Policy - 20/November/2019

New permit rules for nearshore Danish wind projects

The new rules may cause “more work and more risk” for developers

Public comment on coastal offshore wind farms planned around Denmark can now be submitted much later in the project development process than previously. The change means people can endorse or reject a project based on detailed proposals, but it adds significant costs for developers and delays the transition to renewable energy

 

PROCESS Two procedures govern offshore wind farm development in Denmark. For large wind farms, project developers compete for government concessions while for smaller projects close to shore developers submit unsolicited applications for a series of permits under an “open door” process

CHANGE Public disquiet about wind turbines close to land has persuaded the Danish Energy Agency to shift the Environmental Impact Assessment and subsequent public consultation to later in the permitting process to allow for discussion of real plans rather than theoretical scenarios

INDUSTRY REACTION “Having a public hearing in the second phase of the process, when the project is much more concrete, may increase risks for the developer and be very costly if the project gets rejected at such a late stage”

 

When the Danish Energy Agency approved the construction of two “nearshore” wind farms by utility Vattenfall in December 2016, the country’s Energy Board of Appeal was flooded with complaints from over 300 disgruntled members of public. The problem, says Erik Abraham, CEO at Wind Estate, an energy supplier, was that the final layout of the projects, Vesterhav Syd and Vesterhav Nord off the west coast of Denmark in the North Sea, differed from original plans. The board ruled that an additional Environmental Impact Assessment (EIA) was needed, followed by a new public hearing.

As a result of the furore, in autumn 2019, the Danish Energy Agency introduced changes to the so-called open door process for nearshore windfarms to enable public consultations to be based on real, rather than largely theoretical, plans. The wind industry says the changes will bring challenges and must be carefully managed if they are not to become a barrier to the development of offshore wind in Denmark.

Unlike for large offshore projects, in which developers compete for government concessions for identified sites, the permit process for coastal wind farms invites prospective developers to take the initiative and submit unsolicited applications in an open door procedure. The first step of a successful application gives the developer a permit to carry out preliminary investigations in a given area.

The open door procedure requires a developer to gain three licences from the Danish Energy Agency before it can construct a wind farm: one to carry out the initial investigation, one to build a wind farm and one to produce electricity. Until now, the public hearing on the EIA took place before the preliminary study was approved. In future, a project will only be open to public comment when the agency has sufficient information to make its decision on the initial permit. Furthermore, the EIA must describe and evaluate the potential impacts of a more detailed project proposal.

The wind industry says it understands the reasons for the change. “If the EIA does not describe the reality you end up with, the public has not had a fair chance to comment. In that sense, it is fair enough the rules are being adjusted,” says Abraham. Until now, the preliminary EIA often described a worse-case scenario, says Maria Louise Flachs, advisor at the Danish Energy Agency. The change will “provide citizens a better opportunity to consider the actual project,” she states.

 

 

DELAYS AHEAD

But challenges lie ahead. Developers of projects where a public hearing has already been held prior to granting the first permit are required to hold a second hearing before being considered for a construction licence. For future projects and those in early development just one public hearing will be held further down the line.

“We fully understand why the energy agency had to make the adjustments,” says Camilla Holbech, deputy head at Wind Denmark, an industry organisation. “Unfortunately, it means several projects, which have been in the process for a long time, will be hit twice because they must now comply with the adjusted EIA as well as a public hearing.” Abraham adds: “Having a public hearing in the second phase of the process, when the project is much more concrete, may increase risks for the developer and it will be very costly if the project is rejected at such a late stage.”

While the first phase, which looks at the preliminary design of the project and any potential environmental impacts on the chosen area, typically costs around DKK 10-20 million (€1.3-2.7 million), costs in the second phase, which include expensive in-depth subsea analysis can rocket to DKK 80-100 million (€10.7-13.4 million), says Kim Pind, head of offshore development at Hofor, the greater Copenhagen utility group.

With the risk of a delayed or eventually rejected EIA, investors and developers may decide to withdraw their support because they are worried about losing such large amounts of money, says Abraham.

Two developers hit by the adjusted rules are Hofor and green energy company European Energy, which together have five nearshore wind farms in development under the open door process.

Pind agrees the new rules will cause “more work and more risk” for developers since they must now in their EIAs show different layout scenarios and include details such as the size range of turbines and rotors, types of foundations and the coordinates at which they could be located. He acknowledges that: “The more precise we are, the easier the process will be as this will eliminate the need for an EIA amendment and an additional public hearing.”

If a later stage project differs significantly from its original EIA an additional assessment may have to be prepared and sent to public hearing, an extra step to be avoided at all costs, says Pind.

At Wind Denmark, Holbech says open door processing times are already very long. “Project developers have spent six, seven years developing some of these projects and now there will be additional administrative work,” she states. “From the industry’s point of view, it is a significant worry. There is a real fear this will delay a number of projects.”

Pind suggests the energy agency could do more to allay some of these fears by reducing uncertainties and making it as clear as possible exactly what will be considered as a significant impact to the environment under new EIA rules and when this could necessitate a second public hearing. “We need clarity and we need the agency’s position on how they plan to administer a second hearing,” he says. Pind would also like the agency to produce extensive guidelines and provide some examples of good practice.

He encourages the agency to engage in more dialogue with industry before making further changes. “It is unavoidable that rules have to be adjusted now and again, but we recommend the agency talks to industry first,” says Pind. “Investors, our board, they get nervous.” Sudden changes may create panic in the market, he says.

 

CLEARER COMMUNICATION

Holbech acknowledges that developers must properly inform citizens of their plans, but insists on the need for flexibility. “That way we can optimise the wind farm layout and not make premature technology choices,” she says.

Astrid Rathe of the Danish Energy Agency affirms the importance of maintaining a good dialogue with industry and citizens. The agency held meetings with industry players before the new rules were made public in October 2019 and following their publication “to ensure a common understanding of the consequences” for future and ongoing projects, she says. But adds the agency will strive for “even clearer communication with industry”.

Minimising risks for developers has been a prime consideration in the adjustment of the open door rules, adds Rathe. She suggests developers had been left with a “false sense of security” under the old system. The energy agency has provided a “securer and firmer” framework, she concludes.

 

TEXT Karin Jensen PHOTO Irfan Alijagic

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