Hans Jørgen Koch, Danish Energy Agency
Release Date: 2009-03-13
Denmark has successfully integrated renewable energy into the energy mix. As a long-time insider, what have been the critical factors behind your country’s alternative energy strategy?Each sort of renewable energy has its own story, background, economic and physical realties. If we look at wind energy, we have reached the highest level of contribution from wind energy in the world, primarily because wind energy production has been integrated in other energy production systems. To be more precise, it has been possible to establish close interaction between Danish wind energy and the Norwegian hydro power. This means that when the wind is blowing at night and a lot of electricity is produced, and there's zero consumption because people are sleeping, the wind is being exported to Norway and is used to pump up the water in the Norwegian hydro power plants. During daytime, when the wind is still blowing, but not enough to secure 100% supply of electricity consumption, we can use the water in Norwegian hydro power plants. There's a good connection to Norway making it possible. The contribution of wind to Danish electricity consumption is 20% and it is coming up to 25%. No other country is in the neighborhood of that figure. So, that is the main success factor.
The incentive for Denmark to develop its own energy production dates back to the oil crisis in 1973, which was even before I entered the business, when Denmark was among the countries that were, as you know, most hardly hit by the crisis in terms of oil prices, because at that stage Denmark was 99% dependent on imported energy. On top of that, Denmark was singled out to a special embargo, together with the US and the Netherlands. The US was subject to the special embargo because they had offered military support to Israel, while The Netherlands was hosting the Rotterdam free market for oil. And what had Denmark done? Denmark's Prime Minister said that he supported Israel, so Denmark was singled out and all of us remember having no heat in the houses, a cold bus in the morning, no cars on Sunday, etc. Denmark found itself in a terribly vulnerable position, even more vulnerable than the most vulnerable OECD countries, mainly Japan.
So, that was the starting point. Clearly, something had to be done, so we started to search in a number of areas. We initiated a discussion on nuclear energy, but a combination of physical and psychological facts (the latter triggered by the meltdown of Chernobyl’s reactor) made it easy to make a decision. Nuclear power was not the best option.
What was left? Energy efficiency, a number of renewable energy sources and coal: we still have a substantial contribution of coal in our energy mix. Over the years we managed to develop an energy system that allowed the lowest energy consumption per GDP in the European Union. On the world basis, only two countries can compete with Denmark, and those are Japan and Switzerland.
Energy efficiency has played a strong role. The most important factor here is combined heat and power production, where, again, we have a world record. More than 50% of our electricity is based on combined heat and power production. Coal fired power plants account for the majority of this power generating capacity, but biomass plays an increasingly important role.
People were always complaining in this country that this damn wind is blowing all the time. Why couldn’t we utilize it? It was natural to look at wind, as only 10% of the country is covered by forests, and to look at waste products from agriculture and waste products from forestry. So, therefore, wind and biomass are, for physical reasons, the most natural sources for renewable energy in Denmark. I would like to point out that biomass is giving a bigger contribution to the total energy consumption, about double the contribution of wind energy, and that is because it is used for combined heat and power production and for heat production.
The concern about environmentally negative effects from energy consumption has always been and is still strong in this country. Therefore, that helped to have the understanding that renewable energy and energy efficiency is something we have to invest into, and then calculate and hope that it will give a payback at a later stage.
The Danish Wind Industry Association says that Denmark has the ambitions to reach 50% of the electricity generated here coming from wind. According to you, which would be the optimal energy mix for the country?
First of all, there are days when wind-powered electricity covers 100% of the consumption. The ambition is to come up to 50%. We are already at 20%. We have offshore plans which will lead us to 25%.
One of the preconditions is not only to cooperate with the Norwegian system, developing quicker connections with the significant hydropower resources in Sweden and Norway. The other precondition is the liberalization of the European electricity market. There's a big potential in continuous liberalization of the European electricity markets but this will take some time because in many countries the producers are also the owners of the transmission grids. For Denmark it is essential to cooperate more with the continental grid system. That is the reason why the European Union’s current discussion on the need to establish a European super grid connecting future large scale offshore wind farms in the North Sea with the European continent is crucial for the development of the Danish wind industry. As the wind power production is not equal at all stages, such effective interaction will ensure that there is no need for a specific backup capacity. Practical implementation of the grid requires big investments.
So, basically the first point is the necessity of constructing physical grids connecting the zones with the biggest potential in the North Sea with the European continent and the second point is to have better rules of the game for cross-border trade in electricity. If we expand our grid connections to Germany and, consequently, to the continent, then I don't see any obstacles for wind energy to reach a share of 50% of our energy production.
Denmark is still, according to many people, the technology hub for the sector, although, as the industry grows globally, some already start to disagree even here in Denmark. What are the measures the Danish government should take in order to make sure that you don't lose the leading position?
I think the best answer to that is to secure that there is still a well-functioning market in Europe and in other countries. If this is done, wind energy will be competitive with any other source of electricity production.
Today, the wind industry is a global industry and success of the Danish wind industry depends on its global competitiveness. A small country with five million inhabitants can do little for an industry which is serving between one fourth and one third of the global market, so the best thing we can do is to secure that wind energy has fair competition conditions in the world market, in the European market, and then secure that the Danish wind industry, as in any other industry, has reasonable and fair conditions in Denmark.
Denmark should continue to maintain its leadership in research and development. We’re supporting continued R&D of new turbines, also improving the conditions for testing and certification of wind turbines. The total budget for research and development in this country in energy will be doubled in the course of the next couple of years. We've always had a tradition for close cooperation between the industry and the research institutions, through subsidized programs. However, it would be wrong to say that the government is pumping a lot of money in order to help the Danish wind turbine industry to maintain a leading position. That is not the industry policy of this government.
What are your expectations for cooperation between Denmark and China in the renewable energy sector in the longer term?
I think there are almost endlessly big prospects. Today China has the highest investment level in renewable energy in terms of GDP, which is second only to Germany. There are 1.3 billion people in China, in other words, there's a huge market there. Denmark has expertise in a number of areas, not only wind but also biomass and it is obvious that China would like to develop its own industry and, to do so, China will be interested in partnerships with other companies. I think it is difficult to overestimate the prospects for Danish-Chinese cooperation. As I read in a Danish business newspaper, Danish company Novozymes has great cooperation prospects in China for development of second generation biofuels. Biofuels is an important sector. It's an important part of biomass. In the longer term, you can have different sorts of ocean energy which could be productive, but that's mostly in the longer term, but there's also tidal water, desalinization...
Is Denmark a bit like the ‘Al Gore of nations’, going around the world talking about climate change, and willing to enhance cooperation with other countries by offering Danish solutions?
There is a global awareness about Denmark’s leadership in renewable energy and our willingness to cooperate other countries as their understanding of the need for enhanced long-term security of supply and the need to be independent of the intolerable fluctuations of oil prices rises. India and Brazil are two examples of countries with which we have signed cooperation agreements.
If you look at the analysis of what should be done to cap the rising temperature at two degrees Celsius up to 2050, you can make a chart that demonstrates that, at an oil price of sixty dollars per barrel in 2050, there are a number of cost efficient power technologies for renewable energy sources. Wind and biomass are the cheapest technologies whereas nuclear and carbon capture and storage are much more expensive. However, if we count on a price of 150 dollars per barrel, it is only carbon capture and storage that have a positive cost. For all of the other investments in efficiency, renewables and nuclear will have a negative cost due to the fossil fuel prices, there will be payback.
The Danish government will be hosting COP15 and clearly has to make strong efforts to convey the following message: changes need to be made to both fight climate change and ensure the long-term security of supply. Moreover, we need to ensure long-term innovation and economic growth. Even the International Energy Agency, a very conservative organization based in Paris, stated that we should transfer the global economy into a low carbon economy. That means we need to boost the use and implementation of CCS, nuclear power, and renewables. There is a growing understanding all over the world that this is absolutely necessary.
How do you want the world to view Denmark after it has hosted COP15 in Copenhagen this year?
Hosting such an event creates a big economic opportunity for any host nation. An international conference will clearly not raise the same level of attention as the Olympic Games, but still, it is an event that will draw the attention to Denmark. This conference is considered a window of the clean technology industry to the whole world and will give Denmark the opportunity to promote its technologies and solutions.
Could it also be a chance for other countries to showcase themselves in a sort of mini world expo for clean energy, with the Chinese, Indians and the Americans showcasing their technology?
To a certain extend, there is a possibility to exhibit different technologies. We also have a lot of visitors and delegations from Asia coming to hear about our energy policy, visit the wind industry and see other renewable energy sources. I would like to emphasize that I do not believe that we, as a result of having hosted COP15, will see a boom in Danish clean technology exports in the following years.
Would you expect, after COP15, the cooperation with other countries in R&D to flourish?
A couple of years ago representatives of the US came to our national renewable energy laboratory asking for cooperation, and we also have extensive contacts with India, Brazil, Turkey, and other countries. Maybe as a result of that, there will be even more countries that would like to look a little closer to see what they are doing in this strange little fairytale country.
| Company: | Danish Energy Agency |
| Position: | Deputy State Secretary |
| Country: | Denmark |