August 26, 2008
Inheriting the Wind: Danish Wind Power
The following is an excerpt chapter from the Breakthrough Institute report, Case Studies in American Innovation: A New Look at Government Involvement in Technological Innovation. You can download the full report here or read more excerpts from the document here.
At the mouth of Copenhagen harbor, twenty giant wind turbines, arranged in a graceful arc, turn in the coastal breeze. This is Middelgrunden, Denmark's first cooperative wind farm and a symbol of that tiny country's impressive wind energy industry. Middelgrunden's turbines, installed in the late 1990s, were designed by Danish engineers, built and installed by Danish technicians, and generate enough electricity to power 40,000 Danish homes. Perhaps most impressively, the project is owned by over 8,500 cooperative members who share the profits of clean energy generation.
Middelgrunden is a result of Denmark's long and successful collaboration between private industry, individual citizens and, most importantly, strong government support. Since 1979, the Danish government, through intelligent, sustained investment, has mobilized the nation in the development of next-generation wind energy, and the results have been impressive. Today, Danish firms account for one third of the global wind power market and have driven the creation of a booming multi-billion dollar industry. In Denmark alone, 6,300 wind turbines pump energy into the regional grid today, providing roughly twenty percent of the nation's electricity. Wind power accounts for some 25,000 Danish jobs, and in 2007, the industry exported 4.7 billion euros worth of energy technology. Without a doubt, government involvement in the wind sector enabled this Danish success story.
Denmark unlocked the energy and capital of its private citizens through strong, consistent market incentives. From 1979 to 1989, the Danish government covered 30 percent of wind investment costs, and later implemented loan guarantees for large turbine export projects. It also guaranteed the domestic wind market by mandating that utilities purchase all generated wind energy at a consistent, above-market price. These market guarantees and subsidies, along with significant tax breaks for wind-generated electricity, promoted rapid deployment and technological innovation, as firms competed to capture the profits to be made from wind energy with the most efficient and cost-effective technologies. Financial incentives also drew ordinary citizens into the wind energy economy, including the members of Middelgrunden and other wind cooperatives, who were attracted by income from shares in wind cooperatives, made tax-free by the Danish government.
The government also provided strong research support for the wind industry. Middelgrunden's turbines, and innumerable others, follow the guidelines set by the government's Risø research center, a global leader in wind energy technology. Risø introduced innovative standards for wind turbines and pioneered a host of technologies relating to the exploration and exploitation of wind resources. Together with the "learning by doing" benefits of mass deployment, these advances have allowed wind turbines to become more durable, more efficient, and dramatically cheaper, and helped private firms in Denmark and abroad move from small turbines to today's multi-megawatt giants - helping Denmark's firms capture a sizable share of global wind energy markets in the process.
Danish citizens and government regulators have been vital in turbine development. Close links between researchers and regulators ensure that government technology standards are well attuned to the latest technology. And earlier in the industry's history, Danish wind turbine owners provided vital feedback on the reliability and productivity of early machines, boosting confidence in Danish firms and stimulating demand. Today, ordinary Danes like the builders, shareholders and customers of Middelgrunden are a driving force behind the wind energy economy, both politically and economically. In fact, over 80 percent of Denmark's turbines are owned by more than 150,000 Danish families organized in cooperatives.
The thriving firms, research centers, cooperatives, and turbine owners of the Danish wind industry are proof that strong, smart government investment in young technologies can lead to big results. Denmark's wind energy success is a model for governments around the world.
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You can download the full report, Case Studies in American Innovation here or read more excerpts from the document here.