Wind power: building momentum through national policy leadership

Starting in the late 1980s, Denmark aimed to reduce fossil fuel imports and address climate change concerns by developing a local renewable energy industry, with a focus on biomass and wind energy. Today, nearly 20% of electricity is produced from wind turbines, and Denmark is one of the leading exporters of wind energy technology and expertise around the globe.

Energy products and equipment (including wind turbines) accounted for over 11% of total goods exports in 2009. Further, Denmark has done this while reducing oil imports and CO2 emissions.

Key factors of this success were:

Reliable public support and private commitment to the goals of the technology strategy.

A set of market introduction mechanisms, including loan guarantees for large wind turbine export projects and feed]in tariffs (FIT) that required utilities to purchase all generated wind farm energy at a consistent, above]market price.

Provision of financial incentives for the public to become supporters of the wind energy economy through wind co]operatives.

Supporting industry wind power R&D by developing guidelines and standards for wind turbines while leading research collaboration on the exploration and exploitation of wind resources.

In the past decade, India now has the fifth]largest installed wind farm capacity in the world, more than three times the installed wind energy capacity of Denmark. As in Denmark, this growth was driven by a set of stable policies and support mechanisms, including:

Effective legislation such as India’s Electricity Act of 2003, which requires state energy regulatory commissions to encourage electricity distributors to procure power from renewable energy sources; this led the states to develop aggressive renewable energy targets and policy support mechanisms.

Support for development of domestic wind turbines manufacturing capability through Suzlon, an Indian]owned company that holds over 50% of the Indian wind farm market share and has also captured a large share of the global market.

China began installing wind power capacity in 2005, but has since become the world’s largest domestic wind farm market, achieving three times the installed wind energy capacity in India (or ten times the capacity in Denmark) in just give years. As in Denmark and India, China created strong incentives and drivers for private investment through a comprehensive mix of support, including:

The 11th Five]Year Plan (2006) included renewable energy scale]up to meet growing electricity demand and achieve energy security and pollution reduction goals. The plan included national targets for wind: 5 GW installed in 2010; and 30 GW installed in 2020.

These targets are implemented by the provinces and by electricity producers through mandated shares of renewable energy. The policy combines market instruments (e.g. bidding on concessions and mandated market share) with government intervention (e.g. price controls and technology targets).

Support for state]owned companies to invest in wind power R&D.

Notably, China’s central government (through the National Development and Reform Commission (NDRC)) replaced the tender system, which had granted on]grid prices that varied significantly. Recognising that the bidding system’s low tariffs were a key barrier to profitable wind energy development, the NDRC established in mid]2009 a fixed FIT, differentiated by regional wind resource.

As a result of this pragmatic, integrated approach, China’s installed wind farm capacity exceeded the 2010 target by 320% (China Electricity Council, 2010). The 12th Five]Year Plan (published in late March 2011) will likely contain a further increase of the 2020 targets above 100 GW.