To harness the North Sea’s green energy potential, Denmark’s Prime Minister Mette Frederiksen hosts the President of the European Commission Ursula von der Leyen, German Chancellor Olaf Scholz, Dutch Prime Minister Mark Rutte and Belgium Prime Minister Alexander De Croo at the North Sea Summit in Esbjerg on 18 May.

With its enormous green energy potential, the North Sea has the capacity to become a regional green energy engine. By harnessing its winds, Europe can power millions of households with green electricity. At the same time, buildout in the North Sea has the potential to create an abundance of new green jobs. Jobs in ports, jobs in test and research facilities, and jobs across industries. Jobs both offshore and onshore. Finally, the generated electricity is a key in delivering the future of fuels. Combining offshore wind and renewable power-to-x, the sea’s gusty winds can provide enormous steps in powering trucks, planes, and ships while decarbonising Europe and promoting energy security.

Representing an ocean of opportunities, the North Sea Summit will focus on the central role offshore wind in phasing out fossil fuels in the EU, and how the North Sea can become a green powerhouse for the European continent. Alongside heads of states, energy ministers, the EU Commissioner for Energy and major business leaders will attend the summit discussing.

Based on five decades of Danish learnings, State of Green has gathered a line of perspectives outlining how wind energy can push the ambitions for a renewable energy transition and help Europe turn the North Sea into a sustainable power hub.

Powering the future: Harvesting the North Sea’s energy potential

With its large sea area, shallow waters and stable wind resources, Denmark has a vast potential for offshore wind. In the North Sea, Denmark will establish the first energy hub in the world with up to 10 GW of offshore wind capacity.

The Danish Sea area (12 nautical mile zone, exclusive economic zone and internal waters) covers 105,000 km2 of largely shallow waters. This makes it both significantly larger than those of the Netherlands, Germany, and Poland, and ideal for bottom-fixed wind turbine foundations. The latter being a prerequisite for producing cost efficient wind power offshore. Denmark’s proximity to load centres like the United Kingdom, Benelux, Germany, and Poland provides opportunities for connecting offshore wind farms directly to neighbouring markets. Over half of the 300 GW offshore wind capacity that the EU aims to install by 2050 is expectedly located in the North Sea. A large share of this could be installed cost-competitively in Danish waters.

An energy exporter

Today, the Danish electricity consumption is around 35 TWh. Through direct and indirect electrification, the electricity demand is expected to increase to 50-70 TWh by 2030 in step with Denmark’s emission reduction targets. By 2033, the Danish offshore wind capacity will alone comprise 7 GW, generate up to 40 TWh by 2035, and surpass the current Danish electricity consumption. This means that Denmark stands to become a net exporter of electricity in the next decades.

Hybrid assets

Traditionally, offshore wind farms have been planned and built as single projects with single radial connection directly to shore. This changed in 2012 with the Danish decision to build the Kriegers Flak Offshore Wind Farm in the Baltic Sea in conjunction with an interconnector between Denmark and Germany: A so-called ‘hybrid asset’. Hybrid assets benefit from the ability to fully utilise the transmission system by both transporting power produced from an offshore wind farm to shore and serving as an interconnector. A need for fewer cables combined with higher cable utilisation rates have lowered overall project costs and investment needs.

Energy islands

As offshore wind farms grow and move further from shore, great synergies can be achieved by combining more projects into offshore ‘hubs’ or ‘islands’ with shared transformation and connections to more markets. Denmark aims to build two such energy islands. One by the island Bornholm in the Baltic Sea with an initial capacity of 2 GW offshore wind connected to both Denmark and Germany. The intention is to use Bornholm as a fixed platform for a transmission substation and potentially an operation and maintenance base. The island can later be expanded with more capacity and connections to e.g., Germany and Sweden.

The second energy island, constructed as an artificial island about 80 km off the west coast of Jutland, will initially cover around 120,000 m2, supporting the infrastructure required for 3 GW offshore wind farms by 2033. Phase 2 includes the expansion of the physical island up to 460,000 m2 and up to 10 GW, powering up to 10 million homes.

The journey does not stop here. Following a proposal by the Danish Government in April 2022, Denmark now aims to build even more energy islands.

The economic benefits of wind energy

Wind energy has a well-documented positive socio-economic effect. From job creation to export, wind energy plays a central role in the Danish economy.

 In 2019, the Danish wind industry directly employed 33,159 people, over 2% of all private employment in Denmark. Indirectly, the wind industry supports a further 63,000 jobs in adjacent industries. The wind industry also contributes significantly to taxes with 13.8 billion DKK (1.9 billion EUR) paid in 2018 through the primary value-chain.

Several municipalities across the country benefit economically from the wind industry. Denmark’s second largest municipality, Aarhus, received 138 million DKK (18.6 billion EUR) in municipal income tax from the industry in 2018. Ringkøbing-Skjern, the third largest municipality in terms of income tax, received more than 5% of the municipality’s tax income from wind industry employees.

In Denmark, the socio-economic benefits of wind primarily come from onshore wind, as it still covers most of the wind capacity. This underlines onshore wind’s continued importance. Meanwhile, the effect of offshore wind is growing. In 2010, offshore wind activities made up 20% of Danish wind companies’ turnover. In 2020, that number had increased to 40%.

New gigawatts and job creation

In 2020, the socio-economic effect of offshore wind installations was documented for the first time. The analysis showed that 1 GW of offshore wind energy generates employment equal to 14,600 man-years for Danish suppliers from direct, indirect, and derived job effects. With almost 10 GW of new wind energy installation in the Danish pipeline, a significant number of jobs stand to be created in the process.

Given the country’s large coastline, the offshore wind industry has a strong effect. Especially, harbours like Grenå by the Kattegat Sea, Hvide Sande by the North Sea, and Rønne in the Baltic Sea exemplify how wind energy contributes significantly to the local economy with opportunities for growth and development. With Denmark’s ambitious expansion plans for offshore wind all parts of the country stand to benefit from the socio-economic effects.

With an estimated 40% market share, Danish companies also have a strong presence on the European offshore wind market. European offshore wind expansions have a significant effect on job creation in Denmark. In fact, an estimate shows that 9,100 man-years of labour are generated in Denmark for every single GW offshore wind investment made in the EU. With 450 GW of wind energy in the EU pipeline towards 2050, this makes for an enormous potential for the Danish wind industry.

Furthermore, wherever wind farms are installed they typically bring many local jobs in relation to installation, operation, and maintenance.

Wind energy as a key industry

Energy technologies and services have become key in Danish exports, making up almost 14% of Denmark’s total export goods in 2019. This year also saw a new record of exports in wind energy technologies and services of 68.5 billion DKK (9.2 billion EUR). This is more than half of the total export of energy technologies from Denmark, totaling 122.7 billion DKK (16.5 billion EUR).

The increased wind energy exports result from both an increase in Danish exports of energy technologies1, as well as a general global increase in demand for wind energy. A strong focus on export of energy technologies and services has opened for unique opportunities for both Danish and international partners.

“From black to green”

Across the globe, policy makers and commercial entities are grappling with the challenge of how to transition from a power system based on fossil fuels to a renewable based one. In doing so, regulators and policymakers must tackle numerous issues along the way, such as how can ambitious targets be met in an economical way and secure sufficient job creation? How can markets attract investment in new technologies, without triggering high risk premiums? How can support schemes incentivise competition in new technologies, without placing heavy economic burdens upon the state? For energy companies willing to make the transition to clean energy, the challenges in a radical reorientation of their business are equally many and complex.

State of Green’s white paper ”From black to green – a Danish sustainable energy growth story” describes in detail Denmark’s green transition, including lessons learned along the way – both positive and negative. The white paper also studies how Ørsted, a Danish energy utility, transformed from fossil fuels to renewable energy, and learn more about the regulatory framework that made it possible.

Background on Denmark’s green energy transition

Like many countries, Denmark was also once entirely dependent on imported oil and other fossil fuels.

Today, more than 50% of our electricity consumption comes from wind and solar energy alone, and by 2030 it will be 100%. The green transition has been made possible through broad political support and a private sector leading the way and developing the necessary solutions to transform the energy system from black to green.

Decades of experience have enabled Danish companies to develop and refine innovative and resource-efficient green solutions in a range of fields. These include wind energy, bioenergy, waste-to-energy, district heating as well as energy efficient solutions in buildings and industry. To harness the synergies between these, Denmark actively works to improve and promote sector integration.

Denmark continues to set ambitious climate goals and is currently working to reduce greenhouse gas emissions by 70% by 2030 (compared to 1990 levels). To meet this ambitious target, Denmark is developing new solutions and scaling up existing ones through public-private partnerships and global collaboration.