2025
Global Power Transmission Report
Regional Market Overviews
Denmark
With almost 90% of the power generation based on renewable energy resources, Denmark stands out as an outlier among countries for its progress in decarbonisation. Its transmission network, with robust cross-border connectivity, has been playing a key role in enabling the energy transition. However, as the renewable capacity addition continues, it still needs expansion and refurbishment. Furthermore, the exceptionally high renewable energy penetration has also exposed the system to the challenges of curtailment, as evidenced by negative prices. The investment commitments are thus about easing the existing bottlenecks as much as it is for the upcoming generation pipeline.
GDP (Current Prices) USD (2023) | 407 Bn |
Projected Average GDP Growth (2024-2028) | 1.6% |
10-year Govt Bond Yield (12-month rolling average) | 2.3% |
Country Credit Rating | AAA |
Renewable Energy Share | 88% |
Total Transmission Line Length (Km) | 7,000 |
Transmission Network
Denmark’s power transmission system operates at voltages ranging from 132kV to 400kV. High-voltage bulk power transmission is predominantly carried out at 220kV and 400kV, while regional transmission grids operate at 132kV and 150kV. Energinet, the sole transmission system operator, manages a network of about 7,000 km in line length as of 2023 (ReGlobal, 2024) (Energinet, 2024)
Between 2015 and 2023, the transmission network experienced a modest growth of 1.9%. This limited expansion is primarily due to Energinet’s strategic focus on reinvesting in existing 400kV lines to enhance capacity rather than laying new cables. As part of this strategy, Energinet is transitioning from single to double systems for ageing 400kV connections, effectively replacing them due to age and wear (ReGlobal, 2020).
As Denmark aims to become a net exporter of green energy, strengthening its grid and interconnections is crucial. Hybrid projects and energy islands in the Baltic and North Seas will be key for exporting offshore wind energy and facilitating power exchanges with neighbouring countries, ensuring stable cross-border energy supply. For instance, the establishment of the Bornholm Energy Island, which will connect at least 3GW of offshore wind capacity to the grid, exemplifies Denmark’s commitment to expanding its interconnection infrastructure (Offshore Wind, 2023).
The transmission network predominantly utilises overhead lines for capacity demands amid a rapid green transition. However, policy directives require 400kV connections to be underground where technically feasible. For new 132-150kV connections, the policy mandates their installation as underground cables, aiming to dismantle existing overhead lines in this voltage range in the long run. Furthermore, the policy framework requires existing 132- 150kV overhead lines to be placed underground during comprehensive reinvestments, especially when they are near new 400kV overhead lines (Energinet, 2024) (ReGlobal, 2020).
| Country Linkage | TSO / Owner | About the Linkage |
|---|---|---|
| Denmark – UK | Energinet and National Grid (The UK) | The £1.7 billion Viking Link is a 475 mile long undersea and underground line with 1.4GW in power transfer capacity, operationalised in December 2023 |
| Denmark – Norway | Energinet and Statnett (Norway) | Skagerrak HVDC transmission system with multiple links; commissioned between 1976-2015, with a total capacity of 1.7GW |
| Denmark – Sweden | Energinet and Svenska Kraftnät (Sweden) | KontiSkan HVDC link, with 250kV and 300kV lines, with a total capacity of 550MW, operational since 1965, two 400kV interconnections and two 132kV interconnections. |
| Denmark – Netherlands | TenneT and Energinet (Denmark) | Known as COBRAcable, with €600.0 million investment, 325 km long, 320Kv HVDC line with 700MW capacity, commissioned in 2019. |
Drivers in Energy Transition
Globally, Denmark leads the way in decarbonisation. The results are seen from the exceptionally high share of renewable energy in the power mix. The national target of reaching Net Zero is 2045 – advanced recently from 2050 earlier, based on the progress in the renewables and overall emission reductions (UNFCCC, 2024). The power sector’s decarbonisation has a central role in this scheme. Thus, a massive capacity addition is underway in renewable power, especially in offshore wind. In April 2024, the Danish government launched its largest offshore wind power tender so far, seeking 6GW-10GW of capacity for planned commissioning by 2030 (S&P Global, 2024). Solar power and biofuels are other major segments driving the shift in clean energy- based power generation.
The Danish grid has been managing high renewable energy penetration while maintaining unaffected reliability standards. Its cross-border integration with other power markets helps. A recent example stands out. Since July 2023, Denmark and Germany have implemented a countertrade agreement in their power market transactions. This helped avoid curtailment of Danish wind power generation as it shifted to the intraday cross- border power market (Renews Biz, 2024). The grid operator’s ancillary services market is the other route through which grid imbalances are managed. Energinet is also part of the European region’s integrated balancing market services (Montel, 2024).
To be sure, the Danish system is forced to curtail renewable power to manage capacity constraints. A clear reflection of such challenges lies in the rising instances of negative prices in the grid. In 2023, it set a record with 512 hours of negative prices in the grid. During the period of January-August 2024, the total time logged for negative prices reached 502 hours, indicating the year-end figure might be considerably higher than the previous year (en.365Nyt, 2024). From the grid capacity perspective, the expansion and strengthening of the network assets assumes a major focus to help stabilise the power markets.
Capacity constraints may feature more prominently as fossil fuel-based generation is phased out. The Danish system presently has just one coal-based power plant, the Nordjylland Power Station, after the company Ørsted shut its last coal-based combined heat and power facility in August 2024 (Balkan Green, 2024). Many such plants are being converted to biomass-based units, indicating the renewable- led push in the market. Gas-based power facilities are undergoing similar pressures to reduce their role in the grid-connected supply. The country’s biogas and biomethane resources are increasingly replacing natural gas not only in power but other industrial uses, with a full phaseout expected by 2030 (Danish Energy Agency, 2024).
The power system must also prepare for a spike in future demand. In a recent study, the country’s energy agency projected power demand trebling between 2023 and 2035, to reach 127TWh. The major demand segment identified in this study is electrolysers using renewable power to generate hydrogen and other green fuels (e.g. sustainable aviation fuel). Electricity requirement for this segment is projected to rise from the present negligible levels to 15.8TWh by 2030 and 59.2TWh by 2035 (Montel, 2023). Beyond this, other key sectors of power demand include data centres, heat pumps and transportation.
Policy Regulation
Being an independent public enterprise wholly-owned by the Danish state under the Ministry of Climate, Energy, and Utilities, Energinet’s regulatory framework emphasises cost recovery rather than profit generation. Energinet’s electricity tariffs are user fees, not taxes, designed to cover the costs of establishing, maintaining, and operating Denmark’s public electricity grid and balancing the system. The Danish Utility Regulator sets a revenue framework, capping Energinet’s allowable revenue, including a regulated return on invested capital. Tariffs are adjusted annually to align revenue with actual costs, adhering to a break- even principle. Additional revenues from interconnectors help offset costs and reduce consumer tariffs (Energinet, 2024).
Energinet’s electricity tariffs consist of two main components: the transmission grid tariff, which covers the operation and maintenance of the high-voltage grid and interconnectors, and the system tariff, which includes costs for ensuring supply security, system operation, and ancillary services. Customers with their own transformers at the 132/150kV level are charged a reduced tariff. The largest part of the system tariff is for ancillary services that ensure the stability of the electricity system (Energinet, 2024).
Energinet is modernising its tariff design to support Denmark’s green transition by shifting from an energy-based tariff (DKK/MWh) to a capacity-based tariff (DKK/MW). This change better reflects the fixed costs of the transmission network, which are more influenced by power demand than energy consumption. The updated design, expected to be approved by the Danish National Regulatory Authority and implemented in 2025, includes a fixed annual capacity fee for customers directly connected to the grid, based on agreed power demand, encouraging optimized usage. A variable network tariff for grid losses, tied to spot prices, will promote demand response by reflecting real-time market costs (Energinet, 2024).
Additionally, the growing use of wind and solar energy has increased production-consumption distances, raising grid costs. So Energinet’s geographically differentiated tariffs and co- location models, like prosumers and direct lines, can reduce costs and enhance efficiency. Cost-based capacity payments optimize grid use, while integrating renewables with flexible consumption supports a smoother transition to green energy (Energinet, 2024).
Market Opportunity
For the period 2023-2027, Energinet has an investment outlay worth DKK 36 billion till 2027, equating to DKK 9 billion annually for the upgradation and augmentation of the grid. This is much higher than the average investment of DKK 5.3 billion between 2018 and 2023. A major share of this investment is expected to be on network expansion (Renewable Watch, 2024).
Some of the critical material supply contracts are taking shape as the grid operator prepares for the upcoming expansion. In May 2024, Energinet signed a €1.4 billion framework agreement with Siemens Energy for the vital switchgear equipment of 50 high-voltage substations (ReGlobal, 2024) (EuropaWire, 2024). Among the renovation projects, there is special attention towards replacing the ageing submarine cables. One of them is the €65 million cable renovation of the Denmark-Sweden transmission interconnection. Contracts in this regard have been signed with JD Contractor A/S for installing 400kV cables and another with Hellenic Cables to design, manufacture, and supply 30 km of submarine cables and 12 km of underground 400kV single-core cables. The project is aimed for completion by 2027 (Offshore Energy, 2024) (Offshore Energy, 2023).
Funding arrangements are also being prioritised. Energinet has a 10-year loan agreement worth €134.4 million, to co-finance the construction of ten new substations and the refurbishment of 45 existing ones, in line with Energinet’s government-approved investment and financing plan. This is the second Energinet project financed by the NIB, following the successful completion of the Viking Link interconnection (Nordic Investment Bank, 2023).
Beyond network assets, there is a rising interest in grid-scale energy storage projects, as seen in the recent investment commitments. Green Energy Vault has announced plans to invest DKK 500 million (€67 million) in building one of Denmark’s largest energy storage systems, a 90-MWh facility set to be commissioned by early 2026 (Renewables Now, 2024). Additionally, Better Energy is deploying its first battery storage system, a 10MW/12MWh system, at one of its solar PV plants in Denmark (Energy Storage, 2024). BattMan Energy, a Danish cleantech company specialising in battery storage, has selected Hitachi Energy as the supplier for its three newest plants, collectively generating 36 MW/72 MWh of capacity, with the first two plants targeted for June 2025 (Hitachi Energy, 2024).
Outlook
Energinet’s network development plan for 2024- 50 lays out the anticipated growth in demand and its required infrastructure expansion. By 2030, the operator projects a requirement of 2,700 km of new-build lines and an additional 3,000-4,000 km by 2050. During the same period, overhead lines spanning 1,000–2,000 km could be removed. The expansion plans include installing 600 km of 400kV connections and strengthening 425 km of existing network. A noteworthy element of the plan is the hydrogen infrastructure development in Western Denmark. The planned development of such an infrastructure will help support the region’s offshore wind power capacity but may reduce the need for grid expansion (Energinet, 2024).
Energinet’s plans indicate stress on addressing the geographical imbalances as new solar and wind facilities are located far from growing electricity demand centres like cities, Power- to-X plants, and data centres. This necessitates further 400kV grid expansion, with some projects underway and others planned for post- 2030 (Energinet, 2024).
Timely commissioning of the ongoing expansion projects would be crucial. Many parts of the grid are reaching capacity limits. Several developers of the solar parks in Denmark’s key locations of Lolland, Falster and South Zealand were asked to wait for the transmission network (Ingeniøren, 2023). This has resulted in developers shelving projects. The risk of delays extends to other key projects. The North Sea Island project, planned originally as a Danish-Belgian project to evacuate offshore wind power in the region, has been delayed by about three years due to cost uncertainty (Reuters, 2024). Costs and material supply chain constraints could impact all projects presently under the planning or development stages, necessitating changes in procurement processes, equipment/component standardisation and efficiency in sourcing strategies (ReGlobal, 2024).
The evolving business conditions will make the planning process a dynamic one. Yet, the direction of growth will be towards a rapid augmentation of the Danish transmission infrastructure to meet the demands of renewable energy and electrification across the economy