IEEE Power & Energy Magazine - November/December 2019 - 29

VERs Share

renewable electricity by 2030 and 100% renewable energy
by 2050. Over three decades ago, Denmark depended on
large coal plants. Government plans and policies drove the
development of distributed combined heat and power and
onshore wind power, followed by offshore wind power and,
later, PVs. In 2018, 43.5% of its annual energy demand was
served by VERs (40.7% from wind and 2.8% from PVs),
23.5% from fossil fuels, 17.8% from biomass and waste, and
15.3% from imports.
Denmark has undertaken a market-based approach to
balancing high levels of VERs. The Danish RTO Energinet
administers day-ahead and intraday markets. It also oversees a regulating market to manage real-time imbalances.
The vast majority of electricity is traded in the day-ahead
market, with the regulating market accounting for less than
0.5% of demand. This indicates a very dynamic day-ahead
market, where price variations create incentives resulting
in substantial flexibility from generation and interconnections. As a result, the regulating market has little imbalance
to handle. Demand-side flexibility is still very limited, with
the main exception being electric boilers in district heating systems that provide regulation. The sizable interconnector capacity with neighboring countries (approximately
the same as installed VER capacity) and the scheduling
of these interconnectors through the day-ahead market
provide significant flexibility. The recent expansion of the
intraday market to include cross-border trade has enabled
Denmark to extract further flexibility from interconnectors. The price responsiveness of thermal power plants has

increased considerably in recent years. This, combined
with the addition of synchronous condensers, allows the
Danish power system to decommit large thermal power
plants over extended periods.
An hour ahead of operation, the intraday market closes, and
Energinet prepares for the physical balancing of the system. System balancing is proactive: operational planning tools continuously update schedules and forecasts. Based on these predicted
imbalances, operators activate manual reserves in the Nordic
regulating market for the following hour. This minimizes the
amount of automatic reserves that manage the remaining imbalance and enables the use of the least-expensive resources for
regulation and reduces reliability risks to the system.
By 2020, VERs will supply more than 50% of Denmark's electric energy demand. The country's transition
from 0 to 50% of VERs was mainly achieved by horizontal
integration, where the electricity sector was well integrated
through an international wholesale market, a strong transmission grid, and a flexible generation system. These measures will not suffice for the next phases when Energinet
envisions a more decentralized digital grid. The focus will
shift toward vertical integration, where retail markets and
other energy sectors will be integrated to unleash a huge
potential for flexibility. Figure 5 illustrates how horizontal
integration has enabled VERs to achieve 50% of Denmark's
power generation. However, the sources of flexibility that
have enabled this will soon be exhausted. The role of the traditional system operator is changing, and they will be part
of a green transition driven by the market and consumers.

In the Next Phase Toward
Independence From Fossil Fuels,
a Vertical Market Perspective
Will Play a Vital Role

50%

Vertical Integration
* Coupling of Sectors
* Activation of Demand Side
* New Market Players
* Data-Based Business Models
* Temporal Integration

Horizontal Integration
* Strong Transmission Grids and Interconnectors
* International Electricity Markets-Wholesale
* Flexible and Controllable Generation System
* Specialized Forecasting and Operational Planning Tools
* Well-Known Roles and Business Models

2020

figure 5. "S" curve growth of VER percent penetration. Denmark's transition from 0 to 50% VERs relied heavily on
horizontal integration. The further transition toward 100% renewable energy will require vertical integration.
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