Denmark’s plan to provide state support for three new offshore wind farms, totaling 55 billion kroner, is facing criticism from the green sector and the Danish Economic Councils. Critics argue that the investment could negatively impact land-based renewable energy projects and that alternative solutions, like increased CO₂ taxes, would be more economically efficient for achieving greenhouse gas reductions and energy independence.

The Danish Economic Councils, an independent advisory body to the Ministry of Economy, released a report questioning the economic justification for state support of offshore wind, suggesting that taxes would be a more cost-effective method for achieving environmental goals. The criticism is fueled by concerns that the state aid model will guarantee offshore project companies a minimum electricity price, which could distort the electricity market and harm the profitability of land-based renewable energy projects.

Green energy companies, such as Eurowind Energy and European Energy, fear that the subsidized offshore wind farms will depress electricity prices, making it difficult for them to compete and secure investments for their land-based projects. Joachim Steenstrup, Head of Strategy at Eurowind Energy, expressed concern about the long-term viability of their projects, given the anticipated influx of cheaper electricity from the offshore wind farms.

A leaked memo from the Ministry of Climate, Energy and Utilities confirmed these fears, acknowledging that the state-supported offshore wind farms are “expected” to lower electricity prices and negatively affect land-based developers. The memo estimated a potential price reduction of at least ten percent for electricity from solar and land-based wind energy by 2035.

While the government hopes that increased electrification will drive up demand and mitigate the negative effects, critics remain skeptical. They question the rationale behind the government’s push for more offshore wind, especially since Denmark is already on track to meet its 2030 climate goals.

The Danish Economic Councils recommend increasing the CO₂ tax as a more economical means of achieving further national reductions and emphasize the need for the government to clarify its objectives if the support is based on other considerations. Climate Minister Lars Aagaard has previously stated the need for more green electricity and the government’s desire for more offshore wind but was unavailable for comment.