DENMARK: An Introduction to Energy

Denmark aims to be a world leader in the transition to a green and sustainable energy system. With ambitious targets to reduce its greenhouse gas emissions and increase its share of renewable energy, Denmark also seeks to become a hub for the development of green technologies.

The energy sector in Denmark is undergoing a transformation from a centralised and fossil fuel-based system to a decentralised and renewable system. The sector is dynamic, innovative and competitive, offering opportunities and challenges for both domestic and foreign companies and investors.

Denmark's focus on energy independence and accelerated green transition is leading to significant legislative and political action in the energy sector. The Power-to-X (PtX) strategy aims to establish Denmark as a pioneer in green hydrogen production, fuelled by abundant offshore wind. Funding for large-scale PtX projects supports this development. In addition, increased investment in energy efficiency measures and the expansion of district heating networks will be prioritised.

The Renewable Energy Market 

Denmark has a long history of developing and using renewable energy sources, which now account for more than 80% of electricity production. It has a national target of increasing the share of renewable energy in total energy consumption to 55% by 2030 and to 100% by 2050. Denmark also aims to become a net exporter of renewable energy and a hub for green innovation and technology.

Offshore wind is the cornerstone of Denmark's energy strategy, as the country has great potential to exploit its wind resources in the North and Baltic Seas. The country also has a strong position in the global offshore wind market, as it is home to several leading companies such as Ørsted and Vestas, and has a complete supply chain of companies providing various wind energy services.

In addition to offshore wind, Denmark also has significant potential for the development of other renewable energy sources such as solar, biomass and geothermal.

Energy Efficiency and Electrification Initiatives

Denmark has taken several measures to reduce its energy demand and improve its energy performance. The country aims to reduce its energy consumption by 7% by 2030, compared to 2010 levels, and to improve energy efficiency by 30% by 2030, compared to 2005 levels.

Some of the key sectors undergoing energy efficiency and electrification initiatives are industry, transport and buildings. In the industrial sector, the government provides support and incentives for companies to invest in energy-saving technologies and processes, such as heat pumps, electric boilers, waste heat recovery and digitalisation. The government is also promoting the use of green electricity and green hydrogen in industrial processes, especially in energy-intensive industries such as steel, cement and chemicals.

In the transport sector, the government has launched a Green Transport Strategy, which aims to reduce emissions from the transport sector by 70% by 2030 compared to 1990 levels.

In the buildings sector, the government has introduced a number of initiatives to improve the energy efficiency and comfort of existing and new buildings, such as setting higher energy performance standards, providing grants and loans for energy renovations, installing smart meters and thermostats, and increasing the use of renewable heating sources such as district heating, heat pumps and solar thermal.

Energy Storage and Flexibility Solutions 

Denmark faces the challenge of integrating a large amount of intermittent and variable renewable energy sources into its energy system, while at the same time ensuring security of supply and grid stability. To meet this challenge, Denmark is developing and deploying various energy storage and flexibility solutions that can balance electricity supply and demand and provide ancillary services to the grid. Some of the main energy storage and flexibility solutions being deployed or tested in Denmark are:

- battery storage, which can store excess electricity from renewable sources and release it when needed;

- pumped storage, which can store electricity by pumping water from a lower to a higher reservoir and release it when the water flows back;

- power-to-X, which can convert electricity from renewable sources into other forms of energy, such as hydrogen, methane, ammonia or synthetic fuels, and use them for a variety of purposes, including electricity generation, heating, transport and industry; and

- demand response, which can adjust the electricity consumption of end users according to the availability and price of electricity.

Green Hydrogen and Biogas Production 

Denmark aims to become a leader in the production and use of green hydrogen and biogas, which are potential alternatives to fossil fuels and can be used for various purposes, such as power generation, heating, transport and industry.

Denmark is one of the leading countries in the production and use of biogas, as it has a large agricultural sector and a well-established waste management system. Denmark is investing heavily in the development and deployment of green hydrogen, seeing it as a key enabler for the green transition.

The Legislative and Regulatory Framework 

Denmark has a comprehensive legal and regulatory framework that sets the rules and incentives for the energy market and the green transition. The framework is based on the principles of market liberalisation, fair competition, consumer protection, environmental responsibility and social welfare.

The legal and regulatory framework in Denmark generally provides a stable environment for the energy market and the green transition and creates a level playing field for all market participants. However, the framework also presents some challenges and opportunities for energy companies and investors, such as the complexity and uncertainty of regulatory requirements and procedures, especially for new and emerging technologies and solutions such as power-to-x, energy storage and flexibility.