Danish energy reform: policy implications for renewables

For decades, renewables have been promoted in Denmark by the feed-in model (fixed price scheme) with favourable tariffs for green electricity. This has resulted in successful penetration of wind power covering more than 13% of Danish electricity consumption (2001). Changing the promotional scheme to a quota-based system with tradable green certificates has been on the political agenda since 1999. This article discusses Danish energy policy with focus on the implications for the penetration and deployment of renewables. It has turned out to be more complicated than anticipated to create an efficient operational system for trade in green certificates, and the starting date for trading has been postponed several times. The national green certificates market was to be fully operational by the beginning of 2003, however, political negotiations in the fall of 2001 seem to postpone the initiation of the certificate market until 2005. Transitional rules for green electricity during the period from 2003 to 2005 are under negotiation after a national election in November 2001. This situation has created widespread uncertainty among potential investors in green electricity. The article evaluates a number of problems related to the shift in Danish energy policy. (C) 2002 Elsevier Science Ltd. All rights reserved.