DENMARK - COGEN Europe

Small-scale CHP
Factsheet
DENMARK
What is small-scale CHP
There are many different definitions of small-scale CHP. Small-scale CHP units are run both as heating appliances,
providing space heating and warm water in residential or commercial buildings like conventional boilers, and in industries
that require heat for their processes. Unlike a boiler, small-scale CHP generates electricity together with the heat at very
high efficiencies and therefore helps to save fuel, cut greenhouse gas emissions and reduce electricity costs. The
European Cogeneration Directive defines small-scale CHP as all units with an electrical capacity of less than 1 MW. This
factsheet will focus on units in this size range. These can be used to provide heating and electricity to district heating
schemes, apartment buildings, commercial buildings and small industries. These products are already available
commercially.
The COGEN Challenge project
The goal of the COGEN Challenge project is to facilitate the development of a significant number of small-scale and micro
cogeneration projects in European cities and towns, as well as in residential areas and industries. COGEN Challenge has
developed a broad range of support tools and structures to facilitate small-scale cogeneration projects. Through these,
the project will build local capacity to successfully develop small-scale cogeneration projects. Regional facilitators will also
offer guidance and help small-scale CHP investment projects materialise.
Country information
CHP accounts for the majority of installed Danish
generation capacity. However, only a fraction of the
total installed capacity qualifies as small scale
cogeneration. Out of 857 units registered nationwide
in 2003, only about 300 of these had an electrical
capacity under 1 MWe, with an overwhelming
majority of these units in the services sector.
There are very few micro-CHP units (under 50 kWe)
installed in Denmark, despite the presence of a local
micro-CHP manufacturer. Based on best available
information there was about 100 micro-CHP units
installed in the country as of late 2005.
Market Potential & Environmental Benefits
The potential for residential micro-CHP in Denmark is
comparatively low due to the existence of large citywide
district heating networks. These are the legacy
of several decades of intelligent urban planning and
mandatory recourse to district heating in urban areas.
Executive Orders 772 and 582 of 2000 have made it
mandatory for municipalities to ensure that all plants
above 1 MWe be converted to CHP production.
Outside the urban centres natural gas availability is
often an issue. Until 2004 the use of biomass as a
fuel was actively promoted for decentralised CHP,
with the adoption of a 10% fuel consumption target.
Main contractual, technical and
administrative requirements
Renewable energy, electricity and heating are
covered by the consolidated version of the Act on
Electricity Supply N°286 of 20 April 2005 and the
Heat supply act N°772 of 24 July 2000. In addition to
the above regulations, Denmark has created a
comprehensive legislative framework promoting
energy savings in all sectors of the economy.
Financial and regulatory support
The scheme supporting the production of electricity
at decentralised CHP plants, when production is
based on renewable sources of energy or natural
gas, is the single largest subsidy scheme. Supporting
small-scale CHP units is a part of the shift from
centralised to decentralised production. The subsidy
depends on the fuel type. Existing plants with output
over 5 MW are eligible for an individual subsidy
corresponding to that received in the period 2001-
2003. The subsidy is paid for 20 years from the date
of the grid connection and for at least 15 years as
from 1 January 2004.
Plants of 5 MWe or under are eligible for a subsidy
depending on when electricity production takes
place. Combined with the market price, the subsidy
ensures a tariff called three-tier tariff. At the end of
2006 the tariffs were approx. 21 øre/kWh at low
demand, approx. 46 øre/kWh at high demand and
COGEN Challenge Denmark Factsheet
Date of release: December 2007

approx. 61 øre/kWh at peak demand. The mean
annual tariff is consequently approx. 35 øre/kWh.
Renewable electricity (apart from wind power) from
existing plants are eligible for a subsidy that together
with the market price will ensure a tariff of 60
øre/kWh for 20 years from the date of grid connection
and for at least 15 years as from 1 January 2004.
New renewable energy plants are eligible for a
subsidy that together with the market price will
ensure a tariff of 60 øre/kWh for 10 years and 40
øre/kWh for the following 10 years. Special rules for
new biogas plants mean that this subsidy is only
applicable to plants connected to the grid before the
end of 2008 and up to a ceiling of 8 PJ for total
biogas use in Denmark.
The Danish Government reduced the tax burden on
decentralised CHP plants. This relaxation
corresponds to reduced costs by an average of DKK
1,000-1,500 per year for a normal house in a rural
area. As far as centralised electricity production
(most large-scale plants are multi-fuel CHP
installations) is concerned, the biomass agreement of
1993 forced central power stations to use biomass.
This element of their production is eligible for a
subsidy which when combined with market price
ensures a tariff of 40 øre/kWh for a 10-year period.
Contacts and useful Web links
► DERA, the Danish national independent Authority
for energy (http://www.energitilsynet.dk)
► COGEN Europe (www.cogeneurope.eu)
The European Association for the Promotion of
Cogeneration
► Cogen Challenge Project (www.cogenchallenge.org
)
The sole responsibility for the content of this fact sheet lies
with the authors. It does not represent the opinion of the
Community. The European Commission is not responsible
for any use that may be made of the information contained
therein.
COGEN Challenge Denmark Factsheet
Date of release: December 2007