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Installation begins on Denmark’s first zero-subsidy wind farm

By State of Green, March 29, 2019

Gusty wind conditions and the first Danish deployment of Vestas' largest wind turbine model will enable Hirtshals Havn to churn out electricity on pure market conditions, only backed by a three-year PPA.

Installation of Denmark’s first zero-subsidy wind farm has begun, writes EnergyWatch.eu. Domestic developer Hirtshals Havnefond has planned a project in partnership with Vestas featuring four wind turbines of the model V136-4.2 at the country’s northern port of Hirtshals. The machines will start spinning on pure market conditions starting from the fourth quarter of this year. The project’s only security is a three-year power purchase agreement (PPA) entered with energy trader EnergiDanmark.

The southern Scandinavian country thereby joins the growing club of countries capable of facilitating onshore wind farm without state subsidy – a tendency that, particularly in the last few years, has gained momentum in Nordic markets such as Finland and Sweden. And the Hirtshals project is also distinctive beyond breaking through the subsidy barrier.

“It has a unique placement and novel wind turbines,” said Hirtshals Havnefond Chair Jens Peter Lunden, explaining how the project will be viable devoid of subsidy.

-Related news: Denmark’s biggest offshore wind farm will be located in the North Sea

With an average wind speed of 8.2 meters per second, Hirtshals Havn could hardly be better suited for wind energy generation. The V136-4.4, with its 66.7 meter blades, can harvest more wind power the any wind turbine model thus far installed in the country. The 4.2 MW machine can also, Vestas claims, generate roughly 17 GWh annually at such wind speeds – approximately double last year’s average output from an onshore wind turbine installed in the country.

Generation saves the project

Naturally, there will be deviations in optimal output and actual generation during a given year. Even though the cost of renewable energy has declined substantially in recent years, with onshore wind maintaining its lead as the cheapest source of green energy with a global average cost of USD 50 per MWh 2019, according to BloombergNEF, Lunden is convinced that the facility’s location will be a crucial factor.

“Similar to the real estate market, it’s all about location, location, location. Production costs have have declined, but generated volumes save the day,” he said.

Wind Denmark acknowledges that the project site was the decisive factor in planning Denmark’s first zero-subsidy wind farm. For, even though last year’s technology-neutral tender ended with a remarkable average price of EUR 0.0031 per kWh – achieving veritable zero-subsidy status is entirely special, the interest group says.

“We have reached a point where the combination of fantastic wind conditions and the latest technology make it a given that onshore wind turbines can be installed without subsidy. This is a milestone we have been working towards for many years,” said Wind Denmark Chief Executive Jan Hylleberg, who, however, does not for that reason advocate canceling future tenders with attached subsidies.

“In part, it is about promoting technology-neutral competition, and there will probably still be projects requiring some support, as last year’s tender demonstrated. Fantastic wind conditions are not found everywhere, and there will also be sites that don’t allow the for the latest technology.”

Taller turbines, smaller subsidies

The nascent turbine technology planned for Hirtshals only relates to the tops of the towers. Nacelles will be placed atop 82-meter towers, which is roughly half the height of Vestas’ forthcoming platform. This design feature is due to Denmark’s height restriction regulations, which stipulate that tip blade height must not exceed 150 meters. If that requirement was slackened, a larger portion of Danish wind power could be subsidy free.

“There is no doubt that if it were possible to install turbines taller than 150 meters, we would have a situation that could accommodate more wind turbines completed free of subsidy,” Hylleberg said.

-Related solution: World’s largest offshore wind farm

Hirtshals is not the only zero-subsidy green power project planned in the country. In February, Danish developer Better Energy announced a 125 MW solar farm, only secured with a PPA with Danish fashion company Bestseller. Lunden is not concerned that the facility is at risk of incurring losses after Hirtshals’s three-year PPA with EnergiDenmark expires.

“We have had the opportunity to set the power price quite high, but there aren’t enough buyers on the electricity market when the horizon extends beyond three years. A lower power price would then mean that our business will become less lucrative. But things are moving toward increased electricity consumption, both for heat and cars, while transnational interconnectors will homogenize Europe’s power prices,” Lundin said.

Global Danish leadership

The manufacturer of the new and improved, subsidy-free wind turbines also expects further unsubsidized wind farms in the future.

“Denmark’s auction system remains a strong instrument to ensure a successful energy transition and for Denmark to remain a global leader within sustainability. Complementing the auction system, this order shows that onshore wind have now reached a point where projects also are possible on market terms if we can put up the newest technology,” writes Vestas Global Senior Vice President for Marketing, Communications and Public Affairs Morten Dyrholm in a press statement.

Beyond the order four these four turbines – one of which is sold in share to a local cooperative – the company has also secured a 20-year service contract.

Source

EnergyWatch.eu

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