State aid: Commission approves €400 million Danish aid scheme to support production of electricity from renewable energy sources

Denmark notified the Commission of its intention to introduce a new scheme to support electricity produced from renewable energy sources, namely onshore wind turbines, offshore wind turbines, wave power plants, hydroelectric power plants and solar PV. The measure follows a previous Danish aid scheme for electricity from renewable energy approved by the Commission in August 2018, which expired on 31 December 2019.

The aid will be awarded through a competitive tendering procedure organised in 2021-2024 and will take the form of a two-way contract-for-difference premium. Under this model, where the electricity price is below a reference price established based on an auction, the State pays the renewable electricity producer the difference between the actual electricity price and the reference one. On the other hand, where the electricity price is above the reference price, the electricity producer pays the State the difference between the actual electricity price and the reference one. This guarantees renewable energy producers long-term price stability, helping them to make the necessary investments, while limiting the cost for the State. The measure has a total maximum budget of approximately €400 million (DKK 3 billion). The scheme is open until 2024 and aid can be paid out for a maximum of 20 years after the renewable electricity is connected to the grid.