The Danish
Energy Model
Innovative, efficientand sustainable

The Danish Energy Agency

Preface
The Danish Energy Model has shownthat through persistent, active and costeffective energy policy with ambitious
renewable energy goals, enhancedenergy efficiency and support fortechnical innovation and industrial
development, it is possible to sustain

system worldwide: 66% in 2015. In 2015,
more than 40% of the Danish electricity consumption was based on wind
power; by 2020 this figure will likely bemore than 50%.
The Danish government has set a number of targets for the further

significant economic growth, a highdevelopment of the energy sector:

standard of living and a high level

Continuing low-carbon energy sectorof security of energy supply, while
reducing fossil fuel dependency andmitigating climate change.
In a nutshell: energy savings,
optimized manufacturing and investments in green energy technology aregood value for money.
Denmark has reduced the adjusted
greenhouse gas emissions by morethan 30% since 1990. With current
measures in place, the Danish Energy
Agency estimates that emissions will
be approximately 40% lower by 2020 –surpassing Denmark’s legally binding
EU commitment of 34%. Denmark has
the highest contribution of non-2|hydro renewables in any electricity

transition in a cost effective manner
Maintaining Denmark’s leading position
in a number of low-carbon technologies
and systems
And ultimately, making Denmark
self-relianceon renewableenergy in 2050
The Danish
Energy Model
documents thatthe transition
to 21st century energy isdoable – andaffordable.

Morten Bæk
Director General
Danish Energy Agency

benefitted the competitiveness of Danish

Table of contents

enterprises through lower energy costs andLow-carbon economic growth and job creation

3

Setting the course

5

Scenarios5
Energy efficiency

6

Renewable Energy

7

Synergies - energy system integrationand development

12

Climate change – Setting and achieving ambitious
targets12
Strong international ties and cooperation

14

Public engagement and acceptance

15

less exposure to highly volatile fossil fuelprices, but also fostered new products andindustries. Green products and services aredefined as products which reduce pressure
on the environment, for example energy
saving products and the service of installing renewable energy systems. In 2015
Denmark produced green products andservices for EUR 25.8 billion, half of which isrelated to renewable energy and one seventh to energy efficiency. The green sector
employs almost 67,000 people in Denmark.
As an example, the Danish wind energy

Low-carbon economic
growth and job creation
The results of clear political direction havebeen significant and convincing: the Danish
experience shows that through persistentand active energy policy focused on enhanced energy efficiency and ambitious useof renewables in a cost efficient manner, it
is possible to sustain significant economic

sector currently employs more than 31,000
workers1 and the Danish export of windenergy technology in 2015 accounted for
EUR 6.5 billion1. The total export of energy
technology accounted for more than 10%
of Denmark’s total exports of goods in 2015.
Green energy technology accounted foralmost 60% of that number.
1

The Danish Wind Industry Association (DWIA)

growth and simultaneously reduce fossil-

Danish trends -fuel dependency while protecting theEnergy and CO2 intensity

climate and environment.
The Danish economy’s energy consumption
is among the lowest in the world relative
to gross output. Denmark has become
one of the world’s most energy efficienteconomies. Since 1990, Danish GDP has
increased by 44%. During this period, thedomestic energy consumption has declined
by 8% and the adjusted carbon emissions
by 36%. This development has not only

(1990=100)
100
80
60
40
1990

1995

2000

2005

Energy Intensity

2010

2015

CO2 Intensity

Source: Danish Energy Agency

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en|3

Declining energy consumption and carbon emissions
Most of the 8% decline in the gross ener-

has also been improved significantly. As

gy consumption in Denmark between

an example, the manufacturing sector has

1990 and 2015 is due to a 28% drop in fos-boosted the gross value added by almost

sil fuel consumption relative to the gross

30% but reduced final energy consump-energy consumption partly substituted bytion by more than 20% in the period.

a 6% increase in contribution from wind

Danish households have increased realenergy and a 14% from bio fuels andconsumer spending by more than 40% inother renewable energy sources. In 2015

the period but only increased net energy

renewable energy sources accounted

consumption by almost 10%.

for 28% of the gross energy consumptionof Denmark. In the same period, energy
conversion efficiency has been boosted
significantly, reducing conversion losses
by 34% or 9% relative to gross ener-

As for CO2 emissions related to energy, the main contributors to the 36%
drop in Danish emissions since 1990 isenergy conversion (electricity and heatgeneration) by 56% mainly due to an

gy consumption. The main reason foralmost tripling of energy generated fromthis improvement has been a massive
increase in district heating and wind energy capacity. These two energy sources
have increased their overall contribution
by 9% compared to the gross energy

renewable energy sources, plant efficiency and CHP plants. Goods manufacturingand household consumption contributedwith 38% and 58% emission reductions,
respectively. As for power generation,

consumption in the period. With a 44%

reduction in fossil fuel based sources andincrease in real GDP from 1990 to 2015
combined with almost flat net energy consumption, the end-user energy efficiency

power plant optimization has reduced this
sector emissions by 60% compared to1990 emissions.

Total CO2 emissions related to energy
consumption in Denmark

70

Million tonnes

60
50

Households

40

Services
Goods

30

Transportation

20

Energy & Transformation
10
0
1990

2015

Source: Danish Energy Agency

4|

Setting the course

io. A low carbon transition of the Danish

Denmark has a long tradition of active

improvement of energy efficiency and newenergy policy, initiated as a reaction to

low carbon energy sources, but also further

the first oil crisis in 1973. Over the years, aenergy cooperation with Denmark’s neigh-broad consensus in the Danish Parliamentboring countries to reduce costs and securehas been utilized to transition Denmark’s

stability and security of energy supply. Den-energy system towards reduced energy

mark fully supports the creation of the EU

consumption, increased decentralized

Energy Union as a way to improve energy

energy production and increased utilization

security and reduce green transition costs.

energy system not only requires furtherof renewable energy sources. Consistent,
determined and long-term political objectives have formed the foundation of the
low-carbon transition of the Danish energy
sector.

To further secure a cost efficient low carbon
energy transition, the Danish government
has formed a new Energy Commission to
analyze the next step after reaching the2020 target for energy efficiency, renewableenergy supply and greenhouse gas (GHG)

Scenarios

reduction.

In 2007, the Danish Commission on Climate
Change Policy was formed to ensure a cost
future for Denmark. The Danish Energy

Innovation and systemdevelopment

Agency supported the Commission’s work

Research, development and demonstration

efficient transition of a low carbon energy

through detailed scenario analyses, toinvestigate both technical possibilities andrelated costs for Danish society in reaching
the goal of a low carbon energy system by
2050. This analysis shows that it is possible
to cost-efficiently design different energy
systems which all meet the target of a low
carbon energy system by 2050. All scenarios assume vast energy savings as part ofthe strategy to reach a low carbon energy
system. A business as usual based scenario
was used as a reference, and the analysisof new technologies and systems havebeen critical elements in establishing a
Danish stronghold in the energy sector.
Public-private sector cooperation, coupledwith stable political and regulatory frameworks, has fostered important innovation
and breakthroughs in energy concepts and-systems. The foundation of the low-carbon transition has been threefold: energy
efficiency, renewable energy and system
integration including electrification.

shows that both the wind and biomass
scenarios are within 10% of additional costs
compared to the fossil fuel based scenarDanish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en|5

Energy efficiency

Denmark has achieved remarkable results

Energy efficiency is a vital element in theholds, manufacturing and energy produc-

green transition of the energy sector. Without extensive energy efficiency
improvements, it would have been disproportionally expensive to meet energy
demands with new and initially more expensive energy sources like renewable energy.
Successful energy efficiency deployment
enables meeting society’s demand forvarious energy services more efficiently
and effectively, so that energy consumption
is reduced. Results are achieved in partby transitioning to more energy efficienttechnologies and solutions, but also highly
dependent on increasing energy conscious-

in energy efficiency performance for housetion. For instance, energy consumption inbuildings has been reduced by 45% persquare meter since 1975. For the manufacturing sector, the energy intensity has been
reduced by more than 2% per annum thelast ten years. According to a study2 thegains in energy efficiency has improved
cost competitiveness in the Danish manufacturing sector by 9%, due to oil priceincreases over the last decade.

Danmarks Nationalbank Monetary Review, 2nd
Quarter, 2014, Energy efficiency and competitiveness2

ness and altering consumer behavior.

Energy use and intensity in the Danish manufacturing sector
180

0,9

0,8
170
0,7

0,6

PJ

0,5
150
0,4

140

TJ/DKKm GVA

160

0,3

0,2
130
0,1

120

0,0
1990

1995

2000

2005

2010

2015

Note: Energy (E) use in PJ and E intensity in TJ / mio EUR gross value added (2010-prices) from 1990 to 2013

6|Energy use
Energy intensitySupport for energy efficiency measures
Potential remains for cost effective

efficiency of end-user consumption,energy efficiency improvements. These

that is, consumption by consumers andexist in all sectors and areas of use.

enterprises. Danish environmental- andSignificant improvements on nationalenergy taxes contribute to a better

energy efficiency performance can bereflection of the environmental costs ofachieved with products and techno-

production, use and disposal in consu-

logies that are already developed andmer prices on energy.

available as consumer solutions. Often,
it will be cost effective for consumers touse existing solutions; however, energy
efficiency improvements do not comeabout automatically. Active efforts are

By formulating schemes in close dialogue with industry, knowledge about
challenges and possibilities are integrated in the measures.

needed to promote additional efficien-

Initiatives include:

cy improvements and savings. Danish•

Energy labelling of buildings•

Building codes focusing on energy
consumption

efficiency improvements in order to•Electricity saving trusts

minimize energy use and energy waste•

Energy labelling of appliancesin all sectors.

•

Energy savings in the public sector

In addition to more efficient energy•

Energy efficiency obligationenergy policy therefore contains a
number of initiatives to increase energy

production, a number of initiatives haveschemesbeen carried out to increase theRenewable Energy

Measuring electricity supply alone, re-Despite almost no hydropower resources,

above 50% of domestic generation, whichnewable energy today accounts for well

Denmark has managed to become a global
leader in renewable energy generation.
Renewable energy’s share of final energy
consumption in Denmark has been steadily
increasing since 1980. Today, almost 30%
of Denmark’s final energy consumption iscovered by renewable energy.

is mainly due to the incorporation of windenergy in electricity production. Denmark
today has more than 5 GW of installed windenergy capacity, of which almost 1.3 GW
are offshore wind turbines. On windy days,
wind turbines in Denmark produce morethan the domestic demand.
Changes in the Danish overall energy mix
have resulted in a substantial reduction

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en|7

of emissions from energy production. CO2changes to the Danish energy system andemissions from electricity production have

networks. Danish experience shows that

decreased by 60% in the period 1990 to

flexibility in conventional production in

2015. Less than half the amount of CO2 iscombination with strong transmission andemitted when producing one unit of GDP

distribution networks, and larger exchange

in 2015 compared to 1990 and per capita

of power with neighboring countries inemission has been reduced by more thanorder to increase balancing areas, are40%.

important components in overcoming

Reaping the full benefits of new renewableenergy technologies has caused radical

challenges.
Renewable energy has contributed to a

Efficient and effective support for renewable energy
Promoting renewable energy requi-handle the steady increase in fluctua-

res a favorable investment climate, ating renewable energy production. Stra-

developed power grid and long-term

tegic planning of future grid investments

planning.

follows the current political energy

High initial investment cost and lackof fuel costs are the main differences
between wind or solar energy andmost conventional power sources.

policies toward the Danish government’s long-term goal of fself-relianceon renewable energy.

Stimulating demand through financial

Mapping available resources are funda-

and market support has been a central

mental in physical planning to estimate

element in promoting the expansion of

production of potential sites. Ambitious

renewable energy in Denmark. A positi-

targets, long-term planning and strong

ve investment climate has been createdand stable political framework conditi-with priority grid access and resourceons have paved the way for significant

based feed-in tariffs. Feed-in tariffs forprivate investments by creating a posi-

offshore wind are settled by tender andtive and secure long-term investment

feed-in premiums with a cap regulate

climate. The Danish Energy Agency fun-the support for onshore wind power.

ctions as a “one stop shop” for permits,

Central and long-term planning has
ensured timely and relevant investments in the power grid and system.
Thus the grid and system have beendeveloped incrementally in order to8|agreement with adopted measures andwhere all relevant information is gathered. This makes necessary processes
more streamlined and effective.

sharp decline in carbon emissions, but also

options. These costs are mainly related toenhanced the security of energy supply

cost for negative effects of emissions suchby utilizing domestic energy resources likeas CO2, SOx and NOx. These emissions arewind, solar and biomass. Going forward,

adding negative health, environment andfurther expansion of renewable energy

climate effects and consequently costs forcapacity and sources is an important

individual citizens and society as a whole.

element in meeting the government’s longterm vision to make Denmark able to coverits energy demand by renewable energy

It is worth mentioning that Danish energy
taxation and participation in the European
Emission Trading System (ETS) is meant

generation and sources.

to correct some of these market imperfec-

Analyses show that the costs of introducing

tions making energy market participants

renewable energy in Denmark have been

and investors aware of indirect generation

relatively high initially. However, gradually

costs. Also it should be noted that emis-

declining renewable energy costs andsions levels per produced MWh is very low

gradually increasing prices for fossil fuelsin Denmark due to strict emissions and effi-

have made renewable energy sources

ciency standards (CO2 per produced MWh).

increasingly competitive compared with

The calculations also includes balancing

traditional energy sources. Today, onshore

cost for fluctuating renewable energy

wind is the cheapest power generation

sources like wind and solar, which is on atechnology when adding new capacity inlevel of EUR 1-2 per MWh for the Danish

Denmark even excluding indirect costs for

power system.

conventional fossil fuel based generation

Share of RE in final
energy consumption
35%
30%
25%
20%
15%
10%
5%
0%
1990

1995

2000

2005

2010

2015

Source: Danish Energy Agency

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en|9

How is Denmark integrating renewable energy
today and in the future?
Some days the power production fromreducing the electricity production

wind turbines in Denmark exceeds theat the CHP plants when there isdomestic demand for electricity, andample wind power available in the

on average the fluctuating wind energy

system.

supplied 42% of electricity consumption
in 2015. How is Denmark managing to•Innovation in thermal power plantflexibility, which can vary their daily

integrate very large shares of fluctuating

output and quickly adapt to thewind energy nearly without wind powerfluctuating production from wind.

curtailment, as we often see in otherIn most parts of the world thermal

countries?

power plants are designed to run

Most would point to the resource

constant outputs, and the owners

endowment of the Nordic countries, i.e.

will resist implementing increased

the synergy between hydro-, wind- andflexibility in daily operations. The

thermal power in combination with aspeed of power production regu-

strong integration with neighboring

lation in Denmark is larger than ingrids of Europe, including the well-de-other countries, and the minimum

veloped NordPool power exchange,level of output is unusually low inas the primary factors. Denmark can

Danish power plants due to techni-

freely buy and sell electricity to balancecal retrofits and adjustments.

the fluctuating electricity production
from wind. But reality is more complex,•

advanced wind forecasting in theand includes a number of innovative

operations of power system control

features.
•and dispatch. Such advanced

Integrating heat supply with

forecasting, used by the Danishelectricity balancing. Half of ourTransmission System Operator

electricity is produced by small

Energinet.dk, has increased the

combined heat- and power plants.

ability to integrate and balanceThis system has been designed

high shares of renewables.

with flexibility allowing for varying
proportions of heat and electricity
production, and also has built-in
heating storage that allows forcontinuing the heat supply, while

10 |Innovation in the incorporation of•Advanced functions of the electricity market allowing the CHP
plants and the coal power plants
to benefit not only from selling tothe wholesale market in which theirshare of trade is decreasing due toincreased priority production fromrenewables. They can also profit
from selling their services to the socalled ‘ancillary markets’, which provides a number of services required
for a well-functioning power system.

was reserved for thermal power plants.
The combination of circumstancesin Denmark might be unique, but ourexperience has attracted huge international attention and has been sharedwith important Chinese institutions in
the ongoing cooperation between theDanish Ministry of Energy, Utilities andFurther increasing the share of renew-

Climate and key Chinese authorities inable energy will require more flexibility inthe field of energy, like National Energy

the power system. Denmark is therefore

Administration (NEA), State Grid andstrengthening international connections,others. The Chinese authorities are using

and introducing technical measures that

Danish experiences to reduce curtail-will allow for more flexibility and morement of wind power, and working closely

rapid response in the demand for power.

with Danish authorities to achieve a

Furthermore, it is important to note thatgeneral transformation of the Chinese

modern wind-turbines, due to techno-energy sector in a green and sustainable

logical improvements, today can provide

direction.

part of the foundation to ensure powersystem stability, a role that previously

Levelized cost of energy-New power capacity in Denmark
120
100
80
60
40
20
0
Wind

Wind

Solar

Large CHP - refurb.

Large CHP -Large CHP -onshoreoffshore

power

Wood pellets

coal

natural gas CC

Capital cost

Fixed O&M

Var O&M

Fuel cost

Emissions costs

Balancing cost

Note: Coal based on supercritical plants. Source: Danish Energy Agency

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en| 11

Synergies - energy system
integration and development

Climate change – setting andachieving ambitious targets

Focusing on broader interactions and sys-

The future foundation for Danish energytems, as opposed to individual components
and concepts, is an important aspect of theDanish energy model. The Danish energy
model is characterized by a holistic view ofenergy planning, with emphasis on integration of for instance heat and power production, and establishing synergies between
taxation schemes and policy support frameworks for renewable energy.
Furthermore, prudent interaction within the
power and heating sector, i.e. CHP production, use of heating storage in the district
heating system and increased use of electricity for heating accompanied by increased
deployment of heating pumps and electricalboilers, will further improve the efficiency inthe energy sector and mitigate the challenges of integrating variable renewable energy
sources in the power system.
An effective integration and support for
renewable energy sources in Denmark combined with a well-functioning open power
market in the region (NordPool) has ensured
that Danish power prices are not significantly higher than other European countries, even including the cost of supporting
generation and integration of large amountsof renewable energy.

policy is based on broadly supported political agreements, with theEnergy Agreement of 2012 as the mostimportant element for the further transition
toward 2020.
The Danish Government has establishedthe long-term goal of making Denmark
self-reliance on renewable energy in 2050,
meaning that the entire energy demand– electricity, heating, industry and transportation – is to be met by renewable energy
generation by 2050. Already in 2030 theDanish government is aiming at that 50% of
the Danish gross energy consumption is tobe supplied by renewable energy generation.
The Energy Agreement is the roadmap fordevelopment of energy supply and demand
for the period 2012–2020. This agreement
contains a wide range of ambitious initiatives, bringing Denmark a good step closer
to the target of a renewable energy supply
that matches the energy demand. Throughexpanded offshore wind production anduse of biomass, renewables are expected
to cover more than 70% of Danish electricity production by 2020. The Energy Agreement and current results and projections
shows that Denmark will more than fulfills
its obligations toward the EU 2020 targets
within energy efficiency, renewable energy
and reduction of carbon emissions (20-2020 targets).

12 |Combining heat and power production
Combining heat and power generation
has been a key component in the devel-

CHP’s accounted for close to 80% of theopment of the energy sector in Denmark

thermal power generation in Denmark

creating a cost effective heat and power

in 2015. A transformation of CHP fromsupply. The average cost of receiving

fossil fuel to biomass and new dedi-

heat and hot water from district heatingcated biomass CHP and heat capacity

only amounts to 3% of the averagemeans that close to 50% of the district

household income. The distribution ofheating produced in 2015 was fromheat through district heating in Den-renewable energy. For Danish society,mark has been one of the key drivers in

the gross energy consumption has

reductions of gross energy consump-

been reduced by more than 10% due totion and CO2 emissions from the energy

combined heat and power.

sector. District heating supplies morethan 60% of all households in Denmarkwith heat and hot water.

The implementation of district heating
and combined heat and power has
throughout the years, apart from the

Almost 70% of the heat distributedplanning procedures, been supported

through district heating in Denmark is

by a variety of different support mecha-

generated in combined heat and power

nisms. These vary from tax exemptions,plants (CHP).

feed-in tariffs to investment grants.

Fuel for District Heating
100%
80%
60%
40%
20%
0%

1980

1985

1990

1995

2000

2005

2010

2015

-20%
Oil

Natural gas

Coal

Waste (non-biodegradable)

Renewable Energy

Electricity for heatpumps

Source: Danish Energy Agency

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en| 13

Industrial power prices
140
130

EUR per MWh

120
110
100
90
80
70
60
50
2007
Denmark

2008

2009
Germany

2010
Sweden2011

2012

Holland

2013
UK

2014

2015

EU 28 average

Note: Electricity prices including tariffs for businesses using 2-20GWh annually. Source: Danish Energy Agency

Strong international ties andcooperation
A significant amount of Danish energy
system innovation has been developed inclose public and private cooperation withother countries, institutions and corporations. This cooperation includes European
and other developed countries, as wellas rapidly emerging economies from allcontinents. Using these lessons and experiences, Denmark is trying to stimulate andinspire low-carbon growth globally.

Denmark’s energy related GHG emissions
only account for about 0.1% of global
emissions. Consequently Danish climate
and energy policies do not alter the global
carbon footprint and the threats fromclimate change, which in the coming

14 |decades will mainly be boosted by rapidly
emerging economies. Through Denmark’s
government-to-government cooperation
with a group of leading growth economies,
elements of the Danish Energy Model canaffect up to 2 billion energy consumers,
accounting for one third of the global GHG
emissions. All of these economies do haveinitial significant high energy intensity than
Denmark. Getting down toward the Danish
levels would have a profound impact of
global GHG emissions and reduce the riskof global warming.

A tangible example of this is sectorial
cooperation with the Government of China
on integrating large amounts of renewableenergy into their power system and consequently reducing China’s rapidly growing

GHG emissions. Other partner countries
currently include Mexico, South Africa andVietnam, and the list is expanding. The
scope of cooperation is broad, covering
energy efficiency, renewable energy andenergy system development as well asclimate finance.
Through the power of example, Denmark
has demonstrated that energy consumption and carbon emissions can be radically improved in a short timeframe while
maintaining a sound and resilient economy.
An important part of the Danish effort tomitigate climate change will be stepping up
international cooperation in coming years.

Public engagement andacceptance
Energy policy is well rooted in the everyday
lives of Danish citizens, with significant
public engagement in all aspects of the
low-carbon transition. From energy efficiency measures and campaigns for households and residential buildings, ownershipin renewable energy assets (roof-mounted
solar panels, community owned windfarms, etc.) support for low-carbon transportation (public transportation, bicycle
commuting, etc.), energy conservation andtransition to low carbon options are a partof everyday life for the citizens of Denmark.
The general public support for the energy
sector transition, including costs and otherimpacts, is an important part of the broadpolitical consensus towards the hugechanges taking place in the Danish energy
sector these years, to tackle climate change
and move towards more sustainable andsound economic growth.

Danish Energy Agency, Tel: +45 3392 6700, website: www.ens.dk/en| 15

The Danish Energy Agency’s Centre for
Global Cooperation supports emerging
economies to combine sustainable futureenergy supplies with economic growth. The
initiative is based on four decades of Danish
experience with renewable energy andenergy efficiency, transforming the energy
sectors to deploy increasingly more lowcarbon technologies.
Learn more on our website:www.ens.dk/en/our-responsibilities/
global-cooperation
For further information, please contact
Henrik Breumhebr@ens.dk
Phone: +45 3392 7812