Denmark now produces over 40 percent of its electricity from wind. The country wants to get 50 percent of its electricity from wind by 2020 and 100 percent renewables by 2050.
Despite this high wind supply, Denmark’s grid is more reliable than countries with lower percentages of renewables. So what’s Denmark’s secret to integrating high intermittent generation?
The key, according to analysts, is steady policy commitment to clean energy that’s created a flexible grid of distributed energy resources interconnected across Europe.
“The system operator and the whole energy system are constantly being developed to accommodate the fact that we are going away from fossil centralized production capacity to renewables,” said Troels Gregersen, Nordics energy expert at PA Consulting Group.
Policy certainty sets the stage
Denmark’s energy transition began with the oil shocks of the 1970s, much like America’s. But unlike America, where the return of cheap oil hurt promotion of renewables, Denmark never turned away from the transition. Its focus began with energy independence, but evolved to include low-carbon energy. This transition took coordination between government, the grid operator and utilities.
“Some of the planning utilities are just starting to do here in the U.S. what the Danish grid operator has been doing for decades now,” said Justin Gerdes, author of the e-book Quitting Carbon: How Denmark Is Leading the Clean Energy Transition and Winning the Race to the Low-Carbon Future.
National energy planning was central to this transition, according to Gerdes. In 1976, Denmark established a nationwide natural-gas system, required local heating, and shifted from oil to coal generation. In 1981, it added efficiency mandates. In 1985, Denmark targeted 100 megawatts of wind capacity with a grant program to support installation, followed by a 450-megawatt combined heat and power generation target in 1986. Denmark added an emissions reduction target of 20 percent by 2005 in 1990, and in 2012 established its 2050 fossil-free goal.
As a result, Denmark became a global wind energy leader, installing nearly twice as much wind capacity per capita as any other nation, setting international records by producing 140 percent of its electricity demand on July 9 and 10 of this year, and generating 42 percent of its annual electricity supply in 2015.
But surprisingly, integrating all this wind energy has been a breeze. “The grid operators are finding it hasn’t been as difficult as they thought it would have been,” said Gerdes. “Denmark with a much higher share of renewables...has much less downtime on the grids than we do.”
Grid flexibility encourages renewables and boosts reliability
While Denmark’s comprehensive national energy planning may not work everywhere, its approach to grid flexibility and management holds lessons for other countries and sub-national regions -- especially America.
Denmark’s grid operator, Energinet.dk, manages supply and generation for the whole country and has been involved in long-term capacity planning during the entire transition process. Similar to regional transmission owners or independent system operators in America, Energinet.dk helped consolidate and coordinate multiple small energy cooperatives across the country.
As on other grids with high shares of renewable energy like Germany, Spain and California, Energinet.dk has incorporated advanced day-ahead weather forecasting into generation dispatch and grid control. Weather forecasting has helped Denmark integrate and balance renewables by making them highly predictable, but Energinet.dk has taken it even further, according to researcher Eric Martinot’s 2015 paper.
During the day, in real time, the Danish power system control center constantly compares actual output of renewables against predictions made the day before. The error of actual vs. predicted is then used to forecast the output of renewables in coming hours ahead of real time. This leads to a situation one senior manager of the Danish power grid said ‘virtually eliminates errors in the predictability of renewable output.
This single market operator also maintains four ancillary/balancing markets to help ensure power pricing matches available clean generation to demand, preventing curtailment. Think back to the CHP targets Denmark established along with wind, and fast-forward to today, when roughly half of all power in the country is produced by CHP plants.
The system was designed decades ago to provide flexible capacity, but evolved pricing so CHP can balance output against varying wind generation. A 2015 study from Agora Energiewende, The Danish Experience With Integrating Variable Renewable Energy, details the country’s focus on CHP pricing to boost decentralized grid flexibility.
In 2006 regulations were changed; all decentralized CHP plants above 5 megawatts now settle at market prices. In times of low electricity prices, district heating companies are incentivized to shift production from CHP plants to boilers or to “bypass” the steam turbines at the CHP plants. At low or negative power prices, this bypass is used for exclusive heat production. When prices recover, the plant can quickly switch back into a co-generation model, producing combined heat and power.
As a result, CHP generation units intended for baseload capacity became nimbler. This established demand-side flexibility that was able to sell into ancillary markets to profitably balance wind variability while competing with coal. “We are moving onto more and more local production capacity for companies and households,” said Gregersen. “If they have their own windmill, if they have their ownsolarpanels, if they have other means of production, they can support the system.”
Turning local DERs into regional microgrids
Energinet.dk’s flexibility focus has expanded regionally as the country shifted from centralized generation to distributed wind and CHP. In many parts of the country, installed wind and CHP generation surpass local demand, turning local networks into net power exporters and threatening curtailment or grid instability.
To address these concerns, the Cell Control Pilot Project (CCPP) was developed from 2005-2011 in western Denmark, demonstrating the ability of a local control system to aggregate and manage distributed generation across the transmission grid, but with islanding ability on local distribution networks to prevent blackouts.
The CCPP was able to anticipate major regional grid failures, estimate available generation and management resources, and disconnect from the transmission grid for islanded operation within a few seconds. Then CCPP was also able to reconnect to the main network once supply disturbances ended. While the CCPP has not yet expanded nationally, it demonstrated distributed energy resources can function as regional microgrids, integrating local renewables while increasing grid reliability.
This type of distributed system flexibility will only become more important as Denmark moves toward its clean energy goals. In Quitting Carbon, Gerdes notes that grid experts expect the country to hit 55 percent wind supply by 2020, and national policy now encourages new distributed resources to function as storage for excess wind -- electric heat pumps, electric vehicles, and water electrolysis converting electricity into synthetic natural gas.
Interconnections turn excess wind into an economic engine
But even increased domestic demand and regional grid flexibility can’t sop up a system capable of supplying 140 percent of demand with wind energy. In a move now happening in America’s Western Energy Imbalance Market expansion, Denmark helped create the Nord Pool market-based power exchange in 1999-2000, which now includes nine northern European countries.
The Agora paper calls Nord Pool “the most important tool for dealing with high shares of wind power in Denmark,” and it’s easy to see why. Denmark has 6.4 gigawatts of net transfer capacity just to Norway, Sweden and Germany; it can sell wind power to its neighbors when oversupplied; and it can buy solar or hydropower when wind output is low.
Nord Pool also increases the economic value of wind. By selling excess generation to other nations at market-determined prices, Denmark’s wind generation becomes export goods and production a socioeconomic value.
“It’s very important to have transmission capacity toward the other energy systems for real commercial pricing on Nord Pool,” said PA Consulting’s Gregersen. “That means, from the system operator’s perspective, constantly finding the bottlenecks and inefficiencies and helping minimize those so the market becomes as efficient as possible.”
Bottlenecks have become an issue in Germany as its wind capacity has increased. For instance, Agora Energiewende notes use of the 2.4-gigawatt net transfer capacity to the country is sometimes limited for export due to surplus capacity in northern Germany.
Energinet.dk has moved to expand export capacity. In March 2016 it approved a series of interconnections to Germany and the United Kingdom, including the 1.4-gigawatt capacity Viking Link, which will be the world’s largest submarine cable at 740 kilometers, capable of transporting annual electricity consumption of 2.7 million households. In addition to balancing wind supplies, Energinet.dk predicts the investments will “make billions” in profits for Denmark.
Denmark’s experience plays out across the Western U.S.
This regional balancing may be the timeliest lesson for U.S. policymakers across the Western Interconnection. “Looking toward the U.S. power market, Cal-ISO is already finding it’s saving ratepayers money with the exchange of power, providing an outlet of the high penetrations of peak solar we’re getting on the California grid,” said Gerdes.
“This cuts back the curtailment of wind and solar that otherwise might have happened with even just the limited energy imbalance market in place now for Cal-ISO and neighbors like Nevada.”
Denmark’s results are echoed in a new California ISO report which finds expanding the Western Energy Imbalance Market would help California reach its 50 percent by 2030 renewable portfolio standard, balance renewables' intermittency, and boost reliability through real-time system visibility, while also attracting renewables investment beyond Western states’ existing capacity targets. And it’s not just California -- regional aggregation has been shown to accurately value DERs and boost reliability.
The shift to a flexible DER grid can work -- if done right
So while Denmark’s experience may not completely translate into policy for other countries to emulate, the overall lessons do apply to any country’s clean energy transition -- enable distributed generation and grid flexibility with accurate pricing, and intermittent renewables will become dependable.
“Make it possible for local production capacity to access and contribute to the energy system,” said Gregersen. “Policy makes that possible with rules for how to engage commercially and therefore create incentives.”