Market Research Denmark - Wind Energy Market in Denmark 2009

Wind Energy ‐
Wind Energy Denmark
October 2009

Executive Summary

 In 2008, 20% of electricity generated in Denmark was through wind power
 Denmark had an installed wind capacity of 3180 MW in 2008 and is estimated to grow to
Market 6900 MW by 2025
 It has been forecasted that by 2012, 30% of electricity will be generated via wind
It has been forecasted that by 2012, 30% of electricity will be generated via wind
 High penetration levels and a streamlined planning process
 Major offshore grid capabilities
Market  Booming wind turbine market
Characteristics  Strong opportunities in developing offshore wind farm capabilities
 Taxation process and cost advantages attracting players
 Major energy export market

 Research and Development Initiatives
Research and Development Initiatives
 A Visionary Danish Energy Policy 2025
 Wind Turbine Re‐powering Programme
Government
 Agreement on Danish Energy Policy for 2008‐2011
Initiatives  S i l S b idi G t d t Wi d b d P
Special Subsidies Granted to Wind‐based Power Generation Projects
G ti P j t
 The Danish Consortium for Wind Energy Research
 European Union’s Renewable Energy Directive for 2020
 The market is extremely competitive with major global players
Competition – Dong Energy, E.On, LM Glassfiber, Siemens, Vattenfall and Vestas Wind Systems

WIND ENERGY ‐ DENMARK.PPT 2

•Market Overview
•Market characteristics
Market characteristics
•Government Regulation
•Government Initiatives
•Competition
•Key Developments
•Appendix


Wind power market has been growing in the European
Union due to strong initiatives from the legislature
Overview Installed Wind Energy Capacity
• Wind is the fastest growing power technology in
Europe MW
300,000
• 35% of all additional energy installations in 2008 300,000

were wind power 250,000 +9%
200,000 180,000
• In 2008, the wind turbine market was valued at USD
16.18 bn 150,000
100,000
100 000 80,000
•E i
Estimated growth in offshore wind capability
d h i ff h i d bili 48,031 56,517
64,935
6 93
50,000 34,372 40,500
 2010 ‐ 3.5 GW; 2020 ‐ 35 GW; 2030 ‐ 120 GW
0
2004 2005 2006 2007 2008 2010e 2020e 2030e

Expected Investment in Wind Energy Electricity Consumption Mix
TWh
USD bn 1,370
1,400
300 269 +7% Wind
1,200 35%
250 +146% Hydro
1,000
200 172
Biomass
800 704
150 537 28% Photovoltaic
600 504 25%
14% 15% Geo Thermal
100 400 18%
51% Others
44 69% 66% 3%
50 200 13%
16% 1% 17% 1% 19% 1% 2%
0 0 4%
2008‐10e 2011‐20e 2021‐30e 2005 2006 2010e 2020e


Developing technology coupled with a strong export market
provides strong opportunities for players in this industry
Overview Market Size & Growth
•Denmark is the world’s largest producer of
MW
wind turbines +5%
8,000
6,900
6 900
•The total number of turbines stands at 5,101 +1%
6,000
 In 2008, 51 new wind turbines were installed and
164 turbines were decommissioned 4,000 3,117 3,128 3,136 3,125 3,180
•Major share of electricity through wind energy 2,000
is generated in West Denmark
i t di W tD k
0
•Offshore wind capacity stands at 631 MW 2004 2005 2006 2007 2008 2025e

Growth in electricity generated via wind Segmented Electricity Generated
TWh
43
% 45
+12% 30.0 38 0%
30 40 37
3% 34 1% 35 Oil
25 35 1% 3% Coal
19.3 30 47% 60%
20 42% 55% Natural Gas
N t lG
25 47%
15 Wind
20
10 Waste
15 26% 25% 20%
20% 18% Bio‐fuel
5 10
17% 19% 20% 20%
0 5 14%
4% 4% 5% 5%
2008 2012e 4% 8% 4% 2% 4% 2%
0
2004 2005 2006 2007 2008


Developments in the wind energy segment
1975/76: Establishment of the Danish Academy of Technical 1996: Fourth official Danish energy plan with a
Sciences promoting wind power goal for installed wind power capacity of 1,500
It published reports in 1975 and 1976 proposing research and MW land‐based capacity by 2005 and additional
development programmes for Danish wind power 4,000 MW offshore wind capacity by 2030

1991: The world’s first offshore wind farm is erected in Danish
waters consisting of eleven 450 kW turbines positioned about 1.6
km from the shore in the Baltic northwest of the island of Lolland

1970 1975 1979 1985 1995 2008

• 1974/75: First
• 1985: The • 1993: New
official Danish • 2008: New
Danish
Danish Ministry of
Ministry of
• 1973/74: Oil energy plan Danish RES act,
Parliament Environment
crises threatened focusing on a rules for RES are
• 1979: First decides that and Energy
the countries shift from oil‐ integrated in
Danish Ministry nuclear power promoting rapid
development based electricity one single act
of Energy will not be an increase in
production to with an increase
element in the installed
coal, natural gas
coal, natural gas in production
in production
Danish supply
h l capacity during
d
and nuclear subsidy
system 1990’s
power

1978: Development of the world’s
largest wind turbine(2 MW) at the
largest wind turbine(2 MW) at the
Danish Tvind School


•Market Overview
•Government Regulations
•Competition
•Key Developments
•Appendix


Market Characteristics

High penetration levels and a streamlined planning process

Strong opportunities in developing offshore wind farm capabilities

Booming wind turbine market
g

Key
Characteristics
` Major offshore grid capabilities

Taxation process and cost advantages attracting players

Major energy export market

Others


High penetration levels coupled with a simplified planning
process for wind farms has attracted investors
High penetration levels
• In Europe, largest gross electricity demand from wind is in Denmark. This has attracted global players from
investing in the wind energy market towards capitalizing on the growth opportunities
• Some regions in the country achieve very high levels of penetration
 In the western half of Denmark more than 100% of demand is sometimes met by wind power
% Penetration levels in major wind energy countries
30
21
20
12
9 8 7
10
0
Denmark Spain Portugal Ireland Germany
Streamlined planning process
• The Danish Energy Authority( DEA) is the primary body concerned with the planning process of wind farms
• The single‐window planning process has been extremely beneficial for the market as it has increased the
willingness of the players to enter this growing segment

DEA: Site
tender/permit to DEA: Permit to
Developer:
DEA: Site pre‐ survey DEA: Building exploit site
Construction of
screening for Environmental permit and generate
wind plant
Impact electricity
Assessment


Nascent offshore wind capabilities is a major avenue and
players are expected to capitalize on the opportunity
Strong opportunities in developing offshore wind farm capabilities
• Offshore wind energy potential has been largely untapped in the country
• It has been estimated that offshore turbines could be built with an overall capacity of ~ 4,600 MW
 This is tantamount to generating ~18 TWh of power or just over 8% of energy consumption in Denmark
• Wind industry accounted for more than 70% of the total Danish energy technology export
Segmentation of Wind Energy Installations
Onshore Installations
88% 12% 100% Offshore Installations

Current Parks
Wind Capacity
j
Project Online
Turbines
T bi (MW)
Planned Offshore Wind Parks
Vineby 11 5 1991
Tuno Knob 10 5 1995
Wind Capacity
Project Online
Turbines (MW)
Middelgrunden 20 40 2001
Sprogo 7 21 2009
Horns Rev 1 80 160 2002
Avedore
Ronloand 8 17 2003 3 10‐13 2009
Holme
Nysted 72 165 2003 Rodsand 2 90 207 2010
Samso 10 23 2003 Djursland‐
12 400 2012
Anholt
Frederikshaven
d kh 3 7 2003
Horns Rev 2 91 209 2010


Wind turbine market in Denmark has been growing
dynamically with large contributions from exports
Booming wind turbine market
• The Danish wind turbine industry has seen strong growth primarily due to large scale demand from the
export market
• The overall market is expected to grow between 30‐40%

Growth of Overall Turnover of the Sector Growth in Exports

USD bn USD bn
+29%
15 +35% 10 8.3
10.5 6.4
10 7.7
5
5

0 0
2007 2008 2007 2008

Expected Overall Turnover in the Sector

USD bn Sustained growth will make
g
+24% 19.7
20 the wind energy sector the
15 largest sector in Denmark
10.5
10
5
0
2008 2011


Strong offshore grid capabilities acts as a major incentive for
players to enter or expand operations in wind energy
Major offshore grid capabilities
• Denmark's offshore grid capacity is strong and is expected to grow
• This is expected to support major development in the segment as players can capitalize on the international
demand for electricity by tapping the export market
Offshore Network Development (North and Baltic Seas)
Name of the Project Link with Status Capacity (MW)
Skagerrak Norway Operating 940
Kontek Germany Operating 600
Konti‐Skan Sweden Operating 300
Great Belt Internal Planned by 2010 600
Skagerrak (upgrade) Norway Planned 350
Skagerrak 4 Norway Under study by 2014 600
Cobra Cable Netherlands Under study by 2016 700
Konti‐Skan II Sweden EWEA recommendation 360
Project to upgrade capacity Germany EWEA recommendation 550

• The country received funding of USD 550 mn from the EU, part of which will be used for the development of
the North Sea Grid project that will link the power grid with offshore wind farms in Danish, French, German,
Dutch, Belgian, British and Irish waters
Dutch Belgian British and Irish waters


Legislative support coupled with cost incentives has played
a major role in the growth the market has achieved
Taxation process driving the industry
• In order to keep the energy sector competitive large disparities exist between the cost of power supplied to
the industrial sector and household sector, householders pay 2.5 times more than Danish industry
 A significant fraction of the charges and taxes paid for electricity by domestic consumers invested into new energy
research and the feed‐in tariffs make it attractive for companies to invest in wind power
• Support provided by government legislation
 In 2008, support for electricity produced from wind turbines increased
– New wind turbines in onshore as well as offshore projects received a price premium of 25 ore/kWh for 22,000 full load hours and an additional
2.3 ore/kWh in the entire lifetime of the turbine to compensate for the cost of balancing etc.
 For special wind parks at sea the support is settled by a tender procedure
– Horns Rev II wind park: Fixed feed in tariff of 51,8 ore/kWh in 50,000 full load hours
– Rodsand II wind park: Fixed tariff of 62,9 ore/kWh for 50,000 full load hours

Cost advantages attracting players
g gp y
• Cost of developing wind power capacity differs significantly across Europe
 The cost per kW typically varies from around USD 1470/kW to USD 1984/kW
• Denmark has been estimated to be the most cost effective destination to develop wind farms
 Costs of installation in UK Spain and Germany have been found to be ~20‐30% higher than in Denmark
Costs of installation in UK, Spain and Germany have been found to be 20 30% higher than in Denmark
 In terms of cost considerations Greece and the Netherlands come closest to Denmark
• While comparing other cost such as grid connection, foundation, electric installation, land, financial costs,
road construction and consultancy, Denmark has been seen to be the most cost effective option
 Others costs account for 32% of total turbine costs in Portugal, 24% in Germany, 21% in Italy and 16% in Denmark

Note: Facts are based on a study carried out in 2006


Wind energy market is expected to develop due to high
electricity generation and low domestic consumption
Major energy export market
• Denmark’s electricity production exceeds demand which allows them to participate in the export market
GWh
20,000

15,000
Total Export
10,000 Total Import
5,000
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

• Eastern Denmark synchronizes with the Scandinavian system, called NORDEL, comprising Finland,
Norway and Sweden
• Additional electricity generated in western Denmark is exported to Germany and other European
Additional electricity generated in western Denmark is exported to Germany and other European
countries
Average Wind Energy Exported

Western Denmark
57% 34%
Eastern Denmark

• Denmark sells this power at an extremely low cost
 Since Denmark does not have any domestic electricity storage facility, electricity is exported to Norway and Sweden
which act as storage hubs. Low tariff are charged under an understanding that its neighbors sell some of their baseload
power back to Denmark at times of low wind speeds
NOTE: The eastern and western parts of Denmark are not inter‐connected, although the commissioning of a 500 MW DC inter‐connector is expected to be completed
NOTE The eastern and estern parts of Denmark are not inter connected altho gh the commissioning of a 500 MW DC inter connector is e pected to be completed
during 2010


Strong infrastructural capabilities, well developed insurance
market and international cooperation drives expansion
Well developed transmission grid
• Robust cables and power lines on land, at sea and in the air guarantee that electricity is transmitted from
the wind turbines efficiently
• The Danish transmission grid is a true link between the Nordic countries and the Continent
• To exploit wind‐generated electricity, the European countries are boosting cooperation to expand the
transmission grid

Rising wind power insurance
Rising wind power insurance
• Insurance premiums for wind power stations in Denmark have been rising by 20‐25%
• This rise has been attributed to higher cost for repairs for wind turbines caused by shortage of components
• Major players include: Codan, If and TopDanmark

International cooperation facilitating wind energy balance
• Denmark has no mechanism of electricity storage within its electricity system It has been balancing wind
Denmark has no mechanism of electricity storage within its electricity system. It has been balancing wind
power through strong international relations via well connected grid systems
• For example, Norway and Sweden have helped the country store electricity dispersing it to western
Denmark when wind energy falls or ceases


•Market Overview
•Competition
•Key Developments
•Appendix


Government Regulations

Renewable Energy Act

Regulations

Regulation of Offshore Regulation of Onshore
Wind Turbines
Wi d T bi Wind Turbines
Wi d bi



• Passed by the Danish Parliament in December 2008
• The schemes under the new act make it more profitable to discontinue old turbines and replace them with new and
Established
bli h d more effective ones thus enhancing efficiency with which energy is generated
• Provisions under the act will motivate local enterprisers who are expected to play a major role in meeting the
renewable energy targets

• Contains four new schemes to promote the development of wind turbines on land
 Compensation plan in the advent of a loss of value to real property due to the erection of wind turbines
 Local citizens’ option to purchase wind turbine shares
 A green scheme to enhance local scenic and recreational values
Provisions  A guarantee fund to support financing of preliminary investigations etc, by local wind turbine owners’ associations
• Contains a scrapping scheme for old wind turbines
 According to this scheme, a scrapping certificate can be earned by replacing old inappropriately situated wind turbines with new and
more efficient turbines. This grants the right to an extra price supplement

• The production subsidy for wind power was increased to 4.9 USDcents/kWh on top of the market price
• Under the new act, the Danish Government made an agreement with the Local Government in Denmark to find
Impact
p
sites for new turbines capable of generating 150 MW in total
i f bi bl f i 150 MW i l
 This is forecasted to correspond to 50‐80 new onshore wind installations

• Expected to lead to higher financial and administrative costs for wind turbine owners and make it more expensive
Primary
for them to set up wind power stations as the bill makes it possible for neighbours of wind power stations to submit
Criticism a complaint against a wind power station up to three months after it has been set up
a complaint against a wind power station up to three months after it has been set up


Regulation of Onshore Wind Turbines
Regulations for Development of Onshore Wind Turbines
Regulations on technical requirements for wind turbines, grid connection and subsidies for wind power are
managed by the Danish Energy Agency under the Ministry of Climate and Energy

Planning related to the erection Environmental impact
Other Provisions
of onshore wind turbines assessment

• Individuals must be
• The municipalities are compensated by the
• Environmental impact
responsible for the developer due to loss of
assessments of onshore
planning process
planning process value of real property
value of real property
wind turbine projects and
• The Agency for Spatial and following the installation
environmental
Environmental Planning  The size of the loss of value
assessments of planning
under the Ministry of the is determined by an
proposals at the general appraisal authority
Environment manages the
and strategic level are
and strategic level are • The developer has a duty
The developer has a duty
legislation on planning
l il i l i
managed by the Ministry to offer at least 20% of the
activities in connection
of the Environment shares in the wind turbine
with the erection of
onshore wind turbines to those with an option to
purchase
Note: Wind turbine being installed must be approved under the technical certification scheme, managed by the Energy Agency’s Secretariat for the Danish Wind Turbine
Certification Scheme


Regulation of Offshore Wind Turbines
Regulations for Development of Offshore Wind Turbines
The Danish Energy Agency (DEA) is the prime authority for offshore wind power projects. Development
conditions are specified in the Danish Electricity Supply Act, adopted by Parliament in November 2008

Licences required to establish Environmental monitoring
Permitting procedure
an offshore wind project programme

• All licences are given by • DEA is the planning
authority for electricity • This new follow up
the DEA
generating installations at
generating installations at program has been initiated
• Licenses include
Licenses include
 Licence to conduct sea to review the impact on
preliminary studies on • According to the the environment of
certain specified conditions provisions of the Electricity various offshore wind
 Licence to establish the turbine installations
Act, all Danish offshore
offshore wind farm on • It has been focusing on
It has been focusing on
certain specified conditions wind projects must get
i d j
 Harbour porpoises
 Licence to produce permission either through
 Water birds
electricity on certain a call for tenders or the  Fish communities
specified conditions open‐door procedure

Note: Wind turbine being installed must be approved under the technical certification scheme, managed by the Energy Agency’s Secretariat for the Danish Wind Turbine
Certification Scheme


•Market Overview
•Competition
•Key Developments
•Appendix


Government Initiatives


A Visionary Danish Energy Policy 2025

Wind Turbine Re‐powering Programme
p g g

Key Initiatives
` Agreement on Danish Energy Policy for 2008‐2011


The Danish Consortium for Wind Energy Research

European Union’s Renewable Energy Directive for 2020


Government Initiative(1/7)

• The government has undertaken major research projects and has established committee’s and foundations towards
the development of renewable energy which has directly benefited the wind energy sector
Research
Research • Programmes undertaken include the Energy Development and Demonstration Program (EUDP) including Energy
Programmes undertaken include the Energy Development and Demonstration Program (EUDP) including Energy
Programmes Agency’s Energy Research Program (ERP), Energinet.dk’s ForskEL program and ForskNG program
• Other establishments developing wind energy include the Danish Council for Strategic Research’s (DCSR)
Programme Committee on Energy and Environment and the Danish National Advanced Technology Foundation
• Funds are available under the annual Finance Act and Public Service Obligation funds (PSO)
 Energinet.dk obtains these funds from the electricity users under the Danish Electricity Supply Act and apply towards research in
Funding environmentally friendly electricity generation and efficient energy use
Received • The Danish Energy Authority has administrative responsibilities
• The funding is expected to increase to ~USD 148.0 mn in 2009 and ~USD 197.4 mn annually from 2010

Disbursement of Funds Under the Individual Schemes Funds Aggregating to Wind Energy Initiatives

USD mn
EDDP USD mn
50 +10%
41.0 DSF 15
40 11.9 12.5
34.2 PSO
30.5 10.0
30 28.5 10
High Technology Funds 7.6 8.3
19.8 18.5 6.3
20 Contribution to EU
14.0
10.1 9.0 9.6 5 3.2
10 2.4

0 0
2007 2008 2001 2002 2003 2004 2005 2006 2007 2008


Government Initiative (1/7)
Various Programmes under Research and Development

• The Danish Energy Authority is responsible for the administration according to the regulation of the new EUDP
• It covers research in both conventional energy and renewable energy
EUDP
• The EUDP’s operations includes funding for quality assurance for renewable energy devices, including wind turbines
• It supported international R&D cooperation through the IEA

• Primarily focuses on the development of renewable energy technologies, including wind power, and secure and
ForskEL and
ForskEL and efficient energy systems
efficient energy systems
ForskNG • The Danish Energy Authority and the minister instated, approve priority areas and the total budget
programs • The PSO program emphasizes the interaction between turbines and the power system including the ability of wind
power plants to contribute to regulation and stability

• Establishment in 2004, operates under the Ministry of Science, Technology and Innovation
Danish Council
• Grants are given for research in renewable energy and environmentally sustainable energy production
for Strategic
• The DCSR’s Supervisory Board sets up program commissions consisting of acknowledged scientists who are charged
Research
with allocating the funds

Danish National • Primarily supports risky and capital intensive R&D towards creating advanced technology through radical innovations
Advanced which can be used at a later stage in the commercial market with a large potential for value creation
Technology • The total budget of the advanced technology projects is USD 0.9 – 5.9 mn, of which 50% is funded by the foundation
Foundation • The duration of advanced technology projects is 2‐4 years


A Visionary Danish Energy Policy 2025

• Forwarded by the Danish government on 19th Jan, 2007
Overview • Primary focus was to improve the use of renewable energy sources, including stronger support for energy
research, development, and demonstration
h d l t dd t ti

• Reducing the use of fossil fuels by 15%
• The share of renewable energy must be doubled so that it will account for 30% of total gross energy
consumption
Proposed Targets
• Enhance energy saving efforts by 1.25% annually in order to keep the overall energy consumption static until
by 2025 2025
• Doubling of publicly funded research, development and demonstration of energy technology to USD 197.4 mn
annually from 2010

• A significant contribution to the fulfillment of this specific goal is proposed to come from expanding the Danish
Direct Impact on wind power capacity to more than 6,000 MW in 2025
 This corresponds to a situation where around 50% of the Danish electricity is generated by wind power
Wind Energy • The Government is also expected to promote onshore and offshore demonstration and trial sites and draw up an
infrastructure plan for offshore wind turbines
infrastructure plan for offshore wind turbines

Long‐term • To become entirely independent of fossil fuels ‐ coal, oil and natural gas
Outlook • The proposed targets and means will be revised by the Ministry of Transport & Energy every four years


Wind Turbine Re‐powering Programme

• In order to bring about efficient energy generation a large number of turbines dating from the 1980s with
Purpose generating capacity of less than 75 kW will be replaced with new and improved turbines

• First repowering scheme carried on between 2001‐2003
• Owners of small turbines were allocated an additional feed‐in‐tariff which led to the replacement of existing
Stage 1 turbines with improved technology which was in a position to generate 3 times the original generation capacity
• This resulted in the decommissioning of 1,480 turbines with 121 MW generating capacity and their replacement
with 272 new turbines with 331 MW combined capacity
p y

• Second program was introduced in the Energy Policy Agreement of 2004
• This offered similar benefits and will remains in force until the end‐2009
Stage 2
• Under the new scheme, the original turbines must have a rated capacity of less than 450 kW to qualify for a top‐up
tariff

• Based on the agreement in 2004, 350 MW of re‐powering was expected by 2009 however, only 250 MW of old
Target turbines have been replaced
• The agreement has been extended to 2010 to achieve the goal

• Wi d
Wind energy organisations, the Danish Wind Turbine Owners' Association and the Danish Wind Industry
i ti th D i h Wi d T bi O 'A i ti d th D i h Wi d I d t
Association, launched a new energy plan aiming to replace old wind turbines with new efficient ones so as to make
it possible to increase wind energy production with 30% fewer wind turbines
Initiatives • It has an ambitious target of meeting 50% of electricity consumption in 2020 by wind energy
• Majority of new wind power stations, under the plan, is expected to be onshore stations as they are cheaper to set
up and operate
d


Agreement on Danish Energy Policy for 2008‐2011

• Forwarded by the Danish government in Feb, 2008
Overview • Primarily aiming at reducing the countries dependence on fossil fuels by developing renewable sources of
energy

• Renewable Energy
 Account for 20% of gross energy consumption by 2011
 Subsidy for new wind turbines shall be raised to 0.04 USD/kWh
y
 Development of offshore wind turbines by identifying profitable locations
– Plans on inviting tenders for two offshore wind farms each of 200 MW capacity, expected to go online by 2012
• Energy Savings
 Decrease gross energy consumption by 2% up to 2011 and by 4% up to 2020, compared to 2006
Initiatives • Energy Taxes
 CO2 taxes will be raised from 0.6 to 17.8 USD/ton CO2 to the expected CO2 quota price, which for 2008‐2012 is
provisionally estimated at 29.6 USD/ton
 Introduction of a new NOx tax of 0.9 USD/kg effective from Jan, 2010
• Energy Technology
 A significant increase in funding of research, development, and demonstration in energy in order to increase the overall
publicly financed efforts
bli l fi d ff t
 The PSO research agreement of 2004 is expected to be extended after 2008 with USD 25.7 mn per year

• Major investments in R&D, subsidies offered in wind turbines, increase in CO2 taxes and the introduction
j , ,
Impact
I t of NOx tax coupled with various energy saving initiatives will boost the wind energy market



• Some are granted as a permanent subsidy whereas others are adjusted in relation to the market price so that the
Overview total of the market price and the subsidy ensures wind‐turbine owners a fixed settlement
• In 2008 subsidies for Danish wind turbines totaled USD 102 1mn
In 2008, subsidies for Danish wind turbines totaled USD 102.1mn

Period of Installation of the Wind Turbine

Before the end of 1999 Between 2000‐2002 Between 2003‐2004 From 1 January 2005 From 19 February, 2009

• Receives a subsidy
which together with • Receive a subsidy
the market price which, together
ensures a price of with the market
USD 0.11/kWh until • Receive a subsidy of • Receive a fixed
price, ensures a • Receive the market
the fullload hour
the fullload‐hour USD 0.01/kWh until subsidy of USD
settlement of USD
settlement of USD price plus a fixed
price plus a fixed
share and after that they are 20 years 0.01/kWh in
0.08/kWh for subsidy of USD
USD 0.08/kWh until old addition to the
22,000 fullload 0.05/kWh for
they are 10 years • The rule that the market price until
hours 22,000 full‐load
old total of the subsidy they are 20 years
• The wind turbines hours
• Subsequently the   and the market old
will subsequently be • To this must be
subsidy drops to price must not • To this must be
settled on market added a balancing g
USD 0.01/kWh until
/ exceed USD
exceed USD added a balancing
added a balancing
terms, and a subsidy subsidy of USD
they are 20 years 0.07/kWh also subsidy of  USD
of USD 0.01/kWh 0.004/kWh
old applies here 0.004/kWh
will be granted until
 Provided the
they are 20 years
market price does
old
not exceed USD
0.07/kWh

NOTE: Wind turbines connected to the grid after 1 April 2001 can receive up to DKK 0.17/kWh in addition to the other subsidies if the new wind turbines replace
dismantled ones (decommissioning subsidy)


The Danish Consortium for Wind Energy Research

• Established in 2002 in order to enhance efficiency and the effectiveness of wind energy research in Denmark
Overview • It has been working towards achieving co‐operation within research, education, innovation and consulting to
ensure development of wind technology complemented by a strong knowledge base
ensure development of wind technology complemented by a strong knowledge base

• Funding members: Riso, DTU (the Technical University of Denmark), AAU (Aalborg University) and DHI – Water
and Environment
Major
Major
• Steering committee: Vestas, Siemens Wind Power, LM Glasfiber, E2, Elsam, Riso, DTU, AAU, DHI
Contributors • It receives strong funding and support: Receiving 1/3 rd of funding internally and 2/3rd from external R&D
support (2/3) with continued involvement of all major players

• Reducing costs of wind farm installation making it a viable option for energy generation
• Develop technology, reliability, construction and maintenance for off‐shore wind farms
Primary Focus • Wind energy integration in power systems
• Developing technical sciences at institutions towards creating a large pool of technically skilled personal

• Creating a High Tech Network funded by the Danish Ministry of Science, Technology and Innovation
• The project will cover
Future Outlook  Strategy development
 Large scale involvement of SMEs
g
 Services towards the industry, including courses, workshops, seminars
 Information dissemination


European Union’s Renewable Energy Directive for 2020

• Each Member State has a legally binding renewables target for 2020 and are required to draw up National Action
Plans detailing the ways in which they are to meet their 2020 targets
Overview
• The energy efficiency target is a non binding recommended target It is distributed across individual countries
The energy efficiency target is a non‐binding, recommended target. It is distributed across individual countries
according to economic capability
• Reduction of greenhouse gas emissions by 20% compared to 1990 levels
Overall Targets • 20% renewables in the energy mix and 10% renewables in the transport sector
• Improve energy efficiency by 20% per cent
Domestic Target • The Danish Energy Agency is attempting to reach the target of 30% renewable energy in 2020
• Major investments in the wind energy sector as Member States collaborate to meet their targets
• Large scale installations of wind turbines as it has been estimated that Denmark will re quire 125 new large wind
Fallout turbines annually to meet the government's renewable energy targets
 The Danish Energy Agency estimated that costs, entailed to meet the target, at USD 1.0 – 1.3 bn
• Grid and administrative barriers over wind energy project developers will be tackled throughout Europe
Renewables' contribution to EU electricity consumption up to 2020

0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 Wind
TWh Geothermal
2005 14.0% 68.8% 15.9% 504.3
0.3% Hydro
1.1%
Photovoltaic
2010 25.0% 1.4% 51.1% 2.8% 19.2% 0.1% 704.0
Solar Thermal Electric
0.3%
Biomass
2020 34.8%
34 8% 2.3%
2 3% 28.0%
28 0% 13.1%
13 1% 3.1%
3 1% 18.2%
18 2% 0.4% 1,370.0
0 4% 1 370 0
Oceanic


•Market Overview
•Competition
•Key Developments
•Appendix


Players in the Market (1/9)

Company Snapshot: Dong Energy
Corporate Information Financial Performance
Fredericia Revenue
Headquarters
H d Revenue Profit
fi
USD bn Profit / Loss USD mn
Founded 2006 15 1,000
12.0
800
Energy exploration, power generation, sales 7.7
Area of Expertise 10
600
and distribution 6.2
400
5 3.1
Anders Eldrup – CEO 200
Key People
Karsten Krogsgaard Thomsen – CFO 0 0
2005 2006 2007 2008

Business Highlights
Business Highlights
• It is planning to invest ~USD 1.79 bn towards developing wind farms in the period 2008‐2010
• Acquired the Danish installation and service player A2SEA for USD 132 mn
 This will allow the company to facilitate faster completion and commissioning of wind farms as well as develop in‐house knowledge
• Major offshore project
 Instrumental in the installation of the world’s largest offshore wind farm Horns Rev 2 in the North Sea
– Comprises of 91 turbines with a capacity of 209 MW and is expected to generate 800 GWh of electricity annually at an investment of USD 694 mn
• Major onshore project
 Partnered with Wind Estate to develop Overgard wind farm located northwest of Randers in East Jutland with a capacity of 63 MW
Partnered with Wind Estate to develop Overgard wind farm located northwest of Randers in East Jutland with a capacity of 63 MW
– This was the largest onshore wind farm project in Denmark



Company Snapshot: E.On
Dusseldorf
Dusseldorf Revenue
Headquarters
H d Revenue Profit
fi
USD bn Profit / Loss USD bn
Founded 2000 150 15
127.6
94.2
Area of Expertise Utility 100 80.5 10
64.2
Dr. Wulf H. Bernotat – CEO 50 5
Key People
Dr. Johannes Teyssen – COO
0 0
2005 2006 2007 2008

Business Highlights
Business Highlights
• It plans on investing USD 631.8 mn of its total Nordic investment budget of USD 868.7 mn on Denmark
• Developed a major offshore wind farm Rodsand I
 It is equipped with 72 Siemens 2.3 ‐MW wind turbines and is jointly operated by E.ON and the Danish company DONG Energy
• Plans on developing a second offshore wind farm, Rodsand II, located 3 kilometers to the West from the existing
Rodsand I offshore wind farm
 Partnered with Siemens to build wind farm in Denmark at an investment of USD 404.2 mn
 The facility is expected to have an installed capacity of 207 MW and will be one the largest offshore wind farms in the world
 The 90 turbines with a rotor diameter of 93 meters and a capacity of 2 3 MW each will be installed in 2010
The 90 turbines with a rotor diameter of 93 meters and a capacity of 2.3 MW each will be installed in 2010
 It is expected to meet 2% of the electricity demand in the country and will save the emission of around 700,000 tons of C02 per year



Company Snapshot: Greentech Energy Systems
Copenhagen Revenue
Headquarters
H d Revenue
Profit
USD mn Profit / Loss
USD ‘000
Founded 1924 20
16.5 4,000
Developing, constructing and operating 15
Area of Expertise 2,000
wind energy projects 10
9.4
0
Kaj Larsen – CEO 5 2.6 2.4
‐2,000
Key People
Mark Fromholt – CFO 0 ‐4,000
2005 2006 2007 2008

Business Highlights
Business Highlights
• The company’s activities span across Denmark, Germany, Italy, Norway and Poland
• It operates 4 wind farms in Denmark with a combined capacity of 15.45 MW
 Frorup – 2 turbines, total capacity of 1.30 MW, initiated in Dec, 2000
 Hannesborg – 2 turbines, total capacity of 1.6MW, initiated in Feb, 2001
 Milbak – 5 turbines, total capacity 3.75 MW, initiated in Aug, 2001
 Oppelstrup – 10turbines, total capacity of 7.50 MW, initiated in Aug, 2001
• Placed orders for wind turbines investing ~USD 0.51 bn with Nordex for delivery in 2009‐2010
• Its target is to establish itself as a leading developer constructor and operator of mid sized wind energy projects
Its target is to establish itself as a leading developer, constructor and operator of mid‐sized wind energy projects
across Europe



Company Snapshot: LM Glassfiber
Kolding Revenue
Headquarters
H d Revenue Profit
fi
USD mn Profit / Loss USD mn
Founded 1978 1,500 100
1,302.1
Manufacturer of major components of wind 50
Area of Expertise 1,000 792.2
turbines such as turbine blades 596.7 0
500 412.2
Richard Hanson – Chairman ‐50
Key People
Roland Sunden – CEO 0 ‐100
2005 2006 2007 2008

Business Highlights
Business Highlights
• It is the world’s leading supplier of blades for wind turbines and the only supplier that operates on a global basis
• Merged with Svendborg Brakes towards enhancing the companies financial resources and growth profile
 The combined entity will have have production, distribution and service operations in Denmark, Germany, Poland, Spain, China, India,
the USA, and Canada
th USA dC d
• In 2008, it invested USD 22.2 mn on research and development activities towards enhancing performance of their
products
• Plan on becoming the leading global supplier of advanced rotor solutions for the wind energy market in 2012 by
increasing production capacity, focusing on product development and manufacturing technology, and optimization of
increasing production capacity focusing on product development and manufacturing technology and optimization of
cost



Company Snapshot: Siemens
Munich
Munich Revenue
Headquarters
H d Revenue Profit
fi
Founded 1847 150 10
113.7
99.4 8
Power generation, transmission and 94.0
Area of Expertise 100 83.4 6
distribution. Manufacturing wind turbines
4
50
Gerhard Cromme – Chairman 2
Key People
Peter Loscher – President and CEO 0 0
2005 2006 2007 2008

Business Highlights
Business Highlights
• Entered into an agreement with Dong Energy for supplying 500 of its 3.6 MW wind turbines for their projects in
Denmark and the UK
• It plans on investing heavily on R&D with an annual budget of USD 1.08 bn
• Major investments in the US and China towards setting up new factories for manufacturing wind turbines
 A strategic move based on estimates that US and China will buy 40‐45% of the total global wind turbine production during 2010‐2012
• It developed a production facility in Olgod, Denmark which is expected to produce wind turbine hubs to all Siemens
wind turbines generating ~25 units a week
• Pl
Plans on adopting an organic growth model and become the third biggest player in the global wind turbine market by
d ti i th d l db th thi d bi t l i th l b l i d t bi k tb
2012



Company Snapshot: Vattenfall
Stockholm Revenue
Headquarters
H d Revenue Profit
fi
Founded 1909 30 4
25.3
25 19.9 20.9 22.1
Area of Expertise Primarily a utility firm 3
20
15 2
Lars G. Josefsson – CEO 10
Key People 1
Dag Andresen – CFO 5
0 0
2005 2006 2007 2008

Business Highlights
Business Highlights
• It is Europe's fifth largest generator of electricity and the largest generator of heat
• It has a presence in all parts of the electricity value chain: generation, transmission, distribution, and sales
• Plans on building a wind park at Norrekaer Enge near Aalborg in Denmark
 It plans on installing 13 units of 2.3 MW wind turbines made by Siemens, which will replace 77 older units, at the same time doubling
electricity output
 The installation is expected to lead to one of Denmark's largest land‐based wind parks
 The annual power production will total 120 GWh which corresponds to the electricity consumption of 30,000 Danish households
• Plans on investing up to USD 15 8 bn in the Nordic countries in the next decade in order to make the company's
Plans on investing up to USD 15.8 bn in the Nordic countries in the next decade in order to make the company s
production in these countries climate‐neutral by 2030



Company Snapshot: Vestas Wind Systems
Rander Revenue
Headquarters
H d Revenue Profit
fi
USD bn Profit / Loss USD mn
Founded 1898 10 1,000
8.9
8 6.6
Manufacturer of wind turbines, gearboxes 500
Area of Expertise and other parts, installation and 6 4.8
4.5
commissioning 4
0
2
Ditlev Engel – President and CEO
Key People 0 ‐500
Henrik Norremark – Executive VP and CFO 2005 2006 2007 2008

Business Highlights
Business Highlights
• Major investments in R&D
 Invested USD 174.37 mn in 2008 towards reducing the price of electricity through technological developments in wind turbines
 Launched two new wind turbines, V112‐3.0 MW and V100‐1.8 MW, which will be ready for delivery by 2010
 Si d 3 5
Signed a 3.5 year cooperation agreement with DTU Riso to develop new wind turbine blades. The Danish High Technology Fund has
ti t ith DTU Ri t d l i d t bi bl d Th D i h Hi h T h l F dh
granted USD 3 mn to the blade project.
• Large scale international participation
 Plans on installing 40 wind turbines in Spain, 24 V90‐2.0 MW and 16 V90‐1.8 MW turbines, which will be delivered by the end of 2009
 Received an order for an offshore wind power plant with a total capacity of 165 MW comprising of 55 units of the V90‐3.0 MW wind
turbine in Belgium which is expected to be completed by 2011
 Plan on supplying Dong with 17 units of its V90‐3.0 MW turbine for a 51 MW project on the northwestern Polish coast by end of 2009



Company Snapshot: Codan
Corporate Information Business Highlights
Headquarters
q Copenhagen
p g • It is a dominant player with 60% of the Danish wind
p y
Founded 1916 power station insurance market
• Globally, Codan participates in 80% of all offshore
Area of
Wind power station insurance projects
Expertise
Financials NA
• Codan's parent company RSA is one of the biggest
players in wind energy insurance market and has a
Simon PG Lee – Chairman 15% market share world‐wide
Key People
Rickard Gustafson – CEO

Company Snapshot: Global Wind Power
p y p
Headquarters Thisted • Developed 3 projects in Denmark
Founded 2000  Harring – 2.50 MW
 Gisselbaek 5 25 MW
Gisselbaek – 5.25 MW
Area of Specializes in the development, installation
Expertise and administration of wind farms  Tagmarken – 10.50 MW

Financials NA
• It also handles the overriding technical and
commercial management of commissioned turbines
Henrik Amby Jensen – CEO
Key People
Key People
Michael Ariel Nielsen – MD



Company Snapshot: Mita Teknik
Headquarters
q Rodkærsbro • Their products allow wind turbines to operate
p p
Founded 1969 efficiently as they are used to control and monitor
wind parks
Area of Produces controller and communication
Expertise systems • Owns Gaia Wind Energy, the only company in
Denmark that produces wind turbines for households
Financials NA
Key People Holger Anderse – Chairman

Company Snapshot: Ramboll
p y p
Headquarters Virum • It is the leading player in the design of offshore wind
Founded 1945
turbine foundations segment with ~60% of global
market share
market share
Area of
Design offshore wind turbine foundations  UK accounts for 50% of the market
Expertise
 Denmark accounts for ~5%
’08: Revenue – USD 1.1 bn, Profit – USD 45.7  Other major markets include Netherlands, Germany and
Financials
mn the US
Peter Hojland – Chairman
Key People
Flemming Bligaard Pedersen – CEO


Market Research Denmark - Wind Energy Market in Denmark 2009

Market Research Denmark - Wind Energy Market in Denmark 2009

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