Denmark’s Forsikring & Pension (F&P) has raised concerns about the increasing cost of pension investment in offshore wind farms, following research that found it had become DKK 13bn more expensive to build a gigawatt of offshore wind as an investment case over the past two years.

The association noted that Denmark had great ambitions for offshore wind, which is supported by the Partnership for Offshore Wind agreement.

According to the partnership, it was crucial that framework conditions for future investments from companies and investors become predictable and competitive.

However, analysis by PwC for the Partnership for Havvind found that bottlenecks and price increases in materials and the supply chain caused by inflation alone have made it up to DKK 46bn more expensive to build nine gigawatts of offshore wind in Denmark.

On top of that, higher interest costs and corresponding higher return requirements have driven costs up further.

It noted that the risks associated with large projects, such as offshore wind turbines, were large, while alternative and competing investments, such as government and mortgage bonds, had become more attractive in comparison due to higher interest rates.

Overall, it has become “far riskier” to invest in offshore wind, F&P noted, highlighting that Denmark was in competition for the same investments with its neighbouring countries and the rest of the world.

F&P argued that it was crucial that the Danish framework for conditions for future investments becomes predictable and competitive for the country’s offshore wind ambitions to become a reality.

“The Danes want to take the lead and invest their pension funds in a green transition,” commented F&P CEO, Kent Damsgaard.

“But Danish pension kroner can of course only be invested in offshore wind at home if it also ensures a competitive return for pension savers. And the investment case has, quite frankly, deteriorated so much that we are worried.

“It is absolutely necessary that the government and the Folketing create proper investment frameworks for Danish wind projects - otherwise the money will bypass Denmark.”

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