Denmark’s wind-solar auction ends with average premium tariff of €0.0031/kWh, and almost 40% of capacity assigned to solar

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The Danish Energy Agency, Energystyrelsen, has allocated around 269 MW of renewable energy capacity in the mixed wind-solar auction it launched at the end of September.

Energystyrelsen said contracts will be given to three wind power projects totaling 165 MW and three solar power plants with a combined capacity of 104 MW, after it received 17 bids – with 260 MW for wind and 280 MW for PV.

The agency had expected around 140 MW of wind and solar capacity would be allocated through the auction.

The weighted average price premium of the winning bids is 2.28 øre per kWh or approximately €0.0031 per kWh, the agency said, without providing specific data on the two technologies. The ceiling price for the tender had been set at DKK0.13/kWh.

Projects will have to be completed within two years from contract signing and the PPA will have a 20-year duration.

The budget for the tender round was DKK254 million ($38.7 million), while the entire budget for the series of tenders throughout next year is DKK842 million. The scheme has an additional budget of DKK4.2 billion for 2020-2024.

The auction’s outcome may be considered a success not only because it took place in a northern European country, where levels of irradiation are low, but also because Denmark is home to a well-established wind industry which is able to deliver projects at competitive prices.

Denmark is also supporting commercial and industrial PV through specific tenders for projects up to 1 MW in size. In the first tender, concluded in mid-November, 19 MW of capacity was awarded to eight developers for 19 projects.

Through the new mechanisms, the government said in April, the average level of direct support for renewable energies is expected to decline from approximately DKK0.22/kWh, to DKK0.10/kWh. The plan for the creation of joint wind and solar auctions was proposed by the government last summer, and approved by the European Commission in mid-August.

*New was updated on Dec. 5 to replace “average price” with “average premium tariff” in the headline. We also corrected the value of the average premium tariff, which was not €0.031/kWh but €0.0031/kWh. We apologize for this mistake.