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The European wind industry has called a sudden Danish government decision to suspend approvals for all offshore wind farms “absurd” in light of the EU’s push for a rapid rollout of clean energy supplies.
Denmark has become a leader in wind energy relative to its size thanks to its so-called “open door” programme for approving renewables projects, but this was called to a halt on Monday after the government cited concerns that it violates the EU’s state aid rules.
The interruption comes at a crucial time for Europe as it tries to protect its clean technology industries in response to the billions of dollars of incentives available to clean energy projects through the US’s Inflation Reduction Act.
The European Commission is also trying to push member states to hit higher targets and speed up permitting procedures for new wind and solar power projects as the bloc tries to wean itself off Russian natural gas.
Giles Dickson, chief executive of WindEurope, said that “pausing the established Danish approach to offshore wind development now will seriously undermine all these targets”.
It would also create uncertainty about the substantial wind energy projects that were already under development in the North and Baltic seas.
“That’s completely absurd — especially at a time when the EU is easing its state aid rules to allow for more flexible investments in renewables,” he added.
Danish wind turbine industry leader Vestas was equally taken aback. Chief executive Henrik Andersen said he hoped that “sense returns” and the government would reverse its decision.
“I’m surprised,” by the move, he said on Wednesday. “You have removed something that a large portion of the industry in Denmark relies on, and is actually built on.” The new policy raises a “question mark” about Denmark’s ambitions in green energy, he added.
Rasmus Errboe, chief executive of Orsted Europe, which operates five offshore wind farms in Denmark, also called the move “surprising and regrettable”.
“We apparently won’t be able to progress quickly with the largest buildout of offshore wind in Danish history, at a time where Denmark’s two largest offshore wind developers both are ready to invest heavily in the buildout.”
The European wind industry has been clamouring for policymakers to accelerate the slow pace of permissions for new projects. At the same time, it is struggling with rising materials costs and supply chain disruption that has cramped profitability and forced cuts to its workforce.
It can take up to 10 years for onshore wind schemes to receive permits, the think-tank Ember found in a study last year, even though EU legislation says the process should take no more than two years.
EU policymakers have pledged to tackle the issue that has led to delays and cancellations for turbine makers, but the industry has said it has yet to experience a change in the grinding bureaucratic process.
The cost inflation and government interventions in energy markets since Russia’s invasion of Ukraine have also slowed development. Financing for new offshore projects in Europe fell from €27.7bn in 2020 to €16.6bn in 2022, according to WindEurope figures. No investment in offshore wind was made in 2021, it said.
Danish authorities contacted the commission about the future of its scheme last month, after which they were advised that it could be against state aid rules.
Denmark’s climate and energy minister Lars Aagaard said in a statement that the suspension of approvals was “a serious situation for the green transition and especially for the market players who are ready to invest in this form of offshore wind”.
The European Commission responded that it was “in contact with the Danish authorities on this matter” and that it was up to member states to “design measures in line with State aid rules and its policy objectives”.
Last year, commission president Ursula von der Leyen pledged alongside leaders from Germany, Belgium, the Netherlands and Denmark to increase offshore wind capacity in the North Sea by 65GW by 2030 and to “at least” double that by 2050.
“The Danish approach to offshore wind is workable and delivers exactly what citizens and companies all over Europe urgently need: more renewable electricity at low cost,” Dickson said.
Additional reporting by Richard Milne in Oslo and Leslie Hook in London
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