Regulatory and policy options to encourage development of ...

SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUALpage 9.74(a)(b)(c)The increased reimbursement of energy excise tax (1984) due to fallingoil prices.New prices for sales to the grid.A 20 per cent direct subsidy to dispersed installations (reduced from30 per cent) but a 50 per cent subsidy to installations in wind farms.(Karnoe, 1990)3. THE LAW FOR WIND TURBINES 1992The Law for Wind Turbines, enacted in 1992, was the first Danish policy to introducea full subsidy mechanism. It established a fixed tariff rate to be paid by theutilities for any wind generated electricity.The Act also formalized the allotment of responsibility for meeting the costs ofgrid connection for wind turbines, an issue that had previously engendered considerablecontroversy. The law stipulated that turbine owners would henceforthbe responsible for costs of grid connection, with the distribution utilities responsiblefor strengthening the grid so that the connection was workable. In fact, thisactually set up a system of shallow connection charging with utilities having tostrengthen the grid in the specific area in which the wind farm was to be constructed,and thus bearing the majority of the cost burden. While the agreementoriginally applied only to turbines under 150 kW, then under 250 kW, it was laterrelaxed to apply across the board (Gipe, 1995).The Act fixed the amount the utilities had to pay for wind-generated electricityat 85 per cent of that charged to a local, average retail consumer with anannual consumption of 20,000 kWh. This amounted to €0.044/kWh, but turbinesreceived up to DKK €0.081/kWh by the end of the scheme in 2000 asthe result of the addition of a CO 2tax compensation of €0.014/kWh and anenergy tax compensation of €0.022/kWh (Kjær, 1999). This price compareswith the price of €0.028/kWh that electricity could attract with the Nordicpower exchange in 2003.Further measures to increase the available sites include a Government mandateto each region. This has resulted in the identification of more potential onshoresites than was expected, with the likelihood that these will be developed in thenext few years.