Denmark scares off investors after energy agenda is jettisoned

Bloomberg

It was the first country ever to venture into offshore wind power. Now, Denmark is scaring off potential investors by abandoning some of the policies that once helped make it an international poster child for green energy.
The center-right government of Lars Loekke Rasmussen wants to scrap an electricity tax that has helped subsidize wind turbines since 1998.
The administration says its decision follows a complaint from the European Union that such subsidies favor domestic businesses. But Denmark’s Wind Energy Association, which estimates the change would lead to a massive drop in new capacity, warns the development is dangerous.
Jan SerupHylleberg, the chief executive officer of the Wind Association, says investors are struggling to interpret the latest signals from Denmark. “Political uncertainty is poison,” he said. “It’s more of a headache to investors than predicting how the wind will blow.”
Denmark is pondering cuts in wind subsidies as businesses including Sweden’s VattenfallVindkraft A/S, ScottishPower Renewable Energy Limited and Boralex Inc. get ready to bid for a total of 950 megawatts of new capacity planned at several new wind farms around the Danish coast.
Patrick Decostre, general manager of Boralex Europe, warns that his company is ready to “review its potential investments in Denmark” because of the latest policy shifts.
“This situation would send a negative message to foreign investors like Boralex as predictability is key when it comes to such major investment,” Julie Cusson, Boralex’s head of communications, said in an e-mail.
Denmark’s decision to drop the subsidy rather than address the specific criticism from the EU, which was that all companies should have equal access to support, would reshape the renewable energy landscape. The Wind Energy Association estimates that new capacity would plunge from an annual 215 megawatts in 2013-2016 to 50 megawatts a year in 2017-2020, or less than one-fourth its current level.
The government says part of the reason it decided to drop the subsidy entirely is because doing so would help competitiveness at a time when weak exports are acting as a drag on economic growth.