The new scheme with which Denmark managed to revive its offshore wind market now faces a legal challenge driven by the renewable energy industry itself.
Dansk Vindenergi , a Danish developer of onshore wind farms, filed a lawsuit with the Court of Justice of the European Union (CJEU) against the state support mechanism for offshore wind energy.
The dispute involves a program that includes public aid of up to DKK 55.2 billion for three offshore wind farms and comes after Vattenfall was awarded two of them: Nordsøen Midt, with 1 GW, and Hesselø, with 800 MW . Together they represent 1.8 GW of new capacity.
The challenge focuses on the contracts for difference (CfD) scheme used to provide financial support for the projects. According to available information, Dansk Vindenergi believes that this state aid could distort competition against onshore wind power generation.
The case is being processed as a challenge to state aid and could have consequences for the disbursement of the subsidies if the developer's argument is successful. At present, no date has been set for the hearing .
The controversy comes at a particularly sensitive time for Denmark, which has just managed to revive its offshore wind tenders after the difficulties experienced by the market.
Vattenfall was awarded the Nordsøen Midt and Hesselø contracts with bids of DKK 504/MWh and DKK 542/MWh , respectively, equivalent to approximately €67.42/MWh and €72.50/MWh according to the values reported by the Danish Energy Agency.
The support mechanism is precisely one of the elements that allowed the recovery of investor interest in these developments, by providing greater predictability on long-term income in a scenario marked by higher costs and difficulties in economically sustaining new offshore parks.
Now, Dansk Vindenergi's questioning introduces a different discussion: to what extent does public support for offshore wind modify the competitive conditions compared to onshore projects that must build their business cases under different conditions ?
From the onshore segment, the pressure on the viability of new developments is already beginning to be pointed out by other players.
Joachim Steenstrup of Eurowind argued that " the eye of the needle has become smaller for onshore wind projects " and added that this situation poses "a more difficult obstacle to overcome" for their business cases.
The 1.8 GW awarded to Vattenfall are at the center of the dispute
The Danish Energy Agency warned that a potential victory for Dansk Vindenergi could prevent the payment of state aid and raise questions about future offshore wind developments that depend on similar mechanisms.
This does not mean, however, that the CfDs have been annulled or that the projects awarded to Vattenfall have been cancelled. The lawsuit opens a legal process whose outcome has yet to be determined.
The Danish state supports the European Commission in the proceedings, given the relevance of the case to the country's offshore program.
The dispute thus pits two segments of the same energy transition against each other. On one side, Denmark seeks to use CfDs and public support to make large offshore wind farms financially viable again . On the other, an onshore developer argues that this support distorts the conditions under which different wind energy alternatives compete.
The decision will be particularly relevant following the recent awarding of the Nordsøen Midt and Hesselø projects. Between these two projects, Vattenfall accounts for 1.8 GW of Denmark's new offshore capacity , so any changes to the support scheme could have implications for investments the country has just secured.
For now, the projects are moving forward and there is no set date for the hearing. But the legal battle introduces a new variable to Denmark's offshore relaunch.