Government support and overcoming transmission and legislative challenges will make Denmark a wind power investment 'hot-spot' through 2028, according to new analysis by Fitch.
The international credit rating agency praised plans for offshore capacity additions and the Nordic country’s auction system, which enabled renewables competing on the same basis as conventional projects in December 2018, which led to several onshore wind projects successfully securing a grid connection.
Denmark plans to award 2.4GW of offshore capacity under the government's 2018 Energy Agreement and a further 12.4GW in future projects by the Danish Energy Agency. The researchers predict 3 percent year-on-year growth over the next decade in Denmark – down from 8% year-on-year growth between 2008 and 2018, due to the “mature nature of the market”.
By the end of the forecast period, Fitch Solutions predicts 7.9GW of installed capacity in the country, up from 5.75GW today, according to Windpower Intelligence. Denmark already has the world’s highest penetration of wind power in its energy mix. In 2017, Denmark's electricity sector wind power produced the equivalent of 43.4% of Denmark's total electricity consumption.
Fitch Solutions reckons wind will remain the dominant source of electricity in the Nordic country, accounting for an annual average of more than 54% of the Denmark’s domestic power generation by 2028.
“In Denmark we expect wind power to remain the dominant source of electricity output, which will be further boosted by government plans for continuing offshore wind power investments” Fitch said in the research note on the outlook to 2028 published earlier in May.
Denmark was a pioneer in developing commercial wind power during the 1970s, and today a substantial share of the wind turbines around the world are produced by Danish manufacturers.
(Graph Data Source: Cleantech)
The researchers also predict India will outperform in wind with 82.3GW installed by the end of 2028, from 41GW this year.
“In India, we expect the government’s drive to increase renewables capacity and efforts to reduce hurdles relating to land acquisition and grid connectivity to result in a total of 50GW of wind power capacity to be added over our 10-year forecast period,” the researchers stated.
"Strong government support for the sector will culminate in intensifying efforts to address structural issues plaguing the sector," Fitch added.
The agency also highlights Poland as a market to watch due to the government’s move to reduce regulatory hurdles for onshore wind.
The government amended the Renewable Energy Sources Act in July 2018, cutting costs for investors.
In February 2019, the country’s deputy energy minister Tomasz Dąbrowski announced the government’s intention to soften distance rules for onshore wind turbines at least in case of municipalities where local communities agree to such investments.
“As onshore wind power projects were subject to stringent location requirements and high property taxes, we highlighted the growth potential for offshore wind power projects,” Fitch Solutions said.
The researchers expect the country to reach 6.16GW in wind capacity this year, to rise to 8.67GW by 2028.