<strong>Copenhagen</strong> <strong>Cleantech</strong> <strong>Cluster</strong> 6The <strong>smart</strong> <strong>grid</strong> will give rise to a number of socioeconomicbenefits, such as lower electricitycosts as the flexibility of electric vehiclesand heating pumps allows part of electricityconsumption to be moved to time slots wherethe electricity is cheaper, and a decrease inthe cost of power generation regulation. Thevalue of these benefits is estimated to beabout Euro 1,1 billion. Traditional expansionof the <strong>grid</strong> would require investments of Euro1,03 billion but would not result in similarsocioeconomic gains. 1 Furthermore, theexpansion of the Danish <strong>smart</strong> <strong>grid</strong> is roughlyestimated by 2025 to have led to the creationof 10,000 new jobs. 2In the EU, the estimated investement needsare Euro 500 billion by 2030 if transmissionand distribution investments are included. 3Ambitious political aimsThe long-term vision for the Danish energysystem is independence from fossil fuels,and there is the political ambition to achievethat goal no later than 2050. A long-termDanish energy system based on indigenousenergy resources can be obtained most costeffectivelyvia a combination of initiativesleading up to 2050: the massive developmentof wind power; substitution of fossil fuels withbiomass, biogas and waste; implementing the<strong>smart</strong> <strong>grid</strong>; energy exchange with neighboringcountries; and a considerable level of energysaving and improvements in overall energyefficiency. 4Long experience with wind energyDenmark has four decades of experiencein the implementation of wind energy, andhas therefore been the first country to meetand address the challenges posed by theintegration of a large degree of wind energy inthe power system. Today, Denmark producesmore than 33% of its electricity from renewableenergy sources – wind, biomass, solarand geothermal. Wind alone accounts for1 Energinet.dk, 20112 Deloitte, 2011 (own translation and currencyexchange)3 EU JRC report, 20114 Confederation of Danish Industry et al, 201020,7%. 5 This is a notably high proportion – infact Denmark has the largest proportion ofsuch electricity production in Europe. 6 Figure2 illustrates Denmarks transition from centralto decentral energy system.However, the potential is much greater:Mikael Togeby, Partner in Ea Energy Analysesestimates that in the longer term, with anintelligent power <strong>grid</strong>, up to 75% of energysupplied by wind is realistic.Flexible and coordinated power marketThe circumstances outlined above havecaused Denmark to be involved in the developmentof one of the world’s most flexibleelectricity markets, and thus the country isalready one step ahead when it comes toa flexible demand response power system.Brian Vad Mathiesen, who is Associate Professorat Aalborg University as well as the mainauthor of and scientist behind the renewableenergy system in IDAs 7 Climate Plan 2050,explains that “Denmark has the world’s mostwell developed market for handling wind andthe resulting fluctuations in its production.Large and small electricity producers alreadyregulate their production, e.g. using thermalstorage. In fact, this means that there isalready a close interaction between consumptionand production in Denmark.”Nord Pool SpotThis market interaction is possible due toNord Pool Spot. In 1991, Norway was one ofthe first countries in the world to deregulateits power market, and was shortly followedby the other Nordic countries, who combinedtheir individual markets into a common Nordicmarket. This was done in order to optimizesocial welfare and increase the security ofsupply. Available power capacity can be usedmore efficiently over a large region comparedto a small one, and integrated markets enhanceproductivity and improve efficiency.5 Danish Energy Agency, 20106 Confederation of Danish Industry, 20107 IDA is the Danish Association of Engineers
Figure 2.Source:Illustration of Denmark’s journey from centralised to distributed energy systemDanish Energy Agency, ens.dk, 100% accurate maps available1985Centralised combined heat and power plantDecentralised combined heat and power plantWind turbines2009Centralised combined heat and power plantDecentralised combined heat and power plantWind turbines
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