Developers of near-shore windfarms in Denmark believe projects will take more time to reach the point at which they secure a permit, that risk and costs will increase, and that some recently submitted under the country’s ‘open door’ scheme might not go ahead at all unless the Danish Energy Agency is prepared to adopt a pragmatic approach to environmental assessment of projects.
In September 2019, a new, multi-stage approach to assessing the environmental impact of projects was announced in a Danish Energy Agency (DEA) statement about the Thor offshore windfarm. Thor is not an open door project, and will be awarded after a competitive tendering process, but the ruling applies to all windfarms in future, offshore and near-shore, including near-shore projects that are already underway following applications under the open door process.
The ruling means that an initial environmental assessment must be carried out prior to the submission of bids. The developer securing a concession to build the windfarm will then have to carry out a comprehensive environmental impact assessment of the final design of the project, before being granted a permit to build.
The change came after a December 2018 ruling concerning Vattenfall’s Vesterhav Syd offshore windfarm. The DEA said the new approach was designed to ensure “a legally appropriate process for environmental assessments and permitting.”
Vesterhav Syd was the subject of a complaint regarding the permit Vattenfall secured for it. The complaint, which was upheld, alleged that the environmental assessment for Vesterhav Syd did not describe it in sufficient detail. As a result, the DEA had to implement a new procedure that will require developers to provide very much more detailed information about a project before a permit is granted.
The problem is, developers of near-shore windfarms suggest, no one yet knows exactly how much detail will be required. The new rules could, they suggest, require them to specify the exact position of every turbine with a high level of accuracy and potentially undertake additional geotechnical campaigns.
Responding to the change, trade association Wind Denmark said the DEA’s decision would be “an additional burden on projects that have already lived a tumultuous existence.” Wind Denmark chief executive Jan Hylleberg said, “We understand that the DEA sees the change as necessary in order to prevent open door applications being hit by the same problem as Vesterhav Syd, but it comes on top of an already very long-drawn-out process and could affect investor confidence.”
Mr Hylleberg said the extra round of environmental assessment that would now be required was “difficult to swallow,” particularly as open door projects enable the utilisation of wind resources in areas not covered by state tenders.
The DEA ruling came as a report produced by consulting firm KPMG on behalf of developers European Energy and Hofor – both of whom are progressing near-shore projects – claimed that near-shore projects may have significant benefits compared with offshore windfarms farther offshore.
KPMG compared the 1 GW Thor project with five near-shore windfarms with a combined capacity similar to the offshore project. It found that there were socio-economic gains of 2-14% for the combined near-shore windfarms, compared with a single large one.
Hofor director of economics and business Jan Kauffmann said KPMG’s analysis highlighted the important role near-shore wind has to play as part of the Danish energy mix. He said near-shore projects could contribute to reducing the cost of energy from offshore wind and highlighted shorter distances to shore and reduced water depths that make near-shore wind less expensive.
Hofor is developing two near-shore windfarms. European Energy is developing a number of projects in addition to a test centre off Frederikshavn. All of its projects are able to use existing onshore infrastructure to transmit electricity produced to consumers and do not need what Hofor and European Energy described as “expensive offshore transformers and onshore grid reinforcement.” European Energy chief executive Knud Erik Andersen said the cost of strengthening the electricity grid to connect a large offshore windfarm would be passed on to consumers “and can cost billions.”
“KPMG’s analysis shows that near-shore wind is cheap, quick to establish, and easier to locate near major cities where there is demand for power,” Mr Kauffmann said. The developers said several smaller near-shore windfarms rather than one large one would enhance security of supply.
European Energy began development of open door projects in 2012. Two of its projects, Omø South and Jammerland Bay, were selected for further development. Pre-investigation work was carried out between 2014 and 2017. Final approval of Omø South and Jammerland Bay is expected in Q1 2020. In 2017, two additional windfarms, Frederikshavn and Mejl Flak, were added to its pipeline of near-shore projects.
A European Energy spokesperson told OWJ that, until recently, the DEA was not adequately resourced to deal with the workload the new process is likely to create, although personnel had been hired in recent weeks.
He said another concern expressed by developers is that even if the DEA approves a permit for a project, that permit could be appealed, and that the appeal function has been moved to the provinces, rather than the capital.
“We believe the new regime will delay projects by at least 12 months, possibly by two or three years,” he said. “A lot also depends on what stage a project is at. We are fairly lucky in as much as we have already done a lot of work since we first submitted our applications. As a developer, we need to know much more about the detail of the new process and how much leeway there will or will not be.”
Another small-scale developer, Wind Estate, recently proposed the development of three projects. It submitted applications to the DEA for projects with a total capacity of up to 1.8 GW. The first application is for an area north of Djursland and east of Randers Fjord, called Treå Møllebugt. The area is 17 km from the coast and would see the installation of 60-62 turbines with a total capacity of 434-720 MW.
The second application is for an area south of Samsø called Paludan Flak. Here, Wind Estate wants to replace 10 turbines in the Samsø offshore windfarm with larger turbines. Wind Estate also wants to install 19-22 turbines with a total capacity of 154-228 MW. The third application is for an area 13 km southeast of Mon and 20 km east of Falster, known as Kadet Banke, where the company wants to install 72 turbines with an installed capacity of 504-864 MW.
Wind Estate founder and Erik Abraham told OWJ that he was confident that all three projects would progress to the next stage of the approval process, but said the need to produce a much more detailed environmental assessment in addition to the one it has already carried out could add significantly to the risk associated with projects. He also highlighted the cost implications of being forced to carry out further geotechnical work.
But Mr Abraham said he hoped that developers would be able to work with the DEA in order to mitigate risk. “It’s not in anyone’s interest to add risk to projects for which there is clearly a sound business case,” he said.
European Energy’s spokesperson concluded that “If the DEA doesn’t adopt a pragmatic approach to this and a developer has to do a lot more geotechnical work, investor confidence could be affected, and some projects could get hurt.”