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Wind Power in Denmark

Wind Power in Denmark. How did it start?. Wind Power in Denmark. 1st Oil crisis in 1973-74 Denmark in 1974 100% import of oil, gas & coal 0% domestic hydro, wind and nuclear Denmark in 2004 Net export of oil & gas 20% wind penetration. Wind Power in Denmark. Federal Authorities –

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Wind Power in Denmark

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  1. Wind Power in Denmark How did it start? October 2004

  2. Wind Power in Denmark • 1st Oil crisis in 1973-74 • Denmark in 1974 • 100% import of oil, gas & coal • 0% domestic hydro, wind and nuclear • Denmark in 2004 • Net export of oil & gas • 20% wind penetration

  3. Wind Power in Denmark • Federal Authorities – guidelines for permitting • Building, environmental, grid connection, tax • TRANSPARENCY AND PREDICTABILITY • Avoid local interpretation and unclear rules • NO special rules for wind – unless required Regional Authorities • Develop regional plans for deployment of WTG • Grid connection • Within designated area = owner’s cost • Outside designated area = utility cost • Cost of balancing, substation & transmission is shared by all consumers

  4. Wind Power in Denmark • Power Purchase Agreement • Guaranteed right to dispatch • PPA on take or pay basis • Fixed price throughout lifetime – • Later only for full load hours (=debt repayment period) • After full load – normal tarif plus green premium • Tax depreciation • No incentives – normal rules for depreciation of industrial equipment • Do not invest for tax – keep focus on generation

  5. Alternative Finance Structures • Emerging Markets • Down Payment and full recourse loan based on Owner’s balance sheet • Officially Supported Export Credits • Markets conditions • ECA insurance cover is key for availability of credits • Soft loan • Grant from donor country • Developed Markets • Equity and non-recourse loan based on project cash flows

  6. Export Credit: Full recourse loan Flexible loan documentation Acceptable credit rating of guarantor and/or buyer Project should be commercially viable Project Finance: Non-recourse loan Complex security package No guarantor required - only project cash flow Project must be bankable Expensive and time- consuming due diligence. Expensive and time-consuming documentation Alternative Finance Structures

  7. Soft Loans • Improves Project Viability (IRR) • Government bureaucracy • Time consuming reports, documentation and delays • Project Viability • Full recourse loan • Acceptable guarantor required

  8. Alternative Finance Structures Contract Buyer/Borrower Vestas Recourse Agreement Payments Loan Vestas Bank AfDB Guarantee Grant Danida

  9. Alternative Finance Structures Contract Vestas Buyer/Borrower Payments On-lending Loan AfDB Euro Fund Insurance cover Local Bank Vestas bank Risk Sharing Local Bank EKF EKF

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