How cheap is cheap electricity and how green is green energy and can it be reconciled? A look at the price of Danish electricity and a look into the green transition
The Danish energy market has exploded into small and large energy companies that settle on everything from cheap electricity to green power. With over 300 energy company suitors on the Danish electricity market, it can be an almost incalculable task to find the energy company that covers exactly the needs and interests of the individual consumer.
But how cheap can electricity become, and can it be combined in the same breath with green energy? Or can we even talk about absolute concepts such as cheap electricity and green energy in Denmark?
Before you even start a discussion about cheap electricity in Denmark, you would do well to take a closer look at your electricity bill. Few have closely test the actual items on the electricity bill, and few have any idea what their annual kWh consumption is.
After all, your electricity bill is more than just your real electricity consumption. The bill represents the following 3 main items:
*The real electricity consumption as well as your subscription
*Transporting electricity to your home
There are additional small items of expenditure on the electricity bill, but the above are clearly the most important on your electricity bill. If you do not know much about electricity bills, you might be surprised that only about 20 percent of the bill is made up of the actual electricity consumption. The vast majority of the bill consists of miscellaneous taxes to the State, which neither the electricity company in question nor the customer can escape, let alone moderate. These charges amount to up to 60%, while the actual cost of transporting electricity to your household is about 12 percent.
The fact that your electricity bill is divided in such a way is due to the fact that there are several parties involved in your electricity bill. Power is not just a matter between you and your energy company. You pay a total of three parties involved:
The state that collects taxes and duties
*The state that collects taxes
*The grid company that owns the local cable network from which your electricity is distributed
*Your electric company that sells you the electricity and handles your energy consumption
The state and the grid company are naturally inextricably linked to your electricity bill and constitute permanent items of expenditure that apply to any energy company's customers in Denmark. The state is not evaded, and the grid company in question is also a foregone conclusion, depending on where you live in the country. So, for example, talking about cheap energy in Copenhagen in connection with the transport of electricity would be slightly misleading since all Copenhageners, regardless of the electricity company, are transported the enegy by the same Grid company.
This means that about 80% of your electricity bill is a foregone conclusion, and that you as a customer only have the possibility of saving within a 1/5 of the total amount.
In fact, there is a time for cheap electricity. Because although you can estimate an average price per kWh used, there is a difference in prices depending on the time of day. Electricity is often most expensive when used during the most stressful periods of the day. This period extends from late afternoon (17.00) to early evening (20.00), when danes are back from work and school and now have time in cooking, TV, heating, light, computers and other electronic devices.
Later in the evening and into the night, the demand for electricity for natural reasons decreases, and the electricity on offer often comes here from renewable energy sources. This means that you can choose to charge your phone, put down a sink or get cheap power for electric cars and other electronic devices during the late evening and night hours. In this context, cheap electricity is not so much about the choice of electricity company, but rather about a more intelligent and economical consumption of its electricity.
However you turn your electricity company, your electricity bill or your electricity consumption, the cheapest power in Denmark is still the one you save. The real savings are, in fact, responsible for this. It is estimated that the average power consumption of 1,600 kWh per capita can be reduced to about 1,000 kWh with slightly heightened awareness of inappropriate electrical habits. No power company will be able to match a saving of this magnitude. Even if you spend several days pouring in and comparing cheap power on the market or doing a thorough test of cheap power.
Being aware of one's electricity consumption is ultimately not only about consideration for the private economy, but can largely also be attributed to the consideration of the global climate account. Because if there's one question that might be even more pressing than how cheap your electricity can get, then maybe that's how green it can ultimately be obtained. Because right now, humanity is struggling to make a much bigger, more important account go up. And that accounting has a great deal to do with electricity.
One thing is the domestic household and the electricity savings speculated on in the short term in the family budget. Another is the large climate accounting. More and more Danish consumers have become more aware of global warming and the major pressing climate issues. Human extraction of energy based on CO2-emitting fossil fuels has left the planet in a critical state where the demand and need for a rapid green transition is more or less acute.
With the urgent climate problems and the increased awareness of historically unsustainable energy solutions, the demand for green energy in Denmark is increasing. The need for energy extraction based on renewable energy sources has boosted Denmark's investment in green energy. Since the 1990s, major active decisions have been made at state level on the production and further development of wind turbines in Denmark, while solar energy production has also been boosted. At the CHP plants, which used to be powered by coal and oil, the notorious fossil fuels with more sustainable biomass have been slowly exploited.
According to the green energy statistics for 2019, Denmark received 36.7% of its total energy from renewable energy sources[i] and is struggling to reach a climate target of 50% by 2030. Denmark is at the forefront of the fight for green energy, and many Danish consumers have realized that the issue of relatively small savings on cheap electricity fortifications in the larger global climate accounts. Green energy companies are therefore increasingly being chosen among Danish consumers.
Although it has been a long process, today very sustainable energy is more economically viable than energy generated from coal and oil. For several years, it has actually been cheaper to create wind turbine parks for the production of electricity than to create a brand new coal power plant. This is therefore also evident in the Danish electricity grid, where up to 80% of total power generation today comes from renewable energy sources such as solar, wind and biomass[ii].
In the long term, green energy is predicted to become even cheaper to produce as further experiments are carried out on green energy and new innovative technologies are developed that further optimise the development of renewable energy.
The green transition has long since been launched in Denmark, and many decisive steps have already been taken in a more sustainable direction. More and more people are thinking green, and more and more companies and power companies are thinking green. There are therefore now several good alternatives when choosing green electricity companies that prioritize sustainable energy in Denmark.
However, it is one thing to pride yourself on adjectives as 'climate friendly' and 'climate conscious', another is to commit to it and be able to be held up on it. The danish electricity grid's current still consists of 20% energy from non-renewable energy sources. As a customer, therefore, you cannot be guaranteed 100% green electricity in your outlet, and yet...
In Denmark, we operate with the so-called magazine scheme, which was launched by the Consumer Ombudsman in 2020 for the Danish electricity market. It is a scheme that has been put in place to create greater transparency for customers in connection with the green marketing of the electricity companies concerned.
The leaf scheme is an official certification of the green energy companies, which verifi that the electricity products are based on 100% renewable energy. This means that the electricity company buys green certificates that guarantee that electricity from renewable energy sources is produced corresponding to the customer's consumption. The highest certification in the scheme is in 2 magazines. However, 2 leaves are only given to electricity companies that not only commit and can document that all their electricity is generated from sustainable energy, but also officially commits to creating further climate action. These measures must not only be documented, but also the very impact of them.
There are still a number of hurdles that need to be climbed in connection with the total transition to green energy in Denmark. Green energy accounts for 36.7% of total energy production, but as green energy production becomes increasingly cheaper, fossil fuels will be phased out on an ongoing basis. Research in renewable energy at DTU helps to increase the innovative technological initiatives in the green transition. Green energy production must be even smarter, even more innovative and much more efficient than it already is.
Watts is one of the Danish electricity companies that is absorbing the new green technological advances in an attempt to lead danes into smarter and more innovative green electricity consumption. With a groundbreaking energy assistant app, you facilitate your users with concrete and smart tools to get a full overview of your green electricity consumption. Watts app can not only create an overview of the household's total electricity consumption, but also of all other energy consumption such as heat and water.
All smart products in the home can be added to the app, so you can create an intelligent control of your energy consumption. It not only gives the full overview of when there is cheap electricity in your electrical outlets, but more importantly: when your energy consumption is greenest and where you can save in the future.
Watt's innovative initiatives in the green Danish electricity market are just an expression of a larger trend in the global renewable energy market. This resonates precisely with the global need for ever smarter and intuitive energy solutions at home as well as globally. So that green energy can be optimised and streamlined, but that it can also be saved, and just as importantly. Because the cheapest electricity, as mentioned, is the one you save. And in exactly the same way, green energy is the same.