Transcript Global klimapolitikk, karbonmarkeder og mulighetene for

Wind Power Developments in
Denmark and Norway:
A comparison
Jørund Buen
Department for Interdisciplinary Studies of Culture
Norwegian University of Science and Technology
(NTNU)
“Strategies for Sustainable Energy Technology”
Workshop, Trondheim, 20-21 November 2003
Industry’s Innovation Fund for NTNU
Outline
• Different development paths
• Why the Danes have had success
• Why they could (have) fail(ed)
Industry’s Innovation Fund for NTNU
Strikingly different development
paths
• Then:
– Oil embargo (1973)  both countries wished to prevent
energy shortage through new energy tech
• Now:
– Denmark: 5,600 turbines, 2,880MW effect, +19 % of
electricity. Norway:  0
– Danish turbine and blade manufacturers 40-50% of growing
global market. About 20,000 employees; turnover DKK 20
billion, mainly for export
– Norway: few, small and scattered subcontractors
• Why?
Industry’s Innovation Fund for NTNU
Available land? Wind resources?
• Norway: Europe’s 5th largest country, but
fewer inhabitants than small Denmark
• No major local resistance in Denmark until
late 1980s, but first major Norwegian
projects ran into problems
• Norway in general better wind resources
than Denmark
Industry’s Innovation Fund for NTNU
Possible explanations
• Political-industrial context:
– Norway coercive, Denmark consensual?
• Nature of policies and measures: differences
in support for dynamic efficiency?
– Providing continuous (dynamic) incentives for
beneficial technological and structural change at
company and sectoral level?
• Nature of environmental problem to be
solved:
– International vs domestic approaches to climate
problem?
Industry’s Innovation Fund for NTNU
Why the Danes succeeded
1: Benign political-industrial context
Industry’s Innovation Fund for NTNU
Political-industrial context 1:
Research & Development
• Bottom-up, incremental, trial-and-error
improvement
• Risø Test Station
– Quality control, consulting, information exchange, R&D
• Craftsmen first, engineers later
– Technical high-schools, not universities
• 1976-96: DKK 100 million
– 4.2% of world total, but ca 50% of world market…
• Funding stable organisationally and monetarily
Industry’s Innovation Fund for NTNU
Political-industrial context 2:
Industrial structure (1)
• Embryonic phase: Small and medium-sized
agricultural companies
– Rooted in cooperative tradition
– Used to produce solid machine
– Other countries: space industry, large agricultural and
machine-building companies
• Wind business piggy-backed on established
companies’ competence, supplier network and
capital base
–
–
–
–
Vestas
Bonus
Nordtank (NEG Micon)
LM Glasfiber
Industry’s Innovation Fund for NTNU
Political-industrial context 2:
Industrial structure (2)
• Close collaboration with network of (mostly)
Danish subcontractors
– Brakes, blades, controllers, nuts and bolts, hubs, etc.
– 2000-: Dominant players aim for vertical integration –
more of value chain in-house
• Horizontal information (and personnel) flow
between competitors
– Similar social, professional and/or educational
background
– Discuss common technical challenges
Industry’s Innovation Fund for NTNU
Political-industrial context 3:
Political window of opportunity
• Energy crisis: Oil embargoes in 1973 and 1979
– Strongly dependent on imported petroleum products
– However, strong public sentiment against nuclear power
– Energy security major role in early development of wind
power
• Grassroots environmental movement provided
credible alternative to nuclear
• Strong need for strong measures to stimulate
employment
• Radical government
– Links to grassroots
– Sympathetic to government intervention
Industry’s Innovation Fund for NTNU
Political-industrial context 4:
Organisations
• Danish Wind Turbine Owners’ Association
(1978)
– Naturlig Energi: transparency, facilitated competition
– Negotiations with government
– Manufacturer groups for sharing of experiences
• Danish Windturbine Manufacturers’ Association
(1978)
• New Renewable Energy Organisation (OVE)
(1976)
– “Vindtræf” – meetings up to 4 times a year
– Exchange of experiences
Industry’s Innovation Fund for NTNU
Why the Danes succeeded
2: Adaptation to problem types
Industry’s Innovation Fund for NTNU
Adaptation to problem types:
Wind power’s shifting rationale
• 1975-ca 1990: Provider of energy security
– Prevented oil and gas imports through increased
self-sufficiency
• Ca 1990-: Important part of domestic solution
to greenhouse gas emissions problem
–
–
–
–
EU “bubble”: DK to reduce GHGs 21% by 2008-12
DK coal-based economy very GHG-intensive
Denmark now (almost) self-sufficient in oil and gas
Can also be exported to developing countries
through project-based Kyoto Mechanisms
Industry’s Innovation Fund for NTNU
Why the Danes succeeded
3: Matching policies and measures
Industry’s Innovation Fund for NTNU
Matching policies and measures (1)
• P&Ms adapted to industrial development
phase
• Embryonic: Strong government
involvement
– Production subsidies
– Installation subsidies
– Direct government investment: Dansk
Vindteknik
Industry’s Innovation Fund for NTNU
Matching policies and measures (2)
• Consolidation of industry: government
support changed
– Guaranteed grid connection and fixed payment
– Production and installation subsidies gradually
reduced to zero (1982-9)
– Government withdrew from direct investment
(1989)
– Public-private financing 1984-9, export
guarantees 1989– MW agreements; national/local planning
Industry’s Innovation Fund for NTNU
Matching policies and measures (3)
• Maturity of onshore industry:
– Policy for replacement of old turbines (1994-6;
2000-2)
• Fewer, larger turbines located in less intrusive
places
– MW agreement for offshore development:
Technological niche
– Exports: Tied aid for new markets in developing
countries; carbon funds
– Compensated for CO2 tax on electricity
– Minor production subsidy; depends on turbine age
Industry’s Innovation Fund for NTNU
Matching policies and measures
(4): Whole period 1975• Installation and production subsidies tailormade to create incentives for local
involvement
–
–
–
–
Individuals can only grid-connect one turbine
Must be placed on their own land
Can invest in co-operatives
Each shareholder in private co-operatives
cannot own shares equalling more than 30,000
kWh
– Investment yields tax deduction – and less
NIMBY problems
Industry’s Innovation Fund for NTNU
Additional success factor:
International political niche market
• Californian export market 1983-7 essential for
industrial development…
• … and its demise
– All efforts directed at one (strongly policy-driven) export
market
– 1987: DK +50% of a rapidly growing market covering
90% of global market activity
– Shrank rapidly after tax rebate removed 31 Dec 1985
• Today: Wind power still “political product” –
market niche = politically driven markets
worldwide
– Germany, Spain, India, China, US
Industry’s Innovation Fund for NTNU
…and why the Danes could just as
well have failed
Industry’s Innovation Fund for NTNU
Why the Danes could have failed (1)
• 1976-1979: Utilities, Ministry of Trade
wanted R&D on large-scale wind power
– Utilities, established industrial actors,
employers’ and workers’ organisations
uninterested in small-scale wind
• 1979-1989: Large-scale R,D&D
programme in parallel with small-scale
R&D + commercialisation
– Costly failure (but much to learn from)
Industry’s Innovation Fund for NTNU
Why the Danes could have failed (2)
• Wind power was a political product, and no
hedge was available; 1985: Annus horribilis
– California scrapped tax rebate
– Demand from cooperatives weakened because
1) Danish production subsidy reduced overnight
2) Secret 100MW agreement between utilities and
govt
3) Private turbine ownership restricted financially,
geographically)
– State export subsidies removed overnight (1986-7)
Industry’s Innovation Fund for NTNU
Why the Danes could have failed (3)
• MW agreements 1985 central government and utilities common interest in
large-scale, concentrated wind power development
(on- and, later, offshore wind farms)
 local (government) protests against wind power
development
 +2 year delays in implementation
 Coordinated planning process initiated, but brought
uncertainty and reduced demand at first
 Could have broken the neck of companies if timing
different
Industry’s Innovation Fund for NTNU
Why the Danes can still fail
• Offshore investment:
– Uncertainty regarding size, speed, rentability
– Cooperatives prevented from participation -1997
• Uncertain future framework for wind power
support (hostile government)
• Strong international competition - relatively
weak position in two dominating “political
markets” Germany and Spain
• Danish majors to produce blades internally
 single companies (and Danish cluster)
vulnerable
Industry’s Innovation Fund for NTNU
Preliminary conclusions/
Lessons for Norway
• Uncertainty related to policies and
measures as well as wind resource
planning have powerful impact on market
development
• Bottom-up approach yields far less
difficulties in obtaining local approval
Industry’s Innovation Fund for NTNU