The Danish energy agency's recent suspension of the "open door" scheme, which processes applications for offshore wind projects, is connected to the potential conflict with the EU's allocation principle as well as a sharp rise in offshore wind applications compared to previous years, the agency told Argus today.
The Danish energy agency received 54 applications under the scheme between April 2022 and January 2023 compared to none in 2021 and just one in 2020, with a high number of applications received in June 2022 alone in the run-up to changes of Denmark's law on promoting renewable energy, which came into force on 1 July of the same year, according to the agency.
Applications for large wind farms near the coast were also received in December 2022 and January 2023, after the amendments to the law were applied. And in the autumn of 2022 market participants in the industry stated they were "willing to pay the State to establish offshore wind [farms] under the open door scheme" via community contributions, the agency noted.
"This, in combination with the fact that open-door allocations take place without competition, has given rise to the fact that, based on dialogue with the government's State Aid Secretariat and dialogue with the EU Commission, we have assessed that the scheme may be in breach of EU law," it added.
Suspension impacts offshore wind investment
The recent suspension of the scheme creates insecurity in offshore wind investment and weakens Denmark's wind capacity targets, European wind association WindEurope has warned.
"The open door scheme existed for a while already in Denmark. Developers had started surveying sites and investing into planning. Pausing the scheme now is putting these investments at risks," WindEurope told Argus today.
Currently projects under the scheme no longer receive any public funding, WindEurope noted. The scheme is "not against EU state aid rules" under a first assessment made by the association, though its suspension "goes against the EU's general policy of accelerating the build-out of renewables," it noted.
The suspension could impact Denmark's offshore wind capacity targets as the country and seven other nations agreed to reach 19.6GW of offshore wind capacity by 2030, which includes 3GW of offshore turbines being built around the Danish island of Bornholm. And Denmark, Belgium, the Netherlands and Germany pledged to install around 150GW of offshore wind capacity in the North Sea by 2050.
The Danish energy agency decided to suspend applications under the scheme on 6 February. According to WindEurope, this has affected over 20GW of offshore wind projects as the suspension includes current and new applications that have been submitted. However Denmark's government has not suspended its central auctions, which "generally [...] are more efficient ways to organise offshore wind build-out," WindEurope told Argus.
The Danish energy agency said it "will clarify the questions raised by the situation as soon as possible" with the assistance of relevant ministries. "And we will continue our dialogue with the EU Commission regarding the assessment and delineation of the implications for the individual applications," it added.
