Response: The myth of the Danish green energy ‘miracle’

by Michael Trebilcock

This article was first posted on the Financial Post website on May 11, 2009.

It is important to understand why the Danish government, which appears to have commissioned Mr. Pedersen’s comments, is sensitive to critiques of the Danish experience with wind power. Denmark is home to Vestas, the world’s largest wind turbine manufacturer, with 20,000 employees and a market share of between 20% and 25%. As the market for its turbines in Denmark and other European countries becomes saturated, it seeks to export the Danish experience worldwide. To this end, it recently ran a multi-million dollar global ad campaign with the slogan, “Believe in the wind,” claiming that Denmark has solved the problem of dirty electricity through wind power.

Mr. Pedersen has various objections to my earlier comments in the Financial Post, which were excerpted from my submission to the Ontario Legislative Committee on the Green Energy Act and subsequently published in edited form by the C.D. Howe Institute. These latter two documents contained many of the citations which Mr. Pedersen complains were lacking in the excerpted version in the Financial Post.

First, Mr. Pedersen complains that several quotes that I attribute to leading Danish figures to the effect that wind power in Denmark has not reduced CO2 emissions and has been a terribly expensive mistake were made by Danes who have subsequently moved on to other jobs. So what? On this theory, we should stop quoting Winston Churchill’s war time speeches.

Second, he claims that all forms of electricity generation require back-up, and that wind power does not present special challenges in this respect. This statement is totally disingenuous. Most wind turbines run at about 25% of rated capacity, requiring back-up generation for the balance of the time. And because of their unpredictability, they require spinning reserves all the time, while conventional forms of electricity generation typically run at 75% to 95% of capacity utilization.

Third, in response to my statement that Danish consumers pay exorbitant power prices, he selectively cites electricity prices to medium-sized industries in Denmark, which indeed are below the European average. My point: Data from the International Energy Agency shows that the cost of residential electricity in Denmark in 2007 was US34¢ per kWh — the highest in Europe. All comparisons include taxes, so Mr. Pedersen’s effort to attribute these differentials to taxes is mystifying. We also know that the proposed feed-in tariff for wind power in Ontario is twice the prevailing electricity rate and will cost consumers hundreds of dollars more each year in their electricity bills. The Royal Academy of Engineering in the U.K. in 2004 estimated that the cost of wind power is two-and-a-half times the cost of other forms of electricity.

Fourth, he objects to my claim that Denmark has yet to close a single fossil fuel plant and requires 50% more coal-generated electricity to cover wind power’s unpredictability, and that pollution and carbon dioxide emissions have risen (by 36% percent in 2006 alone). These claims are literally quotations from a recent detailed study by Tony Lodge, a widely cited writer on European energy policy. Mr. Pedersen claims that Denmark has closed several coal and oil-fired plants in the last 10 years. However, he fails to note that Denmark is heavily dependent on 728 local combined heat and power (CHP) plants which depend on fossil fuels. Energy statistics from the Danish Energy Agency for 2007 suggest that comparing changes between 1994 and 2007, coal production has fallen by 40% while natural gas production has increased by 203%. While proponents of wind power point to the 20% of Denmark’s electricity output met by wind power, they downplay, for example, that in 2004, 70% of Danish wind power was exported to Sweden, Norway and Germany, typically at a substantial loss, and that wind power accounted for only 6% of Danish consumption. In turn, Denmark imported significant quantities of hydro and nuclear generated power from Sweden, Germany and Norway. Thus, any sensible reading of these numbers renders it implausible that Danish wind power has displaced significant amounts of fossil fuel generation. To the extent that CO2 emissions from Danish electricity generation declined at all, this is as much attributable to hydro and nuclear imports as to wind power.

Transposing the Danish experience to an Ontario context, in 2008, 75% of Ontario’s electricity generation output was produced by carbon-free hydro and nuclear generation (unlike Denmark), and about 15% by coal-fired generation. In this context, wind power is likely to displace lower-cost, carbon-free base-load generation, or will be scheduled in addition to it and sold to the U.S. at a loss, leaving Ontarians to foot the difference.

Next time readers see an ad from Vestas inviting them to “Believe in the wind,” they should ask themselves: If wind power has no significant impact on the problem we are trying to solve (i.e., CO2 emissions); if wind power costs two to three times as much as conventional sources of energy; if wind power kills twice as many jobs as it creates through its higher costs (except in the home countries of the major wind turbine manufacturers), then why would any right-minded person accept this invitation? We should also ask our politicians this question.

This article is a response to the article "Wind power works" by Sigurd Lauge Pedersen.