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.

In December 2024, the EC approved, under EU State aid rules, an estimated €1.7 billion (DKK 13 billion) Danish scheme to support the production of upgraded biogas and e-methane to be injected into the Danish grid. The measure is expected to support the production of 7.9 petajoules of renewable gases per year. With respect to e-methane plants, they would prove compliance with the criteria for the production of renewable fuels of non-biological origin (RFNBOs) set out in the delegated acts on renewable hydrogen. Denmark plans to conduct five bidding rounds from 2024 until 2030.

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.

Hydrogen Pipeline – Declaration of Intent with Germany 

In March 2023, in a Joint Declaration of Intent, the Danish and German Governments agreed to cooperate on advancing the rollout of transmission infrastructure for green hydrogen between Western Denmark and Northern Germany from the year of 2028 enabling a large-scale transmission interconnector for green hydrogen between Denmark and Germany. In October 2024, Danish electricity and gas transmission system operator Energinet updated the schedule for the project with the planned commissioning date for the cross-border hydrogen pipeline into Germany at end 2031 (from 2028) with key connections within Denmark to be commissioned in 2032-2033.

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: January 2025