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Small Wind Tariffs in Denmark 2016

Article by: Paul Gipe

After a long delay, Denmark is poised to reintroduce a new Feed-in Tariff (FIT) program for small wind turbines. The previous program had been suspended when it reached its cap. The new program cuts the tariffs and the contract term, and severely limits new installations.

There is 4.9 MW of small wind generation capacity in Denmark less than 10 kW in size and 8.5 MW of turbines less than 25 kW in size. Altogether there’s about 14 MW of small wind in Denmark. Of that 3.5 MW, or 25%, is from Denmark’s FIT program.

There is 5,000 MW of commercial-scale wind generating capacity in the country.

Contrary to popular belief, FIT rates often are less than the so-called market rate.

Previously, DK had both a net-metering and a FIT policy for small wind turbines. As in many locales, net-metering is more lucrative than the FIT rate. The retail rate in Denmark is $0.40-0.50 per kWh.

The FIT program paid the equivalent of $0.40/kWh for 20 years to turbines less than 10 kW and $0.25/kWh for 20 years for turbines less than 25 kW. Thus, the FIT program paid less per kWh than the value of the retail rate an owner could offset with their own wind turbine.

Under the previous FIT program, the government set a low cap. The program was successful and met its cap. Consequently, just as in Nova Scotia’s where the ComFiT program was also successful, the government canceled the program.

The new program not only reduces the tariffs, but also cuts the contract term nearly in half. (See New FITs for small wind in Denmark and Poland.) Reducing the length of the contract is particularly devastating, cutting revenue more than a 50%.

The new program will be limited to only 1 MW of total new installations.