Loan (Loan guarantees for local initiatives for the construction of wind-energy plants
Updated: 04.01.2019
Author: Karl Wikberg
Danish Ministry of Energy, Utilities and Climate provides guarantees for loans taken out by local associations of wind and solar plant owners and other local initiative groups to finance feasibility studies prior to the construction of eligible plants (§ 21 VE-Lov).
If a given wind energy project is not completed, the guarantee paid out need not be repaid unless the project was fully or partly transferred to a third party (§ 21 par. 4 VE-Lov).
Eligible technologies
Loan guarantees as stipulated by VE-Lov are provided for wind energy plants only (§ 21 VE-Lov).
| Wind energy | Eligible. The following plants are ineligible: - wind energy plants with a capacity of less than 25 kW that are connected to an energy-consuming device (§ 41 VE-Lov)
- off-shore wind energy plants authorised under a tendering procedure (§ 21 VE-Lov). This procedure is used to grant an exclusive right to construct off-shore wind power plants in a specific area.
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| Solar energy | Eligible |
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Amount
Danish Ministry of Energy, Utilities and Climate has to work within a budget of 10 million DKK (approx. € 1.34 million) for guarantees. Each guarantee will cover most of the loan in question. The maximum guarantee is 500,000 DKK (approx. € 67,260) per project (§ 21 par. 5 VE-Lov).
Addressees
Guarantees are provided for local associations of plant owners and other local initiatives that intend to construct one or more wind or solar installations. Such organisations and groups must have 10 members at least. The majority of the members shall be residents in the municipality in which the plants will be constructed or shall live within 4.5 kilometres of the building site. In case of off-shore wind turbines, the municipality shall be the municipality that has a coastline, located within 16 km from the site (§ 21 par. 2 no. 1 and 2 VE-Lov).
Procedure
Process flow | - Application. Local organisations or initiative groups apply to Danish Ministry of Energy, Utilities and Climate (§ 21 par. 5 VE-Lov).
- Selection procedure. Danish Ministry of Energy, Utilities and Climate decides whether a guarantee will be provided (§ 21 par. 5 VE-Lov). Applicants shall meet the preconditions specified by law (§ 21 par. 2 VE-Lov).
- Loan borrowing. The organisation or initiative takes out a loan from a bank.
- Guarantee. Danish Ministry of Energy, Utilities and Climate declares to provide a guarantee to the bank.
- Period of guarantee. The guarantee is provided until the wind turbine in question is connected to the grid and ends three months after the installation of the wings at the latest (§ 21 par. 3 VE-Lov).
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Competent authority | The Danish Ministry of Energy, Utilities and Climate is in charge of the guarantee system (§ 21 par. 1 VE-Lov). |
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Distribution of costs
| Consumers | The costs of the support system are borne by the consumers (§ 8 par. 2 Electricity Supply Act). |
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| Distribution mechanism | - Consumers – grid operators. Every consumer is obliged to pay a surcharge, the so-called Public Service Obligation. It depends on each consumer's individual level of consumption. The surcharges are determined by Energinet.dk four times a year. According to Energinet.dk, the surcharges are collected by the grid operators.
- Grid operators – Energinet.dk. According to Energinet.dk, the grid operators submit the surcharges collected to Energinet.dk. A certain part of this money is designated for the guarantees.
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Denmark
