New draft legislative bill will provide a framework for increased integration of renewable energy

Update: The 2nd and 3rd reading of the draft legislative bill has been postponed to the end of April 2023, and the date of entry into force is therefore expected to be postponed to an as yet unknown date.

 

On 23 February 2023, the Danish Parliament held its first parliamentary reading of the draft legislative bill amending the Electricity Supply Act and the Electricity Tax Act (L 37).

The bill is a follow-up to the PtX agreement of March 2022 on direct lines, geographically differentiated consumption tariffs and local collective tariffing, the COP26 agreement "No new coal compact" and the agreement of 18 December 2020 regarding the implementation of RE-II article 21 on a special scheme for municipal PV cells and PV cell analysis.

The overall purpose of the bill is to support the green transition towards the Danish target of 70% CO2-reduction in 2030 and further towards climate neutrality.  

The bill is expected to enter into force on 1 April 2023.

The bill contains the following measures:
 

Direct lines

The bill makes it possible to establish commercially owned direct electricity lines for electricity customers and producers connected to the electricity grid at a voltage level of 10 kV and above. The purpose of the measure is to ensure better framework conditions for green technologies, e.g. PtX plants, and to contribute to increased integration of renewable energy in the electricity grid by promoting an appropriate location of electricity consumption and production. This makes more efficient use of grid capacity, which can reduce the need for investments in the grid.

A direct line is an electricity connection, not established, maintained or owned by a DSO or the TSO, which is intended for the direct supply of electricity from an undertaking's electricity generating installations to its own facilities or subsidiaries or to specific customers and which replaces, in whole or in part, the use of the public electricity supply grid.

The permit for the establishment of direct lines is subject to the fulfillment of a number of criteria, which are expected to be specified in an executive order. As a general rule, electricity consumption through direct lines does not exempt the owners of the consumption facilities from having to pay VAT and taxes, including electricity tax.

Geographically differentiated consumption tariffs and local collective tariffing

The draft legislative bill makes it possible for the Danish TSO, Energinet, and grid companies to differentiate consumption tariffs geographically for electricity customers connected to the electricity grid at 10 kV voltage level and above, as well as local associations of grid users. The prohibition on geographically differentiated consumption tariffs will thus be repealed. The repeal will allow Energinet and the grid companies to differentiate the connection fee depending on whether there is available capacity in the electricity grid for additional consumption or where there is a lot of electricity production. Geographically differentiated consumption tariffs can thereby provide an economic incentive for larger electricity customers, such as PtX plants, to locate in areas with available grid capacity, e.g. production-dominated areas.

It will also be possible to exempt local collective tariffing from the prohibition on geographical differentiation at all voltage levels in the case of local associations of grid users that control both consumption and production.

Prohibition on new fossil fuel power stations

The bill authorizes the minister for climate, energy and supply to prohibit the establishment of new coal-based production facilities and to lay down rules to prevent new permits for electricity production that result in increased combustion of coal.

Internal electricity connections 

The draft legislative bill codifies the Danish Energy Agency's current practice for internal grids. A definition of the term "internal electricity connection" is inserted in the Electricity Supply Act, and there is thus a linguistic conceptual shift from so-called "internal grid" to "internal electricity connection". An internal electricity connection is defined as an electricity connection which is not owned by a public electricity supply undertaking and which is used for 1) connection of an electricity customer's generation facility, located adjacent to the electricity customer's consumption site, to its own consumption installation and distribution of electricity from there to the electricity customer's own consumption and storage behind the consumption site, 2) distribution of electricity supplied from the public electricity supply grid to an electricity customer's consumption site and which is for the electricity customer's own consumption, behind the consumption site, or 3) distribution of electricity within a building with one or more electricity customers.

Rules on renewables self-consumers

The draft legislative bill defines the concept of "renewables self-consumers" in accordance with the RE II directive as an electricity customer who, in connection with his place of consumption, produces renewable electricity for his own consumption. The minister for climate, energy and supply is also given a general authorization to lay down rules on the rights and obligations of renewables self-consumers. It is expected that an executive order will be issued on the basis of the authorization to the minister.

Internal offsetting of electricity tax savings by state bodies 

The draft legislative bill puts the state on an equal footing with municipalities and regions in relation to electricity tax savings from the consumption of self-generated electricity from PV cells. The change is expected to be implemented through a so-called production meter model and will apply to future, new PV cells.

Registration of data for energy plants

It is proposed that rules be laid down on registration of data for electricity generating plants, energy storage facilities and electricity consumption facilities in the Danish Master Data Register. The purpose is to ensure that in future there will be a sufficient and comprehensive data basis to support security of electricity supply through increased knowledge of the connected capacity in the public electricity supply grid.

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