10 12 2015 COP21: The Answer Is (Blowing) In the Wind
This Op-ed by Jan Hylleberg, CEO of the Danish Wind Industry Association, was posted on Huffingtonpost.com.
2014 was a strong good year for the companies in the Danish wind industry. The overall exports increased by no less than 16.7% - indicating a busy year for the industry. The revenue rose by 7.4%, while the number of job increased by more than 5%.
The newest industry figures for 2014 from the Danish Wind Industry Association are now out, showing headway on all measurable parameters. The industry upturn marks the final goodbye to the challenging times and conditions brought on by the global financial crisis that hit the industry in 2008-2009.
“The figures are very impressive, and there is no doubt that this points to the end of the crisis for the majority of the companies in the Danish wind industry. The results are an indication of the hard work that has taken place across the industry. It stresses the ability of the industry to take on an increasingly big part of the global wind energy market in 2014 and the previous years,” says Jan Hylleberg, CEO, Danish Wind Industry Association.
Siemens Wind Power
A theoretical analysis from researchers at the University of Copenhagen finds that houses neighboring wind turbines to a varying degree will depreciate in value due to noise and visual impact. It is a substantial analysis, however it leaves little to say on the current situation with onshore wind energy development in Denmark, says Danish Wind Industry Association and Danish Wind Turbine Owners' Association in a joint message.
Based on a number of theoretical models and assumptions as well as more than 10.000 house sales from 2000-2011, the analysis shows that loss of property value occurs to a varying degree depending on whether a wind turbine is visible or audible from the analyzed house. For example, the researchers found that a house located 800 meters from the nearest wind turbine will depreciate 7-14% in value. However, the type of wind turbines installed in Denmark today (125 meters+ in height) make out less than 5% of the data in the analysis.
“It’s a very complicated and highly theoretical analysis which builds on a number of assumptions. The result is a thorough analysis, from which it is very hard to draw any conclusions that that are applicable to the installation and planning of large modern turbines in Denmark today,” says Asbjørn Bjerre, CEO, Danish Wind Turbine Owners' Association. He is followed by Jan Hylleberg, CEO, Danish Wind Industry Association:
“It is important to distinguish between the theoretical and the real-life way of assessing the value of a house and subsequently the potential depreciation of that value,“ says Jan Hylleberg.
The study can be found here (pay-wall)
In 2013, Danish wind companies experienced a slight overall decline in turnover and exports. Despite this, the Danish wind industry still performed better than the highly challenged global wind market. The Danish Wind Industry Association’s recently published industry statistics show a decline in 2013, but 2014 will bring back industry growth, says the Association.
The recently published report outlines the performance of the large group of companies in the Danish wind industry in 2013, where the global market for new wind energy installations dropped 26 pct. compared to the year before. In the report, the Danish Wind Industry Association presents a decline in Danish exports by 6.9 pct. in 2013. In the same year, the report also shows a fall in the revenue of 1.6 pct., which ended on level with previous years at approx. 80 billion DKK.
"In a global perspective, companies in the Danish wind industry got well through 2013. When looking at the general market decline, Danish wind companies actually outperformed several other competitors, and it is noteworthy that the Danish industry almost managed to maintain its revenues, "says Jan Hylleberg, CEO, Danish Wind Industry Association.
Exports saw a greater decline than revenue with a 7 pct. decrease from 52.3 billion DKK in 2012 to 48.7 billion DKK in 2013. In the Danish wind industry, 61 pct. of the turnover was exported against 64 pct. in the year before.
"In addition to the large drop in the international market, the fall in exports of almost 7 pct. happened due to the extraordinary large number of activities in Denmark last year. In 2013, Danish manufacturers and companies had a larger than normal domestic focus with the commissioning of the Anholt wind farm, which meant that fewer items were exported. Therefore, the decrease is quite understandable," says Jan Hylleberg.
Political uncertainty harms
2013 was the first year since the 1980s that the global wind market dropped. This drop in installed capacity can in particular be attributed to declines in markets like the United States and Spain, where national political support for renewable energy almost disappeared.
"There is no doubt that the political uncertainty we saw in several markets in 2013 has contributed greatly to the decline we experienced in Denmark. Once again, this underlines the need for long-term planning and political clarity in all markets, so that the industry can make long-term and appropriate investments," explains Jan Hylleberg.
Market uplift in 2014
The Danish wind industry can look forward to more work in 2014, where the global market according to the consulting company MAKE is expected to grow by approx. 40 pct. to 48,300 MW. Jan Hylleberg assesses that Danish companies have a good basis for taking part in the market growth.
"Towards the end of 2013, we saw a large number of companies gearing up to match the increased activity in 2014. Therefore, it is also our expectation that we in 2014 will increase our market share and increase exports and revenues in the industry, " says Jan Hylleberg and concludes:
"2013 was not a good year for the global wind industry, but from a Danish perspective we performed satisfactorily and managed better than average. Therefore, the Danish industry is also well prepared for 2014, which we expect to be levelled with the record year of 2012."
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.
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