Denmark

Country: Denmark

Document type: National Strategy

Title: The Government’s Strategy for Power-to-X (English translation)

Released: December 2021

Summary Points:

The strategy identifies four objectives in promoting Power-to-X (PtX) technologies in Denmark:

  • Power-to-X must be able to contribute to the realisation of the objectives in the Danish Climate Act.
  • The regulatory framework and infrastructure must be in place to allow Denmark’s strengths to be utilised and for the Power-to-X industry to operate on market terms in the long run.
  • The integration between Power-to-X and the Danish energy system must be improved.
  • Denmark must be able to export Power-to-X products and technologies.

The Government has proposed that Denmark should aim to build upwards of 4-6 Gigawatts (GW) of electrolysis capacity by 2030. The strategy notes that Denmark’s offshore wind resources provide good conditions for the production of green hydrogen.

The strategy also notes Denmark’s strategic geographical position in terms of exporting PtX products and technologies to countries such as Germany.  The strategy highlights, among other things, the Southern part of Denmark as a hub for green energy and sector coupling, where the current natural gas connections to the rest of Denmark and Europe could benefit from conversion to hydrogen distribution.

The strategy notes the Government has proposed investing (Danish Krone) DKK1.25 billion – through a PtX tender for operational support of the production of hydrogen and other PtX products – in order to support the industrialisation and upscaling of PtX production in Denmark (aiming to reduce costs associated with hydrogen production).

The strategy also notes other funding support mechanisms that can support Danish value chain projects for hydrogen.

Power-to-X State Aid Scheme

In March 2022, a broad majority in the Danish Parliament entered into a political agreement on the development and promotion of hydrogen and green fuels (the PtX Agreement). The PtX Agreement covers five key measures for the production and utilisation of PtX in Denmark.

1)      Denmark to target 4-6 GW of electrolysis capacity by 2030.

2)      Dedicate DKK1.25 billion in support of production of PtX in Denmark

3)      Enable direct lines, geographically differentiated tariffs, and local collective tariff structures

4)      Enable the build-out of infrastructure for hydrogen in Denmark.

5)      Appointment of a PtX Taskforce to support developing a market and infrastructure for hydrogen in Denmark.

In February 2023, the European Commission approved, under EU State aid rules, Denmark’s intention to introduce a €170 million scheme (DKK1.25 billion) to support the upscaling of the production of renewable hydrogen and derivatives, such as renewables-based ammonia, methanol, and e-Kerosene, using PtX technologies. The scheme would support the construction of up to 100-200 MW of electrolysis capacity, with the aid being awarded through a competitive bidding process to be concluded in 2023. The aid would take the form of a direct grant for a ten-year period.

In April 2023, the Danish Energy Agency, as the Contracting Authority, opened solicitation of offers for a total of DKK1.25 billion (~US$185 million) worth of subsidies in support of production of PtX in Denmark. In October 2023, the Danish Energy Agency announced that six projects with a total electrolysis capacity of more than 280 MW had won state aid under the PtX tender.

Declaration of Intent with Germany

In March 2023, media reports indicated that Germany and Denmark had signed a joint declaration of intent that the countries would cooperate on advancing the roll-out of transmission infrastructure for green hydrogen between western Denmark and northern Germany from 2028, enabling a large-scale transmission interconnector for green hydrogen. In October 2024, media reports citing the Danish Energy Ministry indicate that the roll-out has been delayed from 2028 to 2031.

Guarantee of Origin Scheme

In July 2023, Denmark extended its Guarantee of Origin scheme to include green hydrogen and derivatives such as ammonia and methanol, having been enacted via an executive order on 1 July 2023. Previously, it had only been possible to obtain guarantees of origin for electricity, gas and heat. With the amendment to the order on guarantees of origin for electricity, gas, district heating and district cooling from renewable energy sources, the guarantee of origin system was extended to also include hydrogen.

Jutland Financing Framework

In April 2024, the Danish Government and seven other political parties agreed the framework for financing and regulating a possible Jutland hydrogen backbone (which can be used to export hydrogen to Germany) subject to five conditions being met by market players.

 

Reviewed: October 2024