Offshore windfarms can once again become a “sound and relevant” investment for pension companies, following a Danish government agreement on tendering frameworks, Insurance and Pension Denmark (I&P Denmark) has said.

The association has welcomed the agreement as an “important step” towards making Danish offshore wind a good opportunity for developers and investors. It believes the agreement will help Denmark become the “leading offshore wind nation and pioneer in the green transition”.

The tendering framework agreement will see the Danish government assume part of the risk in the development of Danish offshore wind, in exchange for a share of the profits when, or if, electricity prices rise above a set guarantee level.

The agreement was signed on Monday, 19 May, by the government and the parties in the Danish Parliament, excluding the Liberal Alliance.

I&P Denmark CEO, Kent Damsgaard, said: “Denmark is in fierce competition with our neighbouring countries to attract investments in the green transition, and with this agreement, the government and the parties behind it have taken an important step towards putting Denmark back in the European lead. This is very good for Denmark and Danish offshore wind, and if one or more pension companies choose to invest in offshore wind farms, it can also become a long-term and stable source of income for pension customers.”

The association described the situation regarding offshore wind development in recent years as being in ‘dire straits’, in part due to ‘disastrous’ tendering framework conditions. Now the government and the parties behind the agreement will support Danish offshore wind with up to DKK 55bn over 20 years.

Damsgaard said that several Danish pension funds participated in investments in the first offshore wind farm in Denmark and have since invested in offshore wind and the green transition worldwide.

“They and their partners therefore have extensive know-how in the field and are world leaders," he said.

In 2019, the industry made a climate pledge to invest DKK 450bn worldwide in the energy transition. The latest metric shows that the industry has currently reached DKK 343bn in everything from wind turbines to green technology companies to energy-optimised buildings.

“Investments in renewable energy are risky. They require a very large investment up front, and in offshore wind in particular, many billions must be invested before any revenue is realised. This is where the risk is greatest.

“It's really gratifying that the government and a large majority of the parliamentary parties have reacted and listened to the players in the market and at the same time gathered experience from establishing offshore wind farms abroad. From our side, we feel involved and we believe that with the agreement, Danish offshore wind can once again become a sound and relevant investment for pension companies, for example,” he concluded.

---