Projects

General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Licences and permissions are obtained through the Danish Energy Agency.

The Danish state owns the exclusive right to utilise energy from water and wind within the Danish territorial waters and the exclusive economic zone. Therefore, the establishment of and subsequent considerable modifications to electricity generation plants exploiting energy from water and wind are subject to having obtained a licence from the Danish Energy Agency.

In respect of offshore wind farms, these licences and permissions to establish offshore wind farms can be obtained through a tender procedure or an open-door procedure:

  • In the tender procedure, the tender is announced by the Danish Energy Agency following a political energy agreement. The tender will include tender specifications and a draft concession agreement. The bids will typically be submitted following a negotiation procedure. The subsidies have been a fixed price per kilowatt based on contract for difference where the subsidy is determined as the difference between the tenderer's offered bid price and the fluctuating spot price. For the upcoming Thor Offshore Wind Farm, a price premium based on the principles of the contract for difference will be calculated as the difference between the tenderer's offered bid price and the annual reference price (the average of the electricity spot prices in the previous calendar year). After evaluation and selection of the winner, a concession agreement is concluded. Hereafter, the winning tenderer must, inter alia, provide a guarantee for the construction of and connection to the grid and a guarantee for the decommissioning of the plant.
  • In the open-door procedure, the project developer takes the initiative to establish an offshore wind farm. The open-door procedure requires a total of three permissions: (1) permission to conduct a preliminary investigation; (2) permission to establish the electricity generation plant; and (3) permission to start utilising the energy. The permissions may be conditional on certain environmental, technical and financial requirements for the project. These permissions may only be transferred upon prior approval from the Danish Energy Agency.

 

The establishment of and subsequent considerable modifications to other electricity generation plants are subject to the prior permission from the Danish Energy Agency, unless such electricity generation plants have a capacity of less than 5MW, or such other plants producing electricity based on renewable energy have a capacity of less than 10MW.

Further, the transfer of electricity generation plants is subject to the prior permission from the Danish Energy Agency.

Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

Electricity is either traded through Nord Pool or through power purchase agreements.

Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

In general, long-term power purchase agreements are not prevalent in Denmark yet. However, they are expected to become more important. These agreements are, like other types of power purchase agreements, negotiated agreements that are not subject to any specific Danish legislation.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

The generation of electricity from plants exploiting energy from water and wind can only be carried out by companies that have obtained a licence from the Danish Energy Agency subject to the conditions in the Act for the Promotion of Renewable Energy. This licence is given for a period of 25 years with the possibility of extension.

The generation of electricity from other plants with a capacity of more than 25MW can only be carried out by companies that have obtained a licence from the Danish Energy Agency subject to the conditions in section 10 of the Electricity Supply Act. This licence is given for af period of minimum 20 years.

It does not require a licence or permission to sell electricity from renewable energy projects.

Decommissioning

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

The permission or licence to establish electricity generation plants will in general be accompanied by the condition to provide security for the decommissioning of plants, for example, in the form of a guarantee for decommissioning of the plant from a financial institution, an insurance company or similar.