Offshore wind farm projects on the rocks

Billions of kroner could be lost

Energistyrelsen, the Danish energy agency, has suspended 28 wind farm projects worth billions of kroner. Other energy projects have also been halted amongst fears that the ‘open door’ contract scheme is at odds with EU law.

All of the projects come under the so-called ‘open door’ scheme. This permits a company to submit an unsolicited project proposal to a municipality, as opposed to the municipality holding a tender for the best company to do a particular project. 

“Energistyrelsen has suspended the processing of offshore wind turbine projects and other renewable energy projects under the open door scheme,” states the organisation’s website.

“The proceedings have been put on hold until further clarification of EU legal issues.”

Big blow to green transition
These developments could put Denmark’s green transition in jeopardy. Some have suggested that the government is gambling with the country’s climate ambitions.

“This is completely unprecedented. The government is suddenly slamming the door on the green transition with a bang, sending shockwaves through the entire green energy sector,” Kristian Jensen, the CEO of Green Power Denmark and former foreign minister, told Baltic Wind.

“Companies have done a huge amount of groundwork and are ready to build more green energy, and then the government pulls the plug on the ‘open door’ scheme at the 11th hour. This is simply not on. It is a break with the way we have historically conducted energy policy in Denmark and creates enormous uncertainty about green investments.”

Unresolved questions
So what prompted Energistyrelsen to take such a drastic measure? 

Ture Falbe-Hansen, the Energistyrelsen executive secretariat, told CPH POST there were 54 open door applications from April 2022 to January 2023. To put this in perspective, the organisation received one application in 2020 and none in 2021.

The surge in applications came with a change in law that came into effect in July 2022. 

“The open door applications do not involve competition as they work on a first-come-first-serve basis, and this goes against EU policy,” said Falbe-Hansen.

“For this reason, the projects had to stop while investigations into the legitimacy of the open door scheme were ongoing.”

Halting the projects would go against the EU’s policy of accelerating the transition to green energy.

Suggestion of payments to secure contracts 
Falbe-Hansen also specified that “players in the industry” wanted to pay the state in order to secure open door contracts. This began in the autumn of 2022 and was a factor in the projects’ suspension. 

He did not specify whether this is normal practice under the open door scheme. It is unclear whether the payments, which would have taken the form of ‘community contributions’, were actually made. 

This was followed by unsolicited applications for very large projects under the same scheme – another factor that Falbe-Hansen indicates as central to Energistyrelsen’s decision. 

Still not clear
Asked to further clarify his comments, Ture Falbe-Hansen did not reply. 

Pressure is mounting on Energistyrelsen to give a reasonable explanation for its decision to suspend the projects.

“We need a rapid explanation. The door has been slammed on offshore wind farm projects and the industry is in shock,” said Jensen on Green Power Denmark’s website.