of flexibility in the tendering processes, just as the ability to conduct dialogue with the market and to learn from experience is paramount for success. Only then can the authorities attract the most competitive bids for these complex projects that carry large economic commitments and which are influenced by political currents. Tenders that work The Danish Energy Agency has strived to develop a scheme that delivers on these parameters. As such, the Danish tendering approach for setting up offshore wind farms is the result of many adaptations over time. In fact, Denmark has the longest experience with tenders for offshore wind energy in the world. The strength of the Danish approach can be divided into three areas. Firstly, a strategic offshore planning process with transparent tender procedures and fully consented environmental impact assessments in place before the submission of tenders. Secondly, a timely establishment of grid connection guaranteed by the Danish state and paid for by the electricity consumers. Third, a fixed settlement price and a unique one-stop-shop permitting process, in which the Danish Energy Agency grants all the required permits and coordinates with other relevant public authorities. Dialogue as a new Danish trademark In the offshore market change is a constant and each tender is different from the next. What we have learned is that the tendering authorities need to speed up on their learning capacity. If we want to ensure the best possible market prices and projects in our tendering procedures, we have to be part of the changes more or less at the same time as they happen. This is why dialogue has become the new trademark of the Danish tendering procedures and why the Danish Energy Agency is promoting a vision where authorities and industry act like equal partners. Our goal is to share this vision with all major offshore countries and we invite all tendering authorities in Europe to start a dialogue of their own. Ultimately, this dialogue has the potential to create a new network of governance and help establish a common vision of offshore tendering in the European market. One-stop-shop means full speed ahead The Danish tendering process is unique, and the one-stop-shop permitting procedure plays a central role in this. To ensure a rapid and as-little-as-possible bureaucratic application process, the Danish Energy Agency grants all the required permits and coordinates with other relevant public authorities. This results in a single point of access for enterprises or industry in need of assistance on issues related to permits and tendering procedures – and this is one of the political framework conditions leading Denmark towards a fossil-free future. 10 Denmark to meet 50% wind energy target in 2020 Denmark to meet 50% wind energy target in 2020 Photo: Palle Peter Skov 11 DENMARK TO MEET 50% WIND ENERGY TARGET IN 2020 A cross-border electricity market and good connections to neighbouring markets ensure first-class security of supply “We are in the process of transitioning from an energy system where generation is adapted to consumption to one where consumption is adapted to generation”. Peder Østermark Andreasen, CEO, Energinet.dk, the Danish TSO responsible for supplying Denmark with electricity and natural gas Map of Denmark’s transmission grid and interconnectors Denmark’s transmission grid (400 and 150/132 kV) and the interconnectors to Germany, Sweden and Norway. Interconnectors have a total capacity of more than 5,500 MW. The transmission grid is designed to handle long fluctuations and transport electricity over large distances, e.g. from on- and offshore wind farms in the west to the Danish capital in the east. Denmark often acts as a transit country, enabling power from Norway’s hydroelectric dams to be sent to Germany and Central European consumers or the other way around, if wind turbines and solar cells generate a lot of energy that Norway wants to buy. “It can’t be done”. “It’s not possible to integrate more than a few per cent wind energy in an electricity system”. These are words we sometimes hear when foreign visitors visit Energinet.dk. However, when we open the door to our control room and show them that we on any given day have 20, 30, 40% wind energy or more in our electricity system, we are not presenting them with a theoretical calculation or a case story. What they see is a quiet control room without panic and the electricity system that supplies Danish households and businesses with electricity – which has one of the highest levels of security of supply in Europe. This is possible because Denmark has a well-developed electricity grid and strong connections to our neighbouring countries Norway, Sweden and Germany (see map). where wind energy generation will exceed our consumption. 50% wind in 2020 and more to come We are making good progress to meet the objective that wind energy will cover 50% of the Danish electricity consumption. In 2014, the figure was 39.1%, and with the wind energy generated by future offshore wind farms in particular, we will reach the equivalent of 50% wind energy in electricity consumption. New interconnectors To be able to handle this, we have joined forces with TenneT, TSO for power and gas in Netherlands and Germany, to build a 700 MW and 320 kilometre submarine cable linking the Dutch and Danish electricity systems - and together with National Grid, TSO for power and gas in England, we are looking into the possibilities of laying a 600 kilometre cable to the UK. Denmark does not have mountains, rivers or many hours of sunshine, but we have wind and a unique location. Wind energy is Denmark’s number one renewable energy source and it will become even more important after 2020. Looking towards 2035, for example, there will be many more days Wind production and power consumption 2013-2035 Today, wind rarely exceeds the total power consumption. In the future this will happen more often. Here shown in three weeks in 2013 and three weeks in 2035. From generation to consumption We are transitioning from an energy system where generation is adapted to consumption to one where consumption is adapted to generation. That is why electricity must be able to flow far, across boarders and in large quantities. The prices must reflect the fact that there are days with ample generation or high demand, and electricity must increasingly be integrated into flexible consumption, such as heat pumps and electric vehicles. Only by taking a cross-border approach and ensuring maximum utilisation of domestic flexibility will we be able to secure an effective and successful energy transition. Today, Denmark is part of a cross-border Nordic market, and we are integrated with Central Europe. Even though we as consumers do not notice the changes, we buy and sell electricity across borders hour by hour. Electricity generated by wind, water, sun, coal, gas and nuclear power flows freely back and forth depending on supply and demand. But the future requires even more open­ ness and cross-border thinking. A well-functioning market is crucial if Denmark and the rest of Europe are to maintain a high level of security of supply. New m arket model In step with increasing amounts of renewable energy, the current business model for electricity is put under pressure, where especially conventional generators based on fossil energy sources are challenged. In the long term this creates a risk of insufficient capacity during future periods with limited renewable energy available, e.g. during periods without wind. We have therefore invited industry players to a sector-wide cooperation with the aim of developing a new market model that will help ensure a high level of security of supply and contribute to a healthy investment climate in the energy sector, and furthermore encourage interaction and flexibility across the value chain. 2013 Week 1 Week 2 Electricity consumption 2035 Week 3 Week 1 Week 2 Week 3 Electricity generation from wind turbines 12 Electrification equals value from wind energy Electrification equals value from wind energy 13 ELECTRIFICATION EQUALS VALUE FROM WIND ENERGY Why electrification is necessary for the Danish energy system Danish electricity generation will consist of at least 50% wind energy in 2020. This requires a focus on electrification and Denmark needs to address the challenge of smart energy. Lars Aagaard, CEO, Danish Energy Association Danish electricity generation has undergone significant changes during the last two decades and Denmark is on the cutting edge when it comes to integrating wind energy into the electricity system. Wind is a positive story already 20 years ago the Danish electricity production consisted of 96% fossil fuels, which emitted 30 million tons of CO2. In 2013, these numbers had changed to 54% fossil fuels, resulting in a 55% decrease of the CO2-emissions. So far, the increasing wind share has not changed the continuity of supply. In 2013, Danish electricity consumers had electricity in their power outlets 99,997% of the time. The potential for electrification Even though we use most of the electricity from wind in households, industry, for electrical cars and in heat pumps in the heating sector, the transformation of the electricity system moves much faster than the electrification of the energy consumption. The electricity consumption is expected to grow by 3 TWh until 2020, while the new wind production is expected to grow by 6.5 TWh. Obviously, wind energy is a fluctuating production form. Given the rapid build-out it needs to be accompanied by further incentives to use and store the electricity when it is produced and a strong backbone of flexible power generation is also required. Following the curves in the figure illustrating development of electricity consumption and wind energy production 2014-2020, they clearly show that the expected expansion of wind production exceeds the changes in electricity consumption. There is a clear mismatch between the growth of the two, which – given the flexible nature of wind energy – needs to be addressed, if we are to make the most value of our wind energy production. The Danish Energy Association has calculated the technical potential of electrifying the end consumption in the district heating sector, the individual heating sector and in the industry. The potential comes out at approximately 13 TWh/year, which is more than a third of the current Danish electricity consumption. In other words, there is a potential for utilising all new wind production in a flexible manner, creating more value for the Danish wind model. Combined with strong, available interconnectors to neighbouring countries, a backbone of power generation plants and a fast development in bringing down costs for electricity storage, we are confident that we can continue the wind expansion and use the fluctuating production in an intelligent way. In order for that to happen we need to see Danish legislators consider and decide upon difficult political issues such as securing continued back-up capacity from power plants, an intensified electrification of the Danish energy system and constraints on interconnectors. Denmark has led the way and will continue to do so by showing the world that it will be possible to introduce more than 50% wind energy into the electricity system. But we need to take the necessary measures to guarantee the continued balance of the electricity supply and to create maximum value of the wind’s changing production levels. Keywords for that to happen are interconnectors, flexible electricity use and reliable backup production when wind is absent. Development of electricity consumption and wind power production 2014-2020 Integrating large volumes of wind energy into the energy system has proven possible, but wind is dependent on a strong back-up system and good market conditions for selling electricity via interconnectors and flexible electricity usage. 160 140 120 Source: Danish Energy Agency Flexible production requires flexible consumption and a strong underlying system Clean electricity from wind turbines can be used to substitute CO2-emitting energy consumption in the heating sector, in industry and in households. This benefits the environment and the climate but in order to reap the full value of wind energy, we need to focus on a better utilisation of it. Index 2014 = 100 100 80 60 40 Electricity consumption (index) Wind energy production (index) 20 0 2014 2015 2016 2017 2018 2019 2020 Development of electricity consumption and wind energy production 2014-2020 Wind energy produced 3% of the electricity consumption in 1994. In 2014, this number had increased to 39.1% and by 2020 at least half of the electricity consumption will be delivered by wind turbines. The general electricity consumption is expected to grow at a much slower rate. 14 Bringing the neighbours on board www.vindinfo.dk – a Danish shortcut In 2012, a national committee issued recommendations for what to focus on in order to optimise the planning processes for wind project developments. A central point was improved public access to information. In response to this, four agencies have gathered all available governmental information about wind energy in Denmark on one website: www.vindfo.dk. This way, citizens, local authorities, and wind project developers have easy access to information. Bringing the neighbours on board 15 BRINGING THE NEIGHBOURS ON BOARD A specialised wind turbine task force is assisting the planning process of onshore wind projects. Schemes focused on citizens and close municipal and state collaboration regarding citizen involvement are just some of the approaches that Denmark takes in order to meet its ambitious targets for CO2-reduction and the advancement of more renewable energy. Niels Bjørkbom, Head of the Wind Turbine Task Force, Danish Ministry of the Environment The 1970s energy crises in Denmark and the rest of Europe sparked an increased interest in renewable energy. During the 1970s, the first wind turbines, less than 50 meters tall, were installed all over the country through local initiatives with no general planning and often through citizen initiated wind turbine cooperatives. Today, onshore wind turbines as high as 150 meters are installed on a commercial scale, which requires larger areas and substantial investments. These kinds of wind turbines are often erected and owned by people living far from the wind turbine areas and that is one of the reasons why it has become increasingly difficult to achieve local acceptance of wind power projects. A complicated process In Denmark, local authorities are responsible for planning onshore wind turbine installations, and the planning processes are often long and complicated. In some municipalities, local politicians stop the planning activities at relatively late stages, due to local public opposition against installing wind farms in the specific area. This is a problem, firstly, because it often results in frustration and local division Step 1 Invite stakeholders Step 2 Establish workshops between opponents and supporters of wind energy. Secondly, because one of the paths to becoming free of fossil fuels, as written in the political energy agreement from 2012, is by installing 1,800 MW of new onshore wind capacity before 2020 - 1,300 MW of which are expected to replace existing, aging wind turbines. Wind Turbine Task Force and state assistance In order to assist local authorities with these challenges, a Wind Turbine Task Force was established in 2008. Furthermore, four financial incentive schemes were introduced a year later. These initiatives both aim to increase local interest in and support for the installation of new, modern wind turbines. An important role of the task force is to solve problems as early as possible and assist the local authorities with the planning process. Citizen involvement takes up an increasingly larger part of the planning process. It is our experience that a good relationship between citizens and the municipality is a crucial aspect in achieving acceptance of new wind turbine Step 3 Network meetings Step 4 Network activies and results Network topics Citizens Network meetings Network meetings Secreterial function Seeing, creating dialogue, enhancing trust and establishing common norms Secreterial function Input on decision on wind turbine plant Business community The introduction of task forces The Danish Wind Turbine Task Force is a new concept within the Danish public administration. Free of charge, the task force assists local authorities in matters such as siting the turbines and the planning process. Public acceptance is the key to deflect the problems that can arise when planning new onshore wind farms. Photo: Lia Maria Hauch Kaufmann Authorities Source: Antropologerne Network meetings Secreterial function Network meetings Secreterial function Growth potential for community development projects. Interviews show that many Danish citizens are unhappy with the way planning activities have been carried out previously. Therefore, we have worked on finding new ways to meet the public and to get them on board at early stages in the planning process. The figure illustrates how the citizens meet the authorities and business community at an early stage in workshops and various networking activities. These include public meetings with display stands, discussion forums and visits to existing and potential wind turbine areas. Traditional citizen meetings usually only include presentations by experts and panel debates and come late in the planning process. Through our work it has become clear to us that municipalities must be more proactive and direct in meeting the public. So far, feedback from participants has been a call for clear, political statements when it comes to setting up onshore wind farms. 1.Invite stakeholders: Ideally citizens should be invited as a first step in a planning process to participate in a debate about wind turbines within their local community to kick start the planning process of locating areas suitable for possible wind turbines. 2.Establish workshops: Citizens and other stakeholders with different opinions are empowered through constructive dialogue in a workshop. 3.Network meetings: Network groups on topics preferred by participants can be formed in the workshops. 4.Network activities and results: Participants get to know and understand each other better, qualified input to municipal planners and political decision makers, participation in field-trips, bottom-up thoughts etc. This creates an earlier dialogue and increases citizens understanding and acceptance of the need for new wind turbines. Now the planning process required by law can be done on a new informed basis. 16 Norway Do you speak wind turbine? DO YOU SPEAK WIND TURBINE? As a rule of thumb, every MW installed offshore generates enough electricity for roughly 1,000 Danish households. Denmark from above 17 DENMARK FROM ABOVE Blade Frederikshavn 7 MW The share of wind in the Danish electricity consumption has increased steadily during the last years: 30% in 2012, 33% in 2013 and 39% in 2014. Sweden Sæby 200 MW Nacelle Hub Upon completion in 2015, Denmark’s second largest onshore wind farm will be the 70 MW Klim Fjordholme wind farm Gear box Østerild National Test Centre for Large Wind Turbines In 2013 and 2014, the average capacity of an onshore wind turbine installed in Denmark was 2.8 MW. Rønland 17 MW 2003 Generator Vesterhav North 200 MW The world’s tallest wind turbine is currently being tested at Østerild – The National Test Centre for Large Wind Turbines. Once installed offshore it can power more than 8,000 average Danish homes. Denmark’s largest onshore wind farm is the 73 MW Nørhede-Hjortmose wind farm commissioned in 2014 United Kingdom Tower Denmark’s third largest onshore wind farm is the 34 MW Lem Kær wind farm commissioned in 2012 Vesterhav South 200 MW Horns Rev 3 400 MW 2017 In 2014, 860 kW of wind energy were installed per 1,000 Danish citizen. In comparison, this number was 250 kW for the other EU28 countries. Tunø Knob 5 MW 1995 Samsø 23 MW 2003 Horns Rev 1 160 MW 2002 LORC Lindoe Offshore Renewables Center Sejrø Bugt 200 MW nd r la he et N Avedøre Holme 11 MW 2009/2010 Smålandsfarvandet 200 MW Kriegers Flak 600 MW 2019 Bornholm 50 MW Germany Transition piece Foundation Monopile Tripod Jacket Gravity Suction bucket Middelgrunden 40 MW 2000 Rødsand II 207 MW 2010 Landing platform Different types of foundations: House of Green Sprogø 21 MW 2009 Vindeby 5 MW 1991 s Horns Rev 2 209 MW 2009 Anholt 400 MW 2013 Selected onshore wind farm Cable connections (Current) Test facility Offshore wind farm (Commissioned) Cable connections (Planned) Place of Interest Offshore wind farm (Planned) Cable connections (Proposed) Near shore area Possible installed capacity The total Danish capacity onshore equals 3,578 MW Name of wind farm Capacity in MW Year of commissioning The total Danish capacity offshore equals 1,278 MW 18 The world’s most depicted offshore windfarm is 50% locally owned The world’s most depicted offshore windfarm is 50% locally owned 19 THE WORLD’S MOST DEPICTED OFFSHORE WINDFARM IS 50% LOCALLY OWNED 8,700 citizens are co-owners of Denmark’s iconic offshore wind farm Middelgrunden, located just off the coast of the capital Copenhagen. Targeted information has played a key role in the local involvement and support for the wind turbines. Erik Christiansen, Chairman of Middelgrunden Wind Turbine Cooperative Photo: Danish Wind Industry Association Set in a symbolic curving line in the waters outside Copenhagen, Middelgrunden offshore wind farm stands as the image of Denmark’s world-renowned renewables sector. The 40 MW wind farm was at the time of commissioning in 2001 the world’s largest offshore wind farm. Today, it covers 3% of Copenhagen’s electricity consumption. customised cooperative: Middelgrunden Wind Turbine Cooperative. Through the cooperative, almost 8,700 local residents became co-owners of the wind farm and bought together 40,500 shares. In the end, this amounted to a local ownership of 50% of Middelgrunden offshore wind farm. The other 50% of the project is owned by the utility company DONG Energy. A particularly innovative model of public ownership was used in the construction of Middelgrunden. To establish local acceptance for the wind farm, groups of local residents came together to form a In the process, the key focus for Middelgrunden Wind Turbine Cooperative was on sharing information with the local residents due to the landmark position of the wind farm just outside the Copenhagen harbour. It was of great importance to involve the local citizens in all phases from planning and installation to the operational phase. This has proven to enhance the local involvement in the project, as well as the will to invest. Thousands of citizens in Copenhagen have visited the wind farm’s information stands and construction sites and thousands attended the opening of the wind farm in May 2001. The project has proven the necessity of local information to ensure local involvement and support for wind turbines. 20 Big scale test facilities help reduce costs Big scale test facilities help reduce costs 21 BIG SCALE TEST FACILITIES HELP REDUCE COSTS Constantly reducing the cost of energy from wind turbines is the primary point of orientation for all players in the Danish wind industry. Reducing mechanical failures and the time it takes to get a new wind turbine off the drawing board plays a major role in producing more wind energy for less money. For Danish wind turbine producers, Siemens Wind Power and Vestas Wind Systems, big scale test facilities are decisive for choosing to carry out their turbine tests in Denmark. It takes little imagination to visualise just how complicated it is to replace a spare part potentially weighing many tons in a nacelle 100 meters above ground. Whether it is on- or offshore, it is essential to mitigate as many potential problems and mechanical failures as possible. By eliminating problems, increasing efficiency, reducing the need for service and introducing the product faster to market, the price of electricity from wind energy decreases fast. Easy access Test facilities are crucial for technologicaland system innovation in the Danish wind industry. In order to maintain Denmark’s leading role within wind energy, it is a prerequisite that the industry has easy access to test facilities for prototype testing close to their R&D departments. Denmark offers companies several options to test and try out their latest technologies. From material to prototype testing In Denmark, you can test any part of a wind turbine. From materials to blades, welding, drivetrain and large components such as nacelles, and last but not least, full scale turbines. LORC (Lindø Offshore Renewables Center), located at the former Maersk shipyard Photo: Danish Wind Industry Association Lindø, and the Technical University of Denmark (DTU), manage the two flagship state-of-the-art test facilities in Denmark. Complemented by the lightning test center Testing Lab Denmark, located in central Jutland, and The Blade Test Centre (BLAEST) in Aalborg in the northern part of Jutland, they provide thorough and unique testing of blades up to 85 meters. World leading test facilities The facilities at LORC comprise two indoor test rigs for functional testing and life-time testing of full-scale nacelles with a power output of up to 10 MW. The function tester is uniquely designed to test the nacelle including the hub allowing the pitch system and the full software package to remain operational. LORC’s test program includes validation of the turbine’s compliance with the grid, its reaction to external events and the testing of the machinery’s robustness. The second test rig, the life-time tester (HALT) is expected to start operating in 2016. Together with its industrial partner FORCE Technology, LORC is establishing environmental and mechanical testing of large components and structures. The test centre will comprise a climatic chamber combined with humidity control and corrosive environment in the form of salt spray. In ad- dition, LORC is establishing a 122m² strong floor with 4m high reaction walls for the testing of the load carrying capacity and fatigue life of components and structures, exposing them to forces and loads in the mega Newton range. DTU has two test sites for large full-scale wind turbines, both based on the west coast of Jutland, where excellent wind conditions ensure that the turbines have the optimum test environment. The Høvsøre Test Site provides facilities for testing turbines up to 165 meters and the Østerild Test Centre has room for seven prototypes up to 250 meters. Both sites are fully booked with well-known industry players such as Vestas Wind Systems, EDF Enérgies Nouvelles, Envision Energy and Siemens Wind Power. They have all chosen Denmark as the base for testing their wind turbines of tomorrow. 22 Østerild test centre ensures siemens wind power a competitive offshore advantage Østerild test centre ensures siemens wind power a competitive offshore advantage 23 ØSTERILD TEST CENTRE ENSURES SIEMENS WIND POWER A COMPETITIVE OFFSHORE ADVANTAGE Siemens Wind Power has just finished testing a 6 MW wind turbine at Østerild Test Centre, the world’s largest and most advanced centre for full scale turbine testing. The Danish test facility allows Siemens Wind Power to accelerate innovation to reduce energy production costs for offshore wind farms. Michael Hannibal, CEO Offshore, Siemens Wind Power In October 2012, Siemens Wind Power installed a 6 MW turbine at Østerild Test Centre in Northern Jutland, Denmark. The test centre, operated by DTU, is of great importance to us. The test site allows us to test turbines on a full scale under changing climatic conditions, which is a strong driver for innovation and therefore a large component in reducing energy production for wind farms. The fast and comprehensive full scale testing possibility at Østerild means that the testing period has ended for SWP-6MW and it is already being used by the European offshore wind market. Innovation is our most important competitive advantage. Therefore, a public test facility, like Østerild, only reinforces the reason why we have decided to carry out our turbine tests in Denmark. The importance of Østerild Østerild is currently the only place in the world where measurements on turbines up to 250 metres in height can be made. For this reason, the test centre is ideal for testing the offshore wind turbines of today and tomorrow. The technological improvements from the tests are already showing. Firstly, they ensure that our fleet of existing turbines continue to evolve and that small improvements can be made in order to increase output. Secondly, an entirely new and much larger wind turbine is underway: A 10 MW turbine. It is not just an evolution of the existing turbines, but a leap into something bigger. This is a turbine that I believe we will see on the market before 2020 thanks to the accelerated innova- tion that research and development testing allows for. The Danish Approach Denmark has pioneered the wind industry for the past four decades. Renewable energy is deeply integrated into the Danish conscience and Denmark is known worldwide for this. Denmark has high education and qualification levels within wind energy, which Siemens Wind Power takes advantage of in research and development. Denmark is also characterised by a political environment that has a positive attitude towards renewable energy. The public aspect of Østerild Test Centre is a good example of this. For all of these reasons, it is not a coincidence that Siemens has chosen to place and maintain its research and development departments in Denmark. In addition to the test facility of Østerild, we have established our own test centres in Denmark, investing over 2 billion DKK (EUR 268 m) in state-of-the-art research and development departments in the cities of Brande and Aalborg. Combined, these make up the largest test facilities for wind turbines and blades in the world. Altogether, these strategic reasons provide Siemens Wind Power with the best test opportunities in order for us to accelerate our wind turbine innovation. Siemens Wind Power is the world’s largest provider of offshore wind turbines. Siemens Wind Power has delivered turbines to the three largest offshore parks in the world: London Array, Greater Gabbard and Anholt Havmøllepark. All parks are based on the 3.6 MW geared model as seen on the picture. Photo: Siemens Wind Power A/S Photo: Siemens Wind Power A/S The first Siemens turbine at Østerild, the 6 MW, is being installed. 24 Advanced nacelle testing an integral part of vestas product development Advanced nacelle testing an integral part of vestas product development 25 ADVANCED NACELLE TESTING AN INTEGRAL PART OF VESTAS PRODUCT DEVELOPMENT The world’s largest wind turbine manufacturer, Vestas Wind Systems, uses state-of-the-art test facilities to reach the ambitious targets for product development. The newest addition to the wind turbine test options in Denmark is the nacelle tester at LORC. Anders Vedel, Executive Vice President & CTO, Vestas Wind Systems A/S All around the year, Vestas is conducting tests on different components in different locations around the world. Most of these tests take place in Denmark, because advanced test facilities and relevant competencies are available here. The latest addition is Lindoe Offshore Renewables Center (LORC), where Vestas will perform full-scale testing of nacelles over the coming years. Comprehensive and advanced testing of components, systems and products is a key part of product development in Vestas, where the overall objective is to reduce the levelised cost of wind energy (by definition the production cost of each unit of electricity generated over the lifetime of a wind farm taking into account a wind farms development costs, capital investments, financial costs and lifetime running costs), shorten the time it takes to bring new products to market and to increase the business case certainty for the customers. Strong forces. Vestas’ own 20 MW test bench in Aarhus is ready to perform another test. Here, Vestas can simulate a complete life cycle for key components and systems in order to map potential reliability issues and possible improvements. This significantly reduces risks for customers and increases the speed of product development. Knowledge previously gathered after years in the field can Photo: Vestas Wind Systems A/S now be collected over the course of months before a product is even installed for customers. Shortening the time to market. LORC offers the world’s most realistic indoor full scale testing of 3-10MW nacelles. A unique design allows the hub to be included and the pitch system to remain active during testing of the nacelle’s functionalities and interaction with the grid. The full software and hardware is tested under extreme events with a test controller calculating the torque reference from simulated wind input. The test process can roughly be divided into three steps with good facilities available in Denmark for every step. Step 1: Component and system integration testing Aarhus, the second-largest city in Denmark, provides the setting for Vestas’ powerful in-house test bench for wind turbines. Here, the full system, including main components such as gearbox and generator, is tested. The test bench can apply massive power and loads to the drive train similar to the conditions in the field, which allows us to simulate a complete life-cycle over a short period of time. Step 2: Complete nacelle testing LORC adds another element to the tests, as the complete nacelle, including the hub, is tested on a 10 MW test bench. It enables Vestas to test other key components in the wind turbine and – not least – their in- Photo: Vestas Wind Systems A/S teraction during realistic conditions. For example, the full software and hardware is tested calculating the torque reference from simulated wind input. The test bench is close to unique when it comes to the ability to test the electrical components and their output to the grid. This is of course of great interest to Vestas – and in the end to our customers. Step 3: Field tests Finally, we test in the field to prove that we can deliver what we have promised our customers. A number of sites in Denmark are dedicated to test purposes, which enables us to quickly bring a prototype to field testing. 26 Making offshore wind attractive and accessible to investors Making offshore wind attractive and accessible to investors 27 MAKING OFFSHORE WIND ATTRACTIVE AND ACCESSIBLE TO INVESTORS Offshore wind projects are politically and financially attractive investments With interest rates at a historically low level, investing in infrastructure such as offshore wind is becoming increasingly attractive as new investment channels become available. Christina Grumstrup Sørensen, Senior Partner, Copenhagen Infrastructure Partners Stephanie Bendorff Røpcke, Manager, Copenhagen Infrastructure Partners For institutional investors, investment in offshore wind is attractive. With long time frames, stable returns over several years and a strong cash flow, offshore wind can serve as a substitute to certain bond types. Governments, seeking to achieve CO2 reductions, address future capacity needs and ensure regional security of supply, support offshore wind investments and the projects are becoming more bankable due to proven concept and technology. The world’s first offshore wind farm was Danish and built in 1991. Today, we have more than 5 GW offshore wind capacity installed in Europe and The European Wind Energy Association anticipates a level of around 23 GW by 2020. accessible for institutional investors, CIP applies an “industrial approach”. The five partners in CIP have extensive experience within development, construction and operations from numerous offshore wind projects and leverage their industrial background for access to proprietary deals. The recent CIP investment in the UK offshore wind project Beatrice is a good example of how and why the industrial approach works. CIP and the two shareholders of Beatrice, the UK energy company SSE and the global energy company Repsol, engaged in a dialogue in early 2014 about the possible acquisition of a shareholding in Beatrice. In November 2014, CIP acquired 25% of Beatrice from SSE. The acquisition was made on behalf of the two funds, Copenhagen Infrastructure I & II, which have commitments from eight of the largest institutional investors, primarily pension funds, in Denmark. SSE and Repsol had developed the project substantially since 2009 and CIP entered the project at the last stage of develop- However, many institutional investors do not yet have the required resources and experience within energy infrastructure investments. This has led to the formation of specialised infrastructure funds, such as Copenhagen Infrastructure Partners (CIP), which was founded in 2012. To make offshore wind projects more attractive and ment. This was late enough for the development risks to be significantly reduced: the Investment Contract was awarded and the grid connection, main consents and building permits were obtained. However, it was as well early enough to allow CIP to participate in the optimization of risk allocation (e.g. allocation of risks in the contracts with suppliers), concept (e.g. wind farm layout and technology choice) and bankability (e.g. participating in securing bankable Operations & Maintenance contracts and Power Purchase Agreements, designing and executing the project finance strategy). All areas in which the CIP partners have substantial experience. Unlike most infrastructure funds, CIP has a long investment horizon. This is attractive for industrial companies looking for long term partners with whom they can build and operate the projects and for institutional investors looking for strong cash flows and stable inflation-linked returns for many years. Illustrative example: Revenue per MWh for a UK offshore wind project with an Investment Contract Nominal GBP received per MWh produced Investment Contract strike price Beatrice is an offshore wind project located in Outer Moray Firth, Scotland, with a potential capacity of up to 664 MW. The project has been substantially developed by SSE and Repsol and is progressing towards Final Investment Decision in 2016. SSE manages the development of the project and will be the main operator. Beatrice is owned by SSE (50%), Repsol (25%), Copenhagen Infrastructure I (12.5%) and Copenhagen Infrastructure II (12.5%). All shareholders have seats in the Board of the project. Photo: Copenhagen Infrastructure Partners Year 1 2 3 4 5 6 Estimated market price – Illustrative high and low level Estimated market price – Illustrative average level 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Beatrice is one of five offshore wind projects in the UK awarded an Investment Contract by the UK government. The Investment Contract secures the generator a fixed CPI indexed price per MWh for a 15-year period (green area). After this period, the generator receives the market price (blue area) which is expected to be lower and exhibit fluctuations due to seasonal effects and changes in economic activity. The investment contract thus reduces the power price risk significantly and produces bond-like cash flows. The graph is only an illustrative example of the revenue profile for a project similar to Beatrice. 28 Sustainable wind export business Sustainable wind export business 29 SUSTAINABLE WIND EXPORT BUSINESS Export of the Danish energy model The Danish political parties have approved an initiative to promote export of Danish energy solutions in the period from 2014 to 2015. The countries of focus for the export initiative are UK, Germany and China. The aim is to facilitate increased collaboration between Danish and foreign authorities to pave the way for business cooperation, export opportunities and foreign investments in Denmark. Industry hand in hand with intergovernmental cooperation on the green agenda Wind energy covered more than 39% of the Danish electricity consumption in 2014. This makes Denmark a world champion in wind generated electricity and a market leader in the green energy transition. Denmark has recently created a new initiative to extend our successful government to government cooperation in this field. Morten Bæk, Director General, Danish Energy Agency Green energy technologies are in high demand and Denmark is a living example that economic growth and CO2 reductions can be achieved simultaneously. Denmark has already established bilateral cooperation with a number of countries, including China, Mexico, South Africa and Vietnam to catalyse the energy transition in these countries. The focus is on energy policy and regulatory issues - such as cost effective framework conditions for wind power expansions. China has entered the energy transition fast track with a clear focus on e.g. wind performance and quality, aiming to learn from Denmark’s technology development practice and regulatory experience. The cooperation makes for real cuts in global CO2 emissions and paves the way for increased bilateral trading in the energy area. Danish export statistics show that green energy technology equals good business. Energy technology exports have long accounted for a large share of Denmark’s export of goods compared to other EU countries. In 2013, the export of energy technologies amounted to 10.8% of exported goods total. Of this, green technologies accounted for more than half. Photo: Keenpress/Wind Power Works A green transition. China stands as an example of countries wishing to transform their energy sector into a greener one. The country’s extensive need for energy has seen a large fraction of renewable energy projects being built in recent years. Denmark’s extensive knowledge within renewable energy technologies, in particular within wind, sees great knowledge-sharing opportunities between the two countries. Wind export China exemplifies countries that wish to green their energy production. With an extensive thirst for more energy, renewables are making up a large fraction of newly built energy projects in China. Based on a decade of mutually beneficial cooperation Denmark has recently initiated a pilot project to support China’s energy transition. Out of the total export of goods to China in 2013, export of energy technologies amounted to 11.2 % with a green energy technology proportion of 32.1%. Of this, the majority was wind. Government to Government cooperation In the implementation of the current bilateral project, the Danish Energy Agency has joined forces with the Trade Council at the Royal Danish Embassy in Beijing and Danish suppliers to the wind industry in China. The project idea is based on an integrated approach, where deep regulatory cooperation makes for sustained business opportunities. The Chinese authorities have welcomed this approach, appreciating the Danish experience in crafting legislation, regulation and modelling for greening the energy sector. Changing the focus China has invested in onshore wind energy amounting to approx. 100 GW. Some farms EXPORT SHARE Denmark 2005 2013 in this vast portfolio are not performing up to standards and the Chinese government is dedicated to make the most of its investment. In the pilot project, Denmark will share it knowledge on how Chinese wind farms can increase performance using Danish standards and technology. The approach is a focus on Levelized Cost of Energy (LCOE). LCOE is the production cost of each unit of electricity generated over the life time of a wind farm taking into account a wind farm’s development cost, capital investment, financial costs, and lifetime running costs. The way we think wind is changing from a focus on investments costs only to a broader focus that includes operation and maintenance cost, too. China has historically approached wind projects with a relatively short-term investment perspective. Through the Danish LCOE approach, Chinese wind farms can achieve a more robust business case and greater return on investments. 8.410.8 Italy 7.89.1 Finland 5.68.9 Germany 7.58.9 Austria 7.48.4 Sweden 6.68.2 EU15 5.86.6 France 6.16.2 Spain 4.35.9 United Kingdom 5.2 Luxembourg 4.95.3 5.3 Portugal 4.55.3 Greece 5.23.5 Netherlands 3.03.3 Belgium 3.33.2 Ireland 2.02.1 Energy technologies’ share of the export of goods in among the EU15 countries In comparison to other EU countries, export of energy technologies has long accounted for a large share of goods exported from Denmark. In recent years, the export of particularly green energy technologies has risen exponentially. Denmark exported 171% more green energy technologies from 2005 to 2013. 30 A POWERPLANT AT SEA Repowering for a windy future A POWERPLANT AT SEA 31 REPOWERING FOR A WINDY FUTURE Denmark’s largest offshore wind farm near Anholt, was finished in 2013 with 111 3.6 MW wind turbines covering an area of 88 km2. With a capacity of 400 MW it provides 4% of Denmark’s total electricity consumption – or roughly the equivalent of more than 400,000 Danish households’ annual consumption. The technological developments have meant that there now is a good business case for replacing old turbines in preferable locations with new, more efficient turbines. Denmark will see a number of repowering projects in the coming years, as more turbines reach the expected lifetime of 20 years. An ambitious goal Denmark has set an ambitious goal. We need to be a low carbon society by 2050. This means that we should stop using coal, oil, and gas as energy sources. By 2020 the aim is that more than 35% of Denmark’s energy will come from renewable sources. An important step Anholt Offshore Wind Farm covers 4% of Denmark’s total electricity consumption. The wind farm is an important step in the right direction towards Denmark’s ambition to be a low carbon society and a large step towards the 2020 target of covering 50% of our electricity consumption with wind power. A sizable project Anholt Offshore Wind Farm is a sizeable project for an economy like the Danish. According to the Danish Energy Agency, the project is expected to generate approx. 8,000 jobs in both knowledge-intensive sectors, in the construction sector as well as in the industrial sector at home and abroad. 400 MW capacity Anholt Offshore Wind Farm is Denmark’s largest offshore wind farm with a capacity of 400 MW. Consequently, the wind farm is a modern-day power plant at sea, able to cover more than 400,000 Danish households’ annual electricity consumption of CO2-free electricity. The Klim Fjordholme onshore wind farm consisting of 35 600 kW turbines was originally commissioned in 1996 and the age of the turbines and the preferably wind location has lead to an upgrade of the farm. When the Klim Fjordholme-project is completed in 2015, it will become Denmark’s second largest onshore wind farm. World leaders The creation of the park strengthens Denmark’s position as one of the world’s leading nations within the wind energy sector and especially as a world leader within offshore wind farms. The license to operate the wind farm was granted to DONG Energy for 25 years. 88 km2 wind farm The chosen design of the wind farm covers an area of 88 km2 within an original specified gross area of 144km2, which secured the most optimal location of each of the 111 3.6 MW wind turbines at the wind farm. The length of the wind farm is approx. 20km, while it is 5km wide. Replacing old turbines for more efficiency In May 2014, Siemens Wind Power and Vattenfall Vindkraft signed the agreement for the delivery of 22 3,2 MW turbines. This will increase the effect of the farm from 21 MW to 70,4 MW. The 22 new turbines in the Klim Fjordholme-project are expected to provide electricity to approx. 58,000 homes. New technology for higher operational reliability The new turbines in the onshore park are fitted with a Siemens gearless Direct Drive Wind Generator which indicates fewer components and a smaller nacelle. In addition, the turbines are lighter and easier to transport. The technological development means that six new turbines will create the same effect as the 35 old turbines they replace. With more than 7,000 kilometres of coast line, it is not surprising that Denmark is a windy place. However, some locations are more preferable than others and the conditions at Klim Fjordholme are optimal for the new Siemens turbines, as the hub is located almost 100 meters above the ground where the average wind speed is 8.1 meters per second. Refurbishment for export The 35 old turbines which are now obsolete in a Klim Fjordholme context will be refurbished. The turbines have already been sold to projects in Italy and Ireland, where they are expected to produce wind power for another 20 years. Learn more about Danish solutions in wind power, find more cases from around the world and connect with Danish expertise at: stateofgreen.com/wind-power State of Green is a non-profit public-private partnership owned by: