Research

Renewable Energy Auctions in Denmark: A Case Study on Results and Lessons Learnt

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Abstract

This report describes in detail all auctions for renewable energy support that have taken place in Denmark since 2016: multi-technology tenders for wind and solar in 2018 and 2019, a PV solar tender for projects with a capacity less than 1 MW in 2018, and the upcoming wind offshore auction for the Thor project. Moreover, the report contains a short summary of the auctions from before 2016 that had already been described in detail in previous AURES reports. The report then assesses the described auction schemes in terms of actor variety, social acceptability, effectiveness, cost effectiveness (efficiency), realisation rates and ownership changes. Significant reductions in support levels have been achieved over the auction rounds in the recent past. There are only few players that have won in the auctions. A citizen-based consortium failed to pre-qualify for the Nearshore Tender. With the introduction of the multi-technology tender in 2018, the Danish government has for the first time in its energy policy history taken a technology-agnostic approach in the offering of support.The first round of the multi-technology auctions have shown strong competition between the technologies, with winning and losing bids from both wind onshore and solar PV. This was also the case in the second multi-technology auction in 2019 – this time, also bids combining onshore wind and solar capacity in hybrid projects were presented and successful. The 2019 auction was the first auction in Denmark that was undersubscribed, while it also resulted in the lowest prices so far. The report also describes a special arrangement in Denmark, where project owners must offer a certain amount of the project (20%) to the local citizens. The scheme has been amended over time, after some challenges became apparent. The report concludes with a short listing of lessons learnt from the recent auctions for renewable support in Denmark.