05 03 2014 Wind makes up less than 5 % of Danes’ electricity bill
In 2013, tariffs supporting wind energy made up 4.6 pct. of Danish utility bills – a slight increase from 2 pct. in 2012. Calculations by the Danish Wind Industry Association show that the increase can be attributed to Denmark's largest offshore wind farm, which was completed in 2013.
In March 2012, the National Energy Agreement was approved with broad political support for an ambitious green restructuring of the Danish energy system toward 2020. The agreement defines the framework and targets for future Danish renewable energy expansions. With the agreement, the financial support for renewable energy continues to be paid over the Danish electricity bills through the Public Service Obligation tariff (PSO).
The collective PSO tariffs amounted to 5.3 billion DKK in 2013, which corresponds to 7.9 pct. of the total electricity bill for an average Danish household. 3.1 billion DKK of the PSO tariff went to wind energy, which forms the backbone of the Danish government’s green energy plan, where wind is to deliver 50 pct. of Danes’ electricity in 2020.
"Looking at the PSO figures from 2013, we see that average Danish households paid almost 8 pct. of their electricity bills to the transformation of the Danish energy system. Just over half of that, 4.6 pct., went to support wind energy. 4.6 pct. is a small part of the total electricity bill, however a very important part, as it contributes to the reformation and development of Denmark's energy supply," says Jan Hylleberg, CEO of the Danish Wind Industry Association.
Support for wind increases
In 2012, the fraction of the PSO tariff going to wind was 44 pct. and amounted to approx. 2 billion DKK. The share paid to wind energy was 4 pct. of the electricity bill for an average Danish household in 2012. Comparing the figures from 2013 with 2012, both the total tariff costs and the wind share increased. This increase happened for a good reason and on the basis of political decisions, states Jan Hylleberg:
"Wind is the cheapest form of renewable energy in Denmark, which is why this energy source naturally attracts more investments. Wind energy is also the cheapest way in which the goals for Denmark’s green transition are best achieved. In 2013, Danish households are to a larger extent than in 2012 contributing to the transformation of the Danish energy system through their electric bills, because we are now sourcing even more energy from wind."
With the approval of the National Energy Agreement this trend is predicted to continue in 2014 as the expected expansion of the Danish wind capacity takes place.
"It was expected, that we would see an increase from 2012 to 2013 due to the commissioning of the Anholt offshore wind farm (400 MW), which was planned prior to the 2012 energy agreement entered into force. This is what we see reflected in the PSO increase between the two years," says Jan Hylleberg.
Offshore wind turbines receive support in an average of 12-13 years, while onshore turbines are supported for an average of seven years. When the support scheme expires, turbines only receive the price rates determined by the electricity market.
Support for other energy sources
In addition to wind energy, other energy technologies receive support through the PSO tariff. 22.3 pct. of the PSO went to decentralized fossil power plants, while 7.7 pct. went to biogas and 8.6 pct. to biomass.
In addition, solar and wave energy are also included in the PSO tariffs. As the support for solar energy is changing, it is expected that the support for solar power will account for an increasing proportion of future PSO payments.
Electricity bill composition 2013
Electricity price: 37.51
Grid- and system tariff: 40.18
Taxes and VAT: 126.27
Total electricity price incl. VAT: 221.34
PSO - wind: 10.08
PSO - other: 7.30
Source: Danish Wind Industry Association, Danish Energy Association and Energinet.dk
An average Danish household
The composition of the electricity bill means that an average Danish household with an annual consumption of 4,000 kWh paid 695 DKK through the PSO in 2013 – out of which support to wind energy accounted for 403 DKK.
About the PSO tariff
PSO stands for "Public Service Obligation", and is a tariff that individual consumers and businesses pay through their electricity bills. It is through the PSO tariff that the production of renewable energy, operation of decentralized power plants and research in clean energy technologies are supported.
Energinet.dk sets the PSO tariff each quarter. The PSO tariff builds on the principles that when the price of electricity is high, renewable energy requires a smaller PSO contribution to be competitive. A higher PSO tariff is temporarily needed when electricity prices fall in order for green energy to remain profitable.