Introduction

On 29 June 2018 the government and all parties in Parliament entered into an agreement which entails a major commitment to developing green energy by 2030.

The agreement contains a broad range of green initiatives and tax reliefs on electricity which aim to encourage Danish consumers to swap fossil fuels for green electricity. Similarly, the planned modernisation of the heating sector aims to provide both companies and consumers with greener and cheaper heating.

The agreement aims to make Denmark a low emission society which is relatively independent of fossil fuels. The overall goals are that:

  • consumer electricity consumption in Denmark will be provided by renewable energy sources by 2030; and
  • 50% of Denmark's entire energy consumption will be covered by renewable energy sources by 2030.

Details of energy agreement

The agreement plans for, among other things:

  • three new large offshore wind farms;
  • a new pool of onshore wind and solar energy;
  • a determined energy savings effort; and
  • the development of energy and climate research.

A total of Dkr19 billion will be invested in renewable energy. The agreement proposes the following:

  • Three new offshore windfarms with a combined capacity of 2,400 megawatts will be established by 2030. The windfarms are expected to be substantially cheaper than previous installations.
  • Dkr4.2 billion will be offered through tenders to develop technologies such as land windmills and solar cells and deliver green electricity at the lowest price.
  • A fund of more than Dkr4 billion will be earmarked for the development of green biogas production. A share of this investment will be allocated to the development of ecological biogas.
  • Dkr500 million will be allocated annually from 2021 to 2024 for a market-based dedicated energy-saving subsidy primarily for businesses. Dkr300 million will be allocated to businesses and Dkr200 million to improving energy saving in buildings.
  • Dkr400 million will be committed in 2025 and Dkr500 million will be committed each year from 2026 to further renewable energy ventures.
  • Immediate tax relief of Dkr2 billion (excluding value added tax) will be offered in 2025 on electricity and electrical heat production.
  • The heating sector will be modernised to enable both district heating plants and consumers to make decisions on future investments.
  • Dkr500 million will be allocated to discontinue the so-called 'basic financial contribution' in the heating sector.
  • Dkr174 million will be allocated to promote surplus heat and the export of Danish energy technologies.
  • Dkr500 million will be allocated to green transportation between 2020 and 2024 to enhance green mobility and transport.
  • Coal will be phased out from electricity production by 2030.
  • Dkr1 billion will be allocated to research and development in energy and climate technology between 2020 and 2024.

Reactions from energy sector

The energy sector's reaction to the new agreement has been positive. For example, Lars Aagaard, CEO of Danish Energy, stated that:

the future is electric. With the new energy agreement, the politicians are setting the frames for a greener consumption, where the Danish population will have a lot more green electricity in their outlets, and for once, it will be cheaper. The agreement shows the rest of the world who is the world champion in both producing green electricity and using it effectively, for the benefit of climate and the economy.

In addition, Kim Mortensen, CEO of the Danish District Heating Association, stated that "with the political agreement the politicians has given the many, smaller, district heating plants the tools to invest themselves out of trouble. Although this will first be seen in a few years, when the investments have materialised".

Finally, Henrik Poulsen, CEO of Ørsted, commented that "the agreement sets the right course for Denmark with an ambitious goal for renewable energy and a clear plan for development offshore wind".

For further information on this topic please contact Nicolaj Kleist at Bruun & Hjejle by telephone (+45 33 34 50 00) or email (nkl@bruunhjejle.dk). The Bruun & Hjejle website can be accessed at www.bruunhjejle.com.

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