Yesterday, while I was promoting my book, a listener on the Michael Medved show challenged me that (I paraphrase), “Denmark has adopted wind power at no cost.” I said that I was no expert on Denmark but that there were significant subsidies involved. As this Economist article makes clear, it is certainly not correct to say that Denmark has adopted wind power at no cost:
Researchers in Denmark have gone a step further and put a value on this effect. They believe that wind power shaved 1 billion kroner ($167m) off Danish electricity bills in 2005. On the other hand, Danish consumers also paid 1.4 billion kroner in subsidies for wind power.
The Danish government cut wind power subsidies that year. The result:
The building of wind turbines has virtually ground to a halt since subsidies were cut back. Meanwhile, compared with others in the European Union, Danes remain above-average emitters of the greenhouse gas carbon dioxide. For all its wind turbines, a large proportion of the rest of Denmark’s power is generated by plants that burn imported coal.
Moreover, because you cannot store any wind power that is generated when no-one wants to use it, Denmark has to sell excess wind-power to Sweden at a price of 0c per KWh. This has caused some trouble:
Much has been written about Denmark’s success as the world’s wind power pioneer. But the regularly repeated claim – that Denmark generates 20 percent of its electricity demand from wind sources – is highly misleading. That 20 percent of electricity is not supplied continuously from wind power. Denmark’s wind supply is so variable that it relies heavily on neighbors Norway and Sweden, taking their excess production. In 2003 its export figure for wind power electricity production was as high as 84 percent, as Denmark found it could not absorb its own highly variable wind output capacity into its domestic system. The scale of Denmark’s subsidies was such that in 2006-07 the government increasingly came under scrutiny from the Danish media, which claimed the subsidies were out of control.
Overall, Denmark, a small, flat, windy country of about 5.5 million souls cannot be a model for the U.S. to follow, even if they had succeeded in making wind power work efficiently.
Chris Horner also discussed Denmark’s tax regime here.