Wind Power: What can Australia learn from Denmark?

The Danish wind industry no longer requires government subsidy. In fact, wind farm developers are now paying the government to enter a highly competitive offshore market.

In January this year, Bloomberg reported that the huge fleet of UK wind farms is also earning the British government money for the first time.

According to the Global Wind Energy Council (GWEC), the offshore wind market had a record year in 2021. More than 21GW was connected - three times higher than the previous year.

With Australia’s first offshore development planned for southern Victoria, what can we do to catch up with our European counterparts?

Danish blueprint for global wind power

According to GWEC Chief Operating Officer Stewart Mullin, Australia is ideally placed to take advantage of successful European templates.

Australian-raised and Danish-based, Stewart has insider knowledge across renewable energy markets, in different hemispheres and political contexts.

As an early adopter of wind power back in 1991, Denmark’s ambition has always been large, he says.

“Now they fight above their weight class. With an established supply chain and Danish embassies around the world promoting offshore wind, they’ve turned their knowledge into an export commodity.”

The UK strategy was slightly different.

“They went offshore in the early 2000s, now they have one of the world’s biggest markets. It’s still growing. They created a sector deal between the wind industry and government, providing a clear pathway for both to benefit,” he says.

Denmark and the UK committed to decarbonisation from the start. Now both countries are experiencing ‘negative subsidies' with multiple bids on single projects.

“But Australia has the space and capacity to have many projects up and running,” Stewart says. “Wind doesn’t have to be a scarce resource.”

With wind power now the cheapest form of new-build energy in Europe, he predicts it will continue to out-perform fossil fuels, even if the price of coal and gas drops.

Why offshore wind could be an Australian winner

As well as learning from these strategies, Australia can take advantage of enormous technological leaps.

“Turbine size has helped significantly in driving down offshore costs, over the last decade. From 2MW turbines back in 2008, we’ve travelled through 3.6, 8, 12 and now 15MW," Stewart says.

"Offshore wind turbines can have a much larger capacity than those onshore, with a limit of around 8MW. Offshore wind has shown the greatest potential to remove carbon from the energy mix. Wind speed is stronger and more consistent at sea. Offshore wind can also play a role as custodian of the oceans, with fisheries tending to be healthier around wind turbines.”

As an emerging market, Australia is positioned to draw best practice from different countries, creating the model that works most effectively here. The runway to success should be much shorter than in Europe, quickly leading Australia away from the subsidy stage.

“Because Australian capitals are sea-based, they can have large offshore generation capacity very close to load centres. The London array at the mouth of the Thames can power a quarter of greater London alone, for instance.”

New government, new offshore wind farm

The building blocks are already in place. With a new federal Labor government elected in May this year, and Australia’s first offshore wind farm Star of the South planned for southern Victoria, the transition from fossil fuels to renewable energy has been given a kick-start.

Star of the South Acting CEO Erin Coldham says state and federal governments have committed to working with the industry to reduce regulatory barriers - a clear signal to the global offshore wind market that there is a strong appetite to establish a new industry in Australia.

She says it is exciting to see the scale of the Victorian Government’s ambition with the release of the Victorian Offshore Wind Policy Directions Paper, which set some strong offshore wind targets. From a federal perspective, the introduction of the Offshore Electricity Infrastructure Act was another key step to realising Australia’s offshore wind potential and unlocking the associated economic benefits, including providing opportunities for the nation’s strong resources and maritime sectors.

“We know that government is serious about facilitating offshore wind development. It will be critical for ongoing industry and regional economic development that the next steps - including finalising the regulations and getting on with the first projects - occurs as soon as possible," she says.

“Ongoing coordination between federal and state governments is also required to address potential environmental, social and economic impacts and benefits, as projects progress through necessary planning approval processes."

A replacement for coal?

Stewart Mullin says Star of the South could be a major catalyst for change.

“More than 20 other offshore projects are in early development, with the potential to provide much-needed jobs for displaced coal workers in the Latrobe Valley, as well as the Illawarra and the Hunter Valley," he says.

"The GWEC believes offshore wind can entirely replace coal in the energy mix. Governments just need to bring people with them, creating real pathways of transition."

The cost reduction experienced in Europe can happen in Australia too, he says.

“The first big project always costs more, getting local supply chains and ports in place. Then costs fall with subsequent projects. If the Australian federal vision is large enough, people will be attracted here," he says. “Offshore wind is very bankable, offering a long, stable investment. New Zealand and Australia together could be a powerhouse region for industry, creating tens of thousands of jobs.”

Wind and solar are highly complementary forms of clean energy, creating diversity of supply. “Australia is blessed with plenty of sun and wind, a great recipe for creating renewable hydrogen for export,” he says.

“Many Danish communities had their economies rejuvenated, as a direct result of offshore wind in their backyard. Australia is poised to experience the same.”