Denmark has awarded 20-year contracts for difference (CFD), at prices around 35% of pre-auction forecasts, to support 21.6 MW of utility-scale solar capacity in its first solar tender, which received no bids from German developers.
“We had never done this before, so we did not know that the market price for solar energy was in Denmark. It is very interesting that we got this very low price,” the head of the Danish Energy Agency which ran the tender, Dijana Dmitruk, told NewsBase.
The agency had initially expected to commit 8 million Danish krone (US$1.1 million) for the subsidy. At the average bid price of 12.89 Danish kroner cents per KWh (US$18 per MWh), the agency estimates the commitment at closer to 2.8 million krone (US$395,000).
The figure is around one third of the recent large-scale auctions seen in Mexico, where the average price was US$38 per MWh even though the whole auction was smaller than many whole projects on offer there.
“Danish installations also won in the German auctions, so we are going to have installations in Denmark receiving support from Germany,” Dmitruk added. As a result Denmark’s solar industry will receive a boost from knowledge shared across borders and practical experience deploying utility-scale technology.
Elsewhere in the world, such a result might trigger calls for a massive expansion of solar technology for domestic use or export, but Dmitruk warns against expect such a trend in Denmark. “It is a political decision. We can only do what the politicians ask us to,” she said.
In September, after Danish wind auctions set a record power price low, Denmark’s energy minister, Lars Christian Lilleholt, told media that the government was considering saving money simply by not building the farms. Construction is programmed for 2019 and first commercial generation is set for 2020. In September, adding to the uncertainty, the rules around developing wind farms close to the Danish coast were unclear. Denmark’s parliament approved a key measure in November that allowed the Vattenfall facility to go ahead.
Since 2015, the ruling centre-right Venstre party’s official line is that it should go no further than the renewable energy targets already in place when it took office.