Danish wind and solar projects edge closer to subsidy-free

The Danish Energy Agency last week announced the results of its 2019 technology neutral renewable energy tender with the average price dropping so much that subsidy-free wind and solar projects may be closer on the horizon than previously expected.

A total of seven projects with combined wind and solar capacity of 271MW were awarded at an average cost of DKK 15.4/MWh ($A3.33/MWh) – the price is a premium to the wholesale price. The awarded prices were so low, in fact, that they accounted for only 61% of the tender’s allocated budget, saving the government DKK 101 million ($A21.87 million).

“The price of onshore wind turbines and solar parks is now so low that it suggests that they are close to becoming subsidy free,” said State of Green, a not-for-profit, public-private partnership between the Danish Government and Denmark’s four leading business associations.

Of the seven contracts awarded two are onshore wind contracts amounting to a combined total of 72 MW, another two contracts are for 97 MW of hybrid wind and solar projects, and three projects amounting to 83 MW will be awarded to solar projects.

The lowest awarded price was for an onshore wind project awarded at only DKK 10/MWh ($A2.17/MWh), while the highest awarded price was only DKK 19.7/MWh ($A4.27/MWh). All three solar projects came in at DKK 18.4/MWh ($A3.98/MWh), while both hybrid projects came in at DKK 14.8/MWh ($A3.20/MWh).

“We have gotten far more renewable energy for far less money than expected,” said Danish Minister of Climate, Energy and Utilities, Dan Jørgensen.

“That is good news for the green transition. It has been a rapid development and much faster than expected. The subsidy rate has dropped by another 30 percent in just one year.”

The low subsidy rates for both wind and solar mean that 2019’s technology neutral renewable energy tender will yield almost twice as much renewable energy as expected – following a year on after the 2018 tender yielded expansion of capacity five times that which was expected.

“The low subsidy rates mean that the money can be used in other areas, where the need is greater,” Jørgensen added. “For example, we could use it to provide subsidies for the development of technologies that allow green energy to be stored and converted into, for example, fuel for aircraft and ships.”