EU approves Danish contracts-for-difference incentive program


The European Commission today announced it has approved Denmark‘s proposed DKK3 billion (€403 million) renewables incentive program.

The Danish government has proposed a contracts-for-difference incentive system which will see applicants competitively bid to secure the lowest guaranteed strike price for the electricity they generate. Renewables plants will receive the wholesale electricity price for the power they produce and when that figure is below the strike price agreed through the auction tender, the government will pay the difference. When the money received from the wholesale market for the clean electricity is higher than the strike price, the generator will hand the difference back to the government.

The commission today said it had approved the new scheme, which will run until 2024, under its state aid rules.

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The contracts-for-difference scheme, which replaces a former renewables incentives program that expired at the end of 2019, can offer contracted strike price payments for up to 20 years, the commission said today in a press release.

Margrethe Vestager, the commission's executive VP in charge of competition policy, said: “This Danish scheme will contribute to substantial reductions in greenhouse emissions, supporting the objectives of the [EU's] Green Deal. It will provide important support to a wide range of technologies generating renewable electricity, in line with EU rules. The wide eligibility criteria and the selection of the beneficiaries through a competitive bidding process, will ensure the best value for taxpayers' money and will minimize possible distortions of competition.”

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