Danish transmission system operator Energinet is planning to raise consumer prices next year to fund its offshore network expansion.
Prices are expected to increase from 9.7 to between 10.9 and 11.3 ore per kilowatt-hour next year after last year’s tariff was insufficient to cover expenses arising from, among other things, several major accidents on electrical connections abroad.
However, Energinet expects growing electricity consumption to stabilise the tariffs at the 2021 level in the long term. The final tariffs will be announced in November.
Offshore wind farms and solar parks have increased the electricity grid’s need for a strengthened transmission network and balanced electricity network, the company said.
Energinet chief executive Soren Dupont Kristensen said Denmark’s goal of 100% renewable energy in the next 10 years means electricity is increasingly produced at power plants away from large consumption centres, such as at sea or in sparsely populated areas where the power grid is not built for large-scale production.
He said: “This will increase the cost of expanding the electricity grid so that the electricity can be transported to where it is to be used.
“And as power plants are phased out or throttled down, there will also be fewer people to provide the system services that ensure a stable and robust electricity system.
“The supply is smaller, and for a period the price will increase until new suppliers have established and we have seriously scaled to international markets.”
Energinet also aims to keep the tariffs as low as possible by pushing to create a Nordic or European market for system services.
By creating more competition, both Danish and foreign suppliers can balance the electricity system and keep the green transition affordable, it said.
The same trend of rising tariffs as a result of major electricity grid changes has also been seen in Denmark’s neighbouring countries in recent years, the company added.