Copenhagen, Denmark – Denmark recently launched a share buy-in scheme intended to help the country meet its ambitious wind energy goals and encourage local support of wind projects.
The new community wind plan would advance the mature and growing wind sector in Denmark. Wind accounted for 28% of the electricity mix in Denmark in 2011, according to the Danish Energy Agency, up from nearly 22% the year before. Under a national energy plan approved by the Danish Parliament in March, wind turbines should supply half of the electricity consumed in the country in 2020. The Danish Wind Industry Association says 1,800 megawatts (MW) of new wind turbines are expected to be installed onshore under the plan.
Under the “Buy Legal System,” which took effect in November 2011, developers of on- and offshore wind farms must offer shares worth at least 20% of the total project to local residents. Detailed information on the scheme is available from Energinet.dk, which operates the electricity and natural gas transmission grids in Denmark.
Søren Thorpstrup Laursen, an engineer with Copenhagen Energy, told me that the rules are intended not just to encourage new wind projects but to temper local opposition by turning residents into wind entrepreneurs.
The developer establishes a private company to distribute the local wind shares. The availability of shares must be advertised in the local newspaper. Shares are offered first to permanent residents 18 and older within 4.5 kilometers of the project site. Outstanding shares are then made available to residents beyond the 4.5-kilometer zone but within the municipality.
The developer is not permitted to make a profit on the 20% community share of the project, Laursen told me. Turbines comprising the local share of the wind farm must be offered at cost. Developers grudgingly accept these provisions, he says, in the hope they will persuade locals to embrace sometimes contentious projects.
Each share, sold for 4,000 Danish kroner ($700), corresponds to 1,000 kilowatt-hours (kWh) of annual output from the wind farm. Investors share costs, revenue, and risk on an equal footing with the wind project developer. Wind turbines under 25 meters, those deemed experimental, and offshore turbines deployed with public funds are exempted from the Buy Legal System 20% requirement.
The Buy Legal System builds upon a system used to partly fund the world’s first utility-scale offshore wind farm, Middelgrunden, an arc of 20 2-MW turbines perched in shallow water in Copenhagen Harbor. Middelgrunden, which came online in 2000, generates 100,000 megawatt-hours (MWh) annually, equivalent to 3% of the electricity consumed in Copenhagen. The 10 southern turbines were purchased by a cooperative of nearly 10,000 private investors. Copenhagen Energy’s Laursen himself owns shares in the Middelgrunden wind park, he told me.
As with the new Buy Legal System, Middelgrunden investors were able to buy shares in 1,000 kWh increments. In years one through six, each share delivered a return of 70 euros ($91) annually (minus 10 euros, $13.05, for maintenance). The rate of return in those years was 12.5%, with a simple payback of 8 years, according to Copenhagen Energy.
“Today, after more than 10 years, we have all the money back and you get about seven percent every year on invested capital. People are quite satisfied with this because it is much better than having it in a bank, and at the same time, you are doing something positive for the environment,” Hans Christian Sørensen, a board member of the cooperative that owns half of the wind park, told the Copenhagen Post last November.
Note: This is the first in a series of posts on clean energy and climate solutions in Denmark. Future installments looked at seawater-based district cooling in Copenhagen, the Project Zero carbon-neutrality plan, Copenhagen's success as a cleantech leader, and what other cities can learn from Copenhagen's climate adaptation plan. The reporting for this post was supported by a grant from the Danish Ministry of Foreign Affairs International Press Initiative.
