Energy

The Danish dominance in the wind energy was stimulated by policy, not technology

Summary

Are producers’ decisions to close or replace aging machinery affected further by technological advances or government policy in developing clean energy industries? It is an essential long-term question for lawmakers looking to increase the cost-effectiveness, production and efficiency of renewable […]

Are producers’ decisions to close or replace aging machinery affected further by technological advances or government policy in developing clean energy industries? It is an essential long-term question for lawmakers looking to increase the cost-effectiveness, production and efficiency of renewable electricity with minimal budgets, says C.-Y. Cynthia Lin Lawell, an associate professor at the Department of Applied Economics and Management at Charles H. Dyson. A world pioneer in wind energy, a comparatively advanced and the low-priced renewable technology, Lin Lawell discovered in a recent study aimed on Denmark that the administration policies have been the key catalyst of the growth and advancement of that sector.

“Technological advancement alone would not have resulted in the widespread development of wind power in Denmark,” said Lin Lawell, Chair of Natural, Electricity and Resource Economics for the Robert Dyson Sesquicentennial. “Excellent policies may be an important contributor to emerging industries, such as renewables, which need to develop technology and have wider environmental benefits for society.” “Lin Lawell is co-author of “Wind Turbine Shutdowns and Improvements in Denmark: Scheduling Decisions and the Effects of Government Policy,” published in a new issue of The Energy Magazine, with Jonathan Cook, who is an associate of the DEEP-GREEN-RADAR research group.

Wind turbines are nearing the completion of their useful life of approximately 20 years in several countries, Cook and Lin Lawell say, making decisions on whether to scrap or repair them more and more critical. Having supported wind energy since oil crisis in late 1970s, Denmark is ahead of the curve. In wind deployment per capita as well as per gross domestic product, the country generates over 40 percent of its electricity from the wind power and going ahead to dominate other countries, the writers said. The Danish wind industry is intensely concentrated, with not over two turbines working for 88 percent of the close 3,000 producers participating in the the study which started in 1980 to 2011. 

The researchers developed a complex structural econometric model which integrated the power, age, and position of any turbine operated during that time by small producers. The “bottom-up” methodology of the model permitted the study of individual owners’ choices to shut down, update or install turbines over time as well as simulated effects of government plans had been reduced or were not enforced. Since the late 1970s, Denmark has provided a feed-in tariff guaranteeing manufacturers a fixed price per quantity of wind power produced, whether the turbines be new or old. Replacement certificates have incentivized updates since 1999.

Both policies greatly influenced the shutdown and upgrade decisions of small producers and stimulated the wind industry’s growth in Denmark, the scholars concluded. Without them, the model found that by 2011, most small-scale wind makers would have abandoned the market, focusing development on larger wind farms.

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