San José State University
Department of Economics
& Thayer Watkins
& Tornado Alley
|Danish Energy Policies|
Denmark generates from the wind an amount of electricity equal to about 20 percent of the total electricity consumed in Denmark. This earns the Danes plaudits for being on the forefront of renewable energy generation. For example, Thomas Friedman, a columnist for The New York Times, in August of 2008 asserted that after the petroleum embargo of 1973 Denmark undertook a program of energy development
[…] in such a sustained, focused and systematic
way that today it is energy independent.
Nothing could be further from the truth. Friedman confuses petroleum independence with energy independence. For the United States petroleum independence would be energy independence. This is not the case for Denmark. Denmark imports all of its coal from Germany and gets about one sixth of its energy needs from that coal.
A senior editor of Atlantic Monthly asserted in an article in that magazine in 2009 that
Denmark, which also suffered the shocks
of the 1970s no longer needs to import oil.
That petroleum independence had nothing to do with the Danes' pursuit of wind power generation. It had to do with the discovery and development of petroleum sources in the bed of the North Sea off the western coast of Denmark. Danish production rose from a level of about 40 thousand barrels per day in 1981 to a peak of almost 400 thousand barrels per day in 2005. Since then production has been declining. Denmark however is continuing to promote new developments of off shore production. There was a similar growth in the production of natural gas. From nothing in 1981 Danish natural gas production rose to 900 million cubic meters per day in 2007. Thus the Danish independence from petroleum imports arose from the policy disdained in America under the epithet of Drill, Baby Drill!
While Denmark did generate electricity from wind generators that means less than one might suppose. The electricity production from the wind machines is intermittent and therefore unsuitable for uses that need a steady continuous flow. This wind-mill-generated electricity also cannot be stored. Therefore Denmark sells about two thirds of its wind power electricity to Germany, Norway and Sweden at price that is necessarily below the price of steady, continuous power. In western Denmark the proportion of wind power sold in 2003 was 84 percent. Although Denmark sells its wind power electricity it imports steady, continuous power from hydroelectric installations in Norway and Sweden.
Danes paid about $0.38 per kilowatt-hr for their electricity in 2008. This is extremely high, the highest in Europe. In contrasts Americans pay about $0.10 per kilowatt-hr and the French $0.17 per kilowatt-hr. The $0.38 per kilowatt-hr that Danes paid for electricity in 2008 was up from $0.32 per kilowatt-hr in 2006. Not only are Danes paying the highest price for electricity but that price is increasing faster than in most other countries.
Danes are well aware that the wind power in Denmark is less than beneficial to them. One Dane remarked
Hver gang vingerne paa en moelle drejer rundt, tager
de 25 oere ud af en
Jo mere de koerer rundt, jo mere koster det skatteyderne.
(Every time the rotor of a Danish windmill turns
it costs the Danish taxpayers a nickel.)
However the Danes are not really subsidizing the electricity consumers in Germany, Norway and Sweden. The wind power electricity sells at a discount because it is intermittent and less dependable than power from generating plants fueled by fossil fuels or stream flow and because it cannot be stored. The Danes are really only subsidizing the wind power industry.
For material on the proper way to do an economic evaluation of windpower see Wind Power.
Robert Bryce, Power Hungry, Public Affairs, New York, 2010.
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