The Future Annual Report 2017 Short Version

NEW PATHS TO THE ENERGY OF THE FUTURE ANNUAL REPORT 2017 SHORT VERSION

ENERGINET, TONNE KJÆRSVEJ 65, DK-7000 FREDERICIA, CVR NO. 28980671 2 Annual Report 2017

FOCUS ARTICLE EUROPE’S UNITED SECURITY OF SUPPLY

PAGE 16

FOCUS ARTICLE DATA CENTRES BETWEEN WIND AND WATER

PAGE 20

FOCUS ARTICLE THE WIND AT DOGGER BANK

PAGE 24

FOCUS ARTICLE OPEN ENERGY DATA PROMOTE INNOVATION IN THE ENERGY SECTOR

PAGE 28 Annual Report 2017 3

CONTENTS

THE BIG PICTURE Letter from CEO and Chairman...... 6 Value chain...... 8 Energinet - developing the energy supply of the future...... 10 Energy across borders...... 11 Targets and results ...... 12 Financial review...... 13

FOCUS ARTICLE Europe’s united security of supply...... 16 MANAGEMENT’S REVIEW MANAGEMENT’S Data centres between wind and...... 20 The wind at Dogger Bank...... 24 Open energy data promote innovation in the energy sector ...... 28

This is an abbreviated English-language excerpt from Energinet’s annual report for 2017. The complete statutory annual report providing an extensive account of the year’s activities and financial statements is available in Danish here: https://energinet.dk/Om-publikationer/Publikationer/Aarsrapport-2017

Energinet, March 2018

THE BIG PICTURE THIS WILL GIVE YOU AN IDEA OF WHAT SORT OF COMPANY ENERGINET IS, WHAT WE ACHIEVED IN 2017 AND HOW WE LOOK AT THE FUTURE. 6 Annual Report 2017

LETTER FROM CEO AND CHAIRMAN OF THE SUPERVISORY BOARD STATUS OUTLOOK PATHS TO THE ENERGY OF THE FUTURE NEW PATHS TO THE ENERGY OF THE FUTURE Large parts of the physical infrastructure which are to underpin the green transition Physical infrastructure is just one step on of the energy sector in Denmark have now the road towards becoming independent of been built or planned. fossil energy sources. New paths and new Ever since the Danish Parliament, Folketinget, partnerships are required when the next step established Energinet in 2005, it has been our is to be taken. goal and task to establish more energy con- nechtions between Denmark and our neigh- Energinet was established in order to help solve bouring countries. the trilemma of the transition: providing energy that is green, reliable and affordable for society. After years of complex negotiations and inves- tigations, an electricity connection to the UK The realisation of the Danish energy policy, which (Viking Link) and a gas connection to Poland traditionally finds broad support among the politi- (Baltic Pipe) were finalised for decision in the cal parties in the Danish Parliament, Folketinget, is course of 2017. receiving recognition from international institutions for offering a good solution to the energy transition We therefore see 2017 as a significant milestone trilemma. for the expansion of energy connections to other countries. But new means and new partnership forms will be required in the years to come, if we want to Viking Link and Baltic Pipe are important projects maintain and expand the green transition of the for the transition in Denmark as sustainable energy sector. energy is energy which can be moved. Intercon- nections are of great value to Danish society, To navigate towards the future energy supply, because they strengthen security of supply and Energinet’s Supervisory Board adopted a strategy ensure the lowest possible energy prices for in 2017 which applies from 2018 to 2020. The stra- Danish citizens and businesses. tegy is called ‘Energy across borders’, because we believe in cooperation across national borders, Viking Link creates better opportunities for tra- across technological boundaries and across ding electricity across borders. Electricity, which traditional energy value chains. increasingly comes from wind and solar power, cannot be stored. It must therefore be possible Through increased cooperation with the market to trade electricity immediately after it has been players in the energy sector, we commit ourselves generated and move it to where the demand and to exploring and pursuing four objectives: New se- the willingness to pay are found. curity of supply framework, Denmark as an energy hub, social responsibility through efficiency, and Baltic Pipe creates a new supply route for natural digitalisation. gas between the Norwegian fields, the North Sea and the European mainland. For Denmark, the Energinet is pursuing the strategy objectives, and connection entails lower gas prices than pre- in the four focus articles in this annual report, you viously, and thus also improved socioeconomic can gain an insight into selected examples of how utilisation of the existing gas system, which is we are doing this: a valuable aspect for the green transition of the gas sector in the coming years. A market without borders for balancing energy between EU countries is an example of a new security From our point of view, 2017 was therefore all of supply framework (page 22). The establishment about preparing physical infrastructures for of data centres is an example of Denmark’s great sustainable energy. potential as an energy hub (page 26). Energinet is a participant in the development project ‘North This was true not only for interconnections, but Sea Wind Power Hub’, which is a large-scale vision also for Energinet’s task of acquiring and gathe- about wind farms and so-called Power-to-Gas ring the gas distribution sector on behalf of the (P2G) far out in the North Sea at Dogger Bank. Danish state. A task aiming to prepare the Read more on page 30. Last, but not least, sharing existing infrastructure in the distribution link for Big Data in energy for use for innovative business future green gases. models is an example of digitalisation (page 34).

CEO, Peder Ø. Andreasen Chairman of the supervisory board, Lars Barfoed VALUEVALUE CHAIN CHAIN VALUE CHAIN

RESOURCES 2017 RESULTS 2017

FINANCIAL PHYSICAL HUMAN SECURITY OF SUPPLY RENEWABLE ENERGY EFFECTIVE TRANSITION

% OF DANISH DKK BILLION SEC. ELECTRICITY KM % CHANGE OF GRID AND SYSTEM HIGH-VOL- AVG. NO. OF NON-SUPPLIED CONSUMPTION ELECTRICITY 2.7 TARIFFS 6,956 TAGE GRID 1,151 EMPLOYEES 92 ELECTRICITY 43.4 COVERED BY WIND 5.6 2016: 2.7 2016: 6,913 2016: 953 2016: 48 SEC. 2016: 38 POWER 2016: 6% SUPPLIER

KM DKK BILLION * GAS PIPE EMPLOYEE % GROWTH IN BIOGAS % OF DANISH GAS GAS TRANSMISSION GAS SUPPLY (TRANS- 75 SATISFACTION PRODUCTION CONSUMPTION TRADED 0.4 TARIFFS 926 ZERO FAILURE 63 57 MISSION GRID) 2015: 75 ON GASPOINT NORDIC 2016: 0.4 2016: 926 2016: ZERO 2016: 43 2016: 68

DKK BILLION INTERCONNECTIONS, BILLION NM3 % STAKEHOLDER % STAKEHOLDER SATIS- LOANS WITH 2 GAS CONNECTIONS % ABSENCE DUE TRANSPORTED SATISFACTION WITH FACTION WITH CONTRI- 26 DANMARKS 7 AND 5 ELECTRICITY 2.3 TO ILLNESS 3.4 GAS 68 CONTRIBUTIONS TO 67 BUTION TO HEALTHY 2016: 24 NATIONALBANK 2016: 7 CONNECTIONS 2016: 2.2% 2016: 4 EFFECTIVE TRANSITION INVESTMENT CLIMATE

KM GAS DISTRI- DIALOGUE MEETINGS ON THE CMMI BUTION GRID WITH CITIZENS AND SCALE IT MATURITY 6,600 60 MARKET PLAYERS 3.7 2016: 6,600 2016: 60 2016: 3.6

2 GAS STORAGE FACILITIES 2016: 2

Energinet is charged with integrating renewable energy, ensuring equal access to the grids and ensuring security of supply in * Employees’ assessment of satisfaction is from 2017. Employees answer questions about job satisfaction in a total of nine areas, with Denmark. The above examples of resources and results are intended to provide an immediate idea of what Energinet does. Some the index ﬁgure representing the aggregate employee satisfaction score. The model is called ‘Global Employee and Leadership Index’, results are associated directly with Energinet’s activities, while others are more indirectly related to Energinet. which is a recognised and widely used method among Danish and international businesses. Energinet conducts an employee satisfaction survey every other year. VALUE CHAIN

RESOURCES 2017 RESULTS 2017

FINANCIAL PHYSICAL HUMAN SECURITY OF SUPPLY RENEWABLE ENERGY EFFECTIVE TRANSITION

KM GAS DISTRI- DIALOGUE MEETINGS ON THE CMMI BUTION GRID WITH CITIZENS AND SCALE IT MATURITY 6,600 60 MARKET PLAYERS 3.7 2016: 6,600 2016: 60 2016: 3.6

2 GAS STORAGE FACILITIES 2016: 2

In 2017, Energinet implemented an organisational restructuring and now consists of corporate functions, two business service units and four independent group business units. All group business units are expected to be established as independent subsidiaries within VISION the ﬁrst half of 2018. Moreover, Electricity Transmission and Electricity System Operator will be spun o as two independent subsidiaries, and DataHub will be spun o from Electricity System Operator and become an independent subsidiary. The organisational restruc- A BALANCED AND SUSTAINABLE turing aims to create more transparency and a clearer distribution of responsibility for Energinet’s individual and overall activities. ENERGY SUPPLY We will ﬁnd ways of producing reliable and D

ENERGINET OBECTIVES -

ENGINEERING AND BUSINESS SERVICES CONSTRUCTION

NEW SECURITY OF SUPPLY ENERGY HUB I D I D’ N E N E W D - PAGE TSO ELECTRICITY PAGE PAGE PAGE The group business unit TSO-GAS GSD DGD TSO Electricity is divided The group business unit The group business unit The group business unit into Electricity Transmis- TSO Gas is responsible for Gas Storage Denmark Dansk Gas Distribution SOCIAL RESPONSIBILITY DIGITALISATION sion and Electricity Sy- the operation and devel- (GSD) operates two gas ensures that the gas in I I stem Operator. Electricity opment of the gas trans- storage facilities in Lille their pipes is distributed Transmission is re- for eﬃciency improvements, and we will E’ mission system and for Torup and Stenlille. The to more than 120,000 sponsible for operating the development of the gas storage facilities, Danish homes and and developing the Danish gas market. new ﬁnancial management system for which are operated as businesses on Zealand electricity transmission E’ grid. Electricity System a single business on and in the southern part Operator is responsible for commercial terms, oer of Jutland. the operation and devel- gas storage to market opment of the electricity players and contribute to STANDPOINT market design and for security of supply in the OUR COMMITMENTS MISSION: RELIABLE ENERGY FOR balancing the electricity gas transmission grid. transmission grid. SOCIETY H E D Together with the energy sector, we are creating peace of mind that there is energy for everyone.

Eﬃcient transition W Together with the energy sector, we are ﬁnding new paths to a green transition which is socioeconomically eective. - - Energinet is an independent public enterprise owned by the Danish state for the purpose of ensuring public control of critical infrastructure for electricity and gas. Energinet was established by the Danish Parliament, Folketinget, by an act of law in 2005, and its H ownership falls under the Danish Minister for Energy, Utilities and Climate. Energinet core tasks are to integrate renewable energy, Together with the energy sector, we are contributing to a ensure equal access to the grids and ensure security of supply in Denmark. healthy investment climate within the energy sector. STRATEGY -

ENERGINET ENERGY ACROSSENERGY - We are developing the energy supply of the future ACROSS BOR- BORDERS DERS

ENERGINET OBECTIVES -

ENGINEERING AND BUSINESS SERVICES CONSTRUCTION

OPEX STAKEHOLDER SATISFACTION CAPEX (INDEX) (INDEX) (INDEX) EFFICIENT TRANSITION/ ENERGINET ELECTRICITY/GAS HEALTHY INVESTMENT 97/94 68/67 CLIMATE 84 TARGET: 92/100TARGETS AND RESULTS TARGET: 90 TSO ACTIVITIES TSO-ACTIVITIES TSO-ACTIVITIES ENGINEERING AND CONSTRUCTION BUSINESS SERVICES SOLVENCY RATIO (%) REPAIRING EXCAVATION RETURN ON CAPITAL DAMAGE WITHIN THREE EMPLOYED – ROCE (%) HOURS (%) 18/33 DGD/GSD 95 4.6/- 8.1 DGD/GSD TARGET: 30-40/30-40 TARGET: 90 TARGET: 4.0/3.0 DGD AND GSD DGD DGD OG GSD

NON-SUPPLIED EMPLOYEE SATISFACTION GAS SUPPLY TSO GAS STORAGE DANSK GAS TSO-GAS ELECTRICITY (SEC.) (INDEX) FAILURE ELECTRICITY DENMARK DISTRIBUTION 92 75 ZERO TARGET: MAX. 60 TARGET: 76 TARGET: ZERO TSO ELECTRICITY COMMON CORPORATE TARGETS TSO-GAS Energinet is a non-profit enterprise and is based on a break-even principle, which means that income and expenses must balance over a number of years. ABSENCE DUE INFORMATION SECURITY OCCUPATIONAL INJURIES TO ILLNESS (%) PER MILLION BALANCE WORKING HOURS NET LOSS FOR EXCESS REVENUE 2.3 3.7 6.1 SHEET TOTAL TARGET: 2.0 TARGET: 4.0 TARGET: 2.0 THE YEAR, DKKM DKK MILLION DKK BILLION COMMON CORPORATE TARGETS COMMON CORPORATE TARGETS COMMON CORPORATE TARGETS -228 45.6 232 2016: -143 2016: 44.6 2016: 1,233 IN EXCESS REVENUE Net loss for the year is not The balance sheet total increased The accumulated excess revenue Energinet’s corporate targets have been set by the Supervisory Board in cooperation with Energinet’s owner (the Danish Minister for Energy, Utilities and Climate). The graph above shows an overview of the targets and the relevant results for 2017. satisfactory. primarily as a result of fixed at 31 December 2017 is DKK 273 asset investments. million. OPEX: Operating expenses. The lower the number, the better the result. CAPEX: Costs of capital The lower the number, the better the The primary reason for this year’s negative results is that the value of the gas storage assets was result. See also key figures and ratios on page 134. written down by DKK 320 million after tax. Annual Report 2017 13 FINANCIAL STATEMENT The financial statements account for the income and expenses included in the taris collected from the consumers.

ENERGINET

ENGINEERING AND CONSTRUCTION BUSINESS SERVICES

TSO GAS STORAGE DANSK GAS TSO-GAS ELECTRICITY DENMARK DISTRIBUTION

Energinet is a non-proﬁt enterprise and is based on a break-even principle, which means that income and expenses must balance over a number of years.

NET LOSS FOR BALANCE EXCESS REVENUE SHEET TOTAL THE YEAR, DKKM DKK MILLION DKK BILLION

-228 45.6 232 2016: -143 2016: 44.6 2016: 1,233 IN EXCESS REVENUE Net loss for the year is not The balance sheet total increased The accumulated excess revenue satisfactory. primarily as a result of ﬁxed at 31 December 2017 is DKK 273 asset investments. million. The primary reason for this year’s negative results is that the value of the gas storage assets was written down by DKK 320 million after tax.

FOCUS ARTICLES HERE YOU CAN READ FOUR FOCUS ARTICLES ON IMPORTANT PROJECTS UNDERTAKEN IN 2017 WHICH GIVE A PICTURE OF ENERGINET’S VALUE CREATION. 16 Annual Report 2017 EUROPE’S UNITED SECURITY OF SUPPLY

THE ELECTRICITY BALANCING GUIDELINE The Electricity Balancing Guideline network code is the legal platform on which the future European balance market is to be based. The PAN-EUROPEAN BALANCE MARKET network code entered into The Electricity Balancing Guideline force on 18 December 2017. deﬁnes, among other things, require- ments, time limits and a preferred design for a common balance market.

Market platforms must be established for exchanging dierent types of balancing energy, including for manual reserves.

MARKET PLATFORM FOR MANUAL RESERVES The market platform for manual reserves consists of both hardcore IT systems for activation and settlement of energy between countries and of cooperation and negotiation processes between market players. The processes must result in a level playing ﬁeld for competition. FOCUS ARTICLE EUROPE’S UNITED SECURITY OF SUPPLY

THE ELECTRICITY There is an increasing focus on common energy solutions in the European Union, and 2017 was the BALANCING GUIDELINE year in which the last of a number of common network codes for the European electricity market The Electricity Balancing entered into force. The network codes have been adopted after five years of negotiations, and the time Guideline network code is the legal platform on which to implement them has now come. Martin Høgh Møller from Energinet is spearheading an important the future European balance part of this work when Energinet and 42 sister organisations are to draw up the framework for a com- market is to be based. The mon platform for activation of energy from manual reserves. The market platform is crucial for the PAN-EUROPEAN BALANCE MARKET network code entered into ability to ensure cost-effective security of supply in a European energy system with increasing shares force on 18 December 2017. The Electricity Balancing Guideline of renewable energy. READ MORE deﬁnes, among other things, require- ments, time limits and a preferred design for a common balance market.

Market platforms must be established for exchanging dierent types of balancing energy, including for manual reserves.

caption 18 Annual Report 2017

The pan-European market platform In a modern electricity market, manual Martin Høgh Møller has now been for activation of energy from manual reserves are a service provided by tasked with replicating for Europe in reserves must be ready for use by selected suppliers which the TSO cooperation with 50 colleagues from the end of 2021. It will be one of the activates in situations where the con- the other European TSOs. most clear examples of high security trol centre predicts that an imbalance of supply being based increasingly on will occur between consumption and Benefits of a pan-European balance cooperation and sharing of resources generation, or in situations where market across countries. But before we go grid or plant faults trigger sudden The pan-European Electricity Balan- into more detail about this, we will first imbalances. Depending on the demand, cing Guideline network code entered explain what manual reserves are. the service may consist of generating into force, and thus became part of more electricity, or it may consist of EU law, on 18 December 2017. One of An electricity system requires a con- stopping the generation or consump- the provisions in the network code stant balance between generation and tion of electricity; businesses may, for stipulates that a European platform consumption of energy. You could say example, be paid to stop an electri- for activation of manual reserves must that there must be a constant flow city-consuming process. be established within four years. Four from generator to consumer, and it is years are a very short time for such not possible to ‘shelve’ excess energy Such balancing services are a neces- a complex project, which not only in the system, the way you can with sary tool for maintaining security of includes a negotiation process where products in a warehouse or a super- supply, and historically, most countries TSOs and the countries’ supervisory market. The electricity transmission have had their own national ways of authorities (in Denmark, the Danish grid operator’s control centre monitors safeguarding these services. In the Energy Regulatory Authority) – with the balance in the grid and initiates Nordic countries, however, we have input from the market players – must measures in the event of imbalances had a well-functioning common market agree on a large number of ways of between consumption and generation. for the activation and exchange of ba- fixing prices and trading energy from In Denmark, this operator is Energinet, lancing services supplied from ma- manual reserves. The project is also a and as mentioned above, there are 42 nual reserves for the past decade. huge IT project, which is to be based on other so-called TSOs (Transmission By making this market a cross-border a European algorithm that will make it System Operators) in the other market, major socioeconomic savings possible for, for example, Energinet’s European countries. have been achieved, and this is what control centre to request balancing

For many years, Danske Commodities has developed systems and models in cooperation with our customers, which means that together we are very cost-effective when it comes to the delivery of ancillary services, including manual reserves. We therefore welcome the establishment of a much larger European marketplace, where our customers can sell their products and thereby get extra value from their plants.

Jakob Bendixen, who is Head of Assets in Danske Commodities, is responsible for handling flexibility services from Danske Commodities’ customers. The customers are Danish generators and consumers, eg CHP plants, electric boilers, heat pumps etc. Annual Report 2017 19

energy and receive the cheapest bid solved by having a dedicated coal-fired from any market player in Europe at power plant at the ready which is any given time. used to supply flexible generation and balancing energy only – ie to turn the “Seeing that four years is not much volume up and down as needed. This is time for such a complex project, 19 neither efficient nor socioeconomically TSOs jumped the gun a bit and started cost saving.” a voluntary cooperation already a year ago, before we were legally obliged to It must be possible for as many market do so,” says Martin Høgh Møller and players as possible to participate in points out that the project “is now the the market for manual reserves, says project which has been developed Martin Høgh Møller and provides a INTERNATIONAL and formally approved by the market graphic example: “Some places have COOPERATION IN committee in ENTSO-E as the project markets for manual reserves in which that all 43 TSOs in the EU member it’s a condition that the market players THE GAS MARKET states must join”. ENTSO-E is the must be able to submit their bid one European association of TSOs within month before the time of use. This The international and European the electricity field. excludes, for example, a wind turbine cooperation is also seeing rapid owner who doesn’t have an earthly developments in the gas market. When Martin Høgh Møller heads out chance of predicting how much the Selected major projects in which twice a week on average to meet with wind will blow in one month’s time. But Energinet has been involved in European partners in the project, if you can wait for the bid until half an 2017 are listed below: which counts approximately 50 perma- hour before the use, for example, the nent participants, it is because there wind turbine owner has a fair chance • The European Commission’s are tangible socioeconomic benefits of of participating as well.” revised regulation on the establishing a pan-European market security of natural gas supply for balancing energy. In its ‘Impact The actual market platform for manual entered into force in 2017. The Assessment on European Electricity reserves must be non-discriminatory regulation proposes that the Balancing Market’ report, the European towards market players as well as countries must increasingly Commission has assessed that exchan- towards consumption and generation help each other in connection ging reserves among the member technologies. This means that there with supply crises. New initi- states may result in total annual cost must be equal access for, for example, atives must be implemented savings in the order of EUR 3 billion for wind turbines and power stations ba- within an 18-month period, the EU countries. And more specifical- sed on fossil energy. But, quite logical- and Energinet is looking into ly, the Nordic cooperation on balancing ly, the actual need for a cross-border how the regulation affects energy results in a socioeconomic gain market for balancing energy is larger Danish security of gas supply. among the participating countries of in energy systems with a high share of approximately EUR 200 million a year. renewable energy. The need for flexible • In 2017, Energinet and Swede- So the work pays off. balancing of imbalances between gas (the Swedish gas TSO) consumption and generation most prepared an economic ana- The market supports the green often occurs in weather-dependent lysis of the balance zone transition energy systems. covering both Denmark and One of the reasons why a pan-Europe- Sweden. A common balance an market for manual reserves makes One of the most important challenges zone will increase security of good socioeconomic sense is that far for Martin Høgh Møller is thus to find supply in both countries. more market players have the oppor- compromises between TSOs in coun- tunity to participate – thereby making it tries where the transition to renewable • Energinet participates in the possible to match the demand from the energy has come a long way and TSOs Green Gas Initiative coopera- TSOs with a far more diverse offering in countries where fossil energy still tion along with six European of balancing energy. plays the key role. Already before 18 gas infrastructure companies. December 2018, the project must sub- In 2017, they published their Martin Høgh Møller draws attention mit a proposal for framework conditi- first status report with recom- to the fact that, although we are used ons for the common market platform mendations for the develop- to activating reserves across national for manual reserves. In Martin Høgh ment of biogas in Europe. borders in the Nordic countries, this Møller’s words: “The time for celebra- is quite foreign to the way of thinking ting is over. Now, it’s back to reality.” in other parts of Europe: “In some countries, problems with creating balance in the electricity system are 20 Annual Report 2017

Many attributes of Odense make it an attractive location for our newest Europe- an data center. Among them is the access to the highly interconnected Nordic grid and an abundance of clean energy options across Scandinavia, addressing our needs for both security of supply and the ability to play a role in adding new green capacity to the grid as we move closer to powering all of our operations with 100 % clean and renewable energy.

Vince T. Van Son (to the left) is Commercial Director for Energy & Infrastructure at Facebook.

FIVE POSSIBLE DATA CENTRES ON THE WAY. Apple, Viborg: High-voltage substation built and ready for operation. Data centre under construction. Apple, Aabenraa: A large data centre has been announced, and preparations are underway. Facebook, Odense: High-voltage substation under construction, expected to be completed in April 2018. Data centre under construction. Google, Fredericia: High-voltage substation close to completion. Possible data centre announced, but not decided yet. Google, Aabenraa: Possible data centre announced, but not decided yet. Annual Report 2017 21

FOCUS ARTICLE DATA CENTRES BETWEEN WIND AND WATER Global companies have discovered that Denmark is a country with access to green energy and high security of electricity supply. Energinet is building the high-voltage substations that are going to connect Apple’s and Facebook’s data centres to the transmission grid. The location and design of these substations will provide grid connections which are among the most reliable in Europe thanks to Denmark’s robust electricity grid and central location in the power grid between wind power on the west coast and hydroelectric power in Norway. Denmark’s role as a hub for data centres really took off in 2017. READ MORE 22 Annual Report 2017

“The time difference between Denmark Oddleif Nielsen, adding “that’s what and the USA means that Apple was 6-9 makes it such a great facility in a great hours away. So communication was location”. In other words, security of SIZE OF THE sometimes quite a challenge,” replies supply is all about location, location, lo- Oddleif Nielsen when asked about the cation as demonstrated by Denmark’s HIGH-VOLTAGE biggest challenge in developing a high- robust electricity grid and the growing voltage substation in Tjele to power the number of connections to renewable SUBSTATIONS Apple data centre. energy sources in Denmark and neigh- The capacity of the high-voltage bouring countries. substations connecting data Oddleif Nielsen was Energinet’s project centres with the transmission manager delivering the high-voltage Denmark’s electrical infrastructure grid can be compared to the fuse substation for Apple’s power supply, makes many regions of Denmark attra- in your house. The fuse in your which was ready for operation three ctive as a potential home for large data house must be able to withstand months ahead of schedule on 28 Sep- centres. This is not just true of Viborg, a certain amount of power tember 2017. Odense and Fredericia where the first consumption at once before it of several new high-voltage substati- switches off. But the size of the It may seem surprising that at the top ons funded by private companies are fuse does not tell you how much of Oddleif Nielsen’s list of challenges under construction by Energinet. It is electricity you actually use at any were some relatively mundane issues about location and about Denmark as a given time. Thus, the capacity of around the time difference between hub for renewable energy. Denmark and the USA. This could just a connection does not translate be an excess of modesty, but it could Data centres and Denmark as a hub into or imply a particular level of also be an indication that what makes for renewable energy energy consumption. the arrival of data centres in Denmark Jesper Storebjerg Jensen has been so new and epoch-making are not the involved on behalf of Energinet since technical aspects of building a modern 2014, when Invest in Denmark came high-voltage substation. knocking with project development teams from international commercial whether Denmark had the right mix of “The high-voltage substation near organisations and global brands to ingredients for supporting investments Viborg is in a pivotal place in our power ‘kick the tyres’ of potential investments in data centres. system, with connections to Norwegian as he puts it. In other words, it is not hydroelectric power and to Sweden, a long since interest was first shown in “At Energinet, it’s now commonplace major link through Jutland to Germany, data centres and potential investors to handle large volumes of wind power and a fourth connection to all that wind came to learn about the Danish elec- in the energy system. In Denmark, the power from the North Sea,” says tricity system and make decisions on volume of wind power as a proportion

Energinet’s technical competencies, speed and can-do spirit were essential ingredients in our decision to locate our data centre investment in Odense, Denmark. We value Energinet’s professionalism and are confident that we’re in good hands in terms of the infrastructure supporting our facility in Odense, now and in the future.”

Vince T. Van Son (to the left) is Commercial Director for Energy & Infrastructure at Facebook. Annual Report 2017 23

of overall electricity consumption sets planning and operating obligations, new records year after year. One rea- which require it to keep production and son we can do this is because we have consumption in balance. The analysis strong international connections, which assumptions contain an estimate of the are set to become even stronger now total expected electricity consumption that the Viking Link to the UK has been from all consuming sectors, but with- approved. Compared to other European out the possibility of tracking estimates countries, we have more capacity in to individual facilities or companies. and out of the country than total Danish consumption,” says Jesper Storebjerg As the public gradually becomes more Jensen, pointing out a possible reason aware of the growing number of data why Apple, Facebook and Google have centres, their positive economic impact ENERGINET AND announced their large data centre in- and the role Denmark can play in sup- vestments or preparations for them. porting their desire to use renewable DATA CENTRES energy, the media and others have • Energinet advises on “The new major consumers in the sought information about their future locations and technical transmission grid all prioritise security energy consumption. This has promp- issues when a customer of supply, and they’re all very serious ted a great deal of interest and specu- expresses an interest in their efforts to move forward on lation about how many more data cen- (through Invest in Denmark) the journey towards powering 100% tres are planned and what they will in building a data centre. of their operations with renewable mean for Danish energy consumption. energy.” • Energinet works with the Energinet’s internal estimates of the local grid company to decide future energy consumption of large whether a large electricity Openness and confidential data centres are subject to conside- consumer (eg a data centre) information rable uncertainty, because the potential can be connected to the Apple’s decision to build a data centre number, size, timing and consumption distribution or transmission near Viborg as well as the subsequent of new facilities are still very uncertain grid. The decision is based investment decisions by Apple, Face- and none are in operation yet. on socioeconomic factors. book and Google (see fact box) have naturally attracted considerable in- Michael Refstrup Pedersen, who is • Energinet consults with terest from the media, the public and responsible for Energinet’s analysis all relevant stakeholders politicians – both locally and nationally. assumptions, says: “In layman’s terms, to design the high-voltage we’re providing a plug point – the substations for the right The high-voltage substations linking high-voltage substation – with enough capacity. the data centres directly to the trans- capacity to meet the maximum power • Energinet installs the high- mission grid are paid for by Apple, Fa- requirement, but once the connection voltage substations con- cebook and Google, but are owned and is installed, it’s up to the customer to operated by Energinet. Working with decide how much to use and when. necting the data centres to the consumer, Energinet determines There’s therefore a spread between the transmission grid, and the capacity available to each consu- low consumption and the high con- all associated costs are paid mer connected to the grid. Energinet sumption which the substation is de- by the customer. uses this capacity information to signed to support. There are no actual • Energinet owns and opera- plan and operate the grid and ensure operating data available as yet, so our tes the high-voltage substa- security of supply. Information about assumptions are more of a best guess tions. consumers is subject to commercial at the moment, with a wide range of confidentiality, and publication could possible outcomes.” potentially break the law. Energinet carefully uses this confidential information in its planning and operations in order to guarantee security of supply.

Meanwhile, Energinet continually up- dates and publishes the assumptions used in its analyses, including estimates and projections of future energy production and consumption. Energinet needs these estimates and projections as input in order to meet its grid WHAT IS NORTH SEA WIND POWER HUB (NSWPH)?

A vision of having one or more of artiﬁcial islands or platforms in the middle of the North Sea which are to harvest energy from thousands of new wind turbines and be the hub for interconnections between the North Sea countries.

A consortium consisting of TenneT (German-Dutch electricity TSO), Gasunie (German-Dutch gas TSO), Port of Rotterdam and Energinet.

6 The area SQUARE KILOMETRES Dogger Bank The island may have an area of 6 square kilometres, correspond- ing to 0.02% of the total area of Dogger Bank. 15 CONVERTER SUBSTATIONS The island will be able to accom- modate 15 converter substations of 2 GW each. 70-150 GW WIND POWER The island might be able to harvest 70-150 GW wind power in 2040. In comparison, Denmark’s maximum electricity consumption is 6.1 GW today. FOCUS ARTICLE THE WIND AT DOGGER BANK Energinet participates in international research, development and innovation projects. Such projects are necessary to pave the way and come up with ideas for the very extensive transition of the energy systems which is under way in these years. However, few of these projects are quite as spectacular as North Sea Wind Power Hub: The vision of having one or more artificial islands or platforms surrounded by thousands of offshore wind turbines at Dogger Bank far out in the North Sea and having interconnections from the ‘islands’ to and between the surrounding North Sea countries. This is an excellent example of major challenges requiring major visions. Because all scenarios show that the overall generation of wind power in the North Sea must be multiplied many times over, if the European countries are to be able to meet their climate commitments. READ MORE

Peter Larsen is a development consultant and Energinet’s project manager in the NSWPH (North Sea Wind Power Hub) consortium. Hanne Storm Edlefsen is head of Department Research and Devel- opment and is responsible for Energinet’s research, development, demonstration and innovation projects. 26 Annual Report 2017

Dogger Bank is a shallow area far out in the North Sea between the Northern European countries. Figuratively WHY IS NSWPH A GOOD IDEA? speaking, it seemed almost as far out when the vision of having an artificial • Offshore wind power from the North Sea plays a key role in Europe’s island at Dogger Bank surrounded by green transition. Somewhere between 70 and 150 GW offshore wind thousands of offshore wind turbines power is expected to be installed in the North Sea in 2040. broke in the media in early spring • Offshore wind farms become ‘near-shore’ wind farms. When the distance 2017. Peter Larsen saw the animated to shore – the artificial island – is short, it becomes possible to use pictures of the vision on his TV in- alternating current technology, thereby reducing costs. Brussels, where he, as Danish energy attaché, was working on the design of • Submarine cables, which are to carry the electricity from the artificial the European energy union. He imme- island to the North Sea countries, can act as both landing cables and as diately got curious, and now he works electricity motorways for trading between the countries. This ensures far as Energinet’s project manager on the better utilisation of cable capacity. North Sea Wind Power Hub research and development project, which is to investigate whether the vision can be realised. as an artificial island and thousands vision, with nothing detracting from it, of offshore wind turbines capable of but which in fact elaborated further On 23 March 2017, Energinet entered generating electricity for millions of on the overarching European plans into the cooperation with the other Europeans” was exactly what it was regarding the energy union and cleaner members of the consortium behind all about. Because sometimes major energy for the Europeans.” North Sea Wind Power Hub, which challenges require major visions, and so far is a very open and exploratory eliminating CO2 emissions from the Joining forces on the North Sea winds development project. The investigation European energy supply and reaching One or more artificial islands, complete of a vision which probably cannot zero by 2050 is a huge challenge. with harbour and infrastructure for use be realised until around 2030 at the for harvesting and transmitting electri- earliest. Before a decision can be In Brussels, Peter Larsen was used city from offshore wind farms, perhaps made to proceed to an actual planning to working on preparing bills: “When most of all resembles something from phase, all aspects of the vision must be the Commission presents a legislative a futuristic film. But even though it is analysed in detail. In the current phase, proposal, it’s completely normal and a spectacular and long-term vision, it the consortium is keeping the project appropriate that it subsequently runs is in many ways a natural extension open for new possibilities and ideas into a lot of barriers, when the member of the development which has already that may come up. states start picking it apart based on been going on for a number of years. the interests they’re protecting. But From his post in Brussels, Peter Lar- that’s also precisely why it was libe- An increasing number of offshore sen sensed that something “as crazy rating for me to see such a grandiose wind farms are being established in

The North Sea is crucial to Europe’s green transition and to the transition to fossil-free energy. Den- mark has led the way within offshore wind power in terms of technology and price falls, and North Sea Wind Power Hub takes us one step closer to exploiting the enormous potential of the North Sea. A future interconnection of the markets across the North Sea will be of great value to Denmark and Danish industry, including the wind turbine industry, and the project emphasises that we in Den- mark are serious about turning the North Sea into the world’s Silicon Valley for offshore wind power.

Jan Hylleberg is CEO of the Danish Wind Industry Association, which represents the wind industry in Denmark. Annual Report 2017 27

the North Sea. In step with offshore the North Sea and about a stronger way, from a socioeconomic perspe- wind farms being established further interconnected market. ctive, of harvesting wind power in away from the coasts, the costs for the North Sea than if we keep going longer cables and not least for large Energinet’s role as today, where the electricity from platforms with converter substations Energinet is engaged in a number of offshore wind farms is brought ashore rise, as the electricity from the wind research, development, demonstration in each its own cable, so to speak. This turbines needs to be converted from and innovation projects. In almost all is one of the most important reasons alternating current to direct current cases, these projects are collaborative why we in Energinet would very much before being brought ashore. It is projects where several parties from like to help investigate the vision.” therefore as such a logical step for various countries work together on many offshore wind farms and more finding solutions for the future energy countries instead to partner up with supply, and, as is often also the case POWER-TO-GAS each other and share the costs invol- for research projects, they are often ved in harvesting the energy and trans- financed by several parties, including, IN NSWPH mitting it from sea to land. for example, via EU R&D programmes. The conversion of electricity into gaseous forms such as In a way, North Sea Wind Power Hub But why is it important to Energinet to is a natural extension of the idea of contribute to determining whether the hydrogen or methane via having near-shore wind turbines – only vision of creating one or more artifi- electrolysis is a promising now far out at sea. The electricity from cial islands for harvesting and further technology which may come the many wind farms around the island distributing wind power in the North to play an important role in an can be transmitted as alternating cur- Sea can be realised? Hanne Storm energy system with increasing rent ‘to shore’, meaning to the island. Edlefsen heads the department in volumes of fluctuating and Converters can then be established on Energinet which is responsible for weather-dependent wind the island, which convert the alterna- coordinating Energinet’s participation energy that cannot be stored ting current into direct current and in research, development, demonstra- in large volumes in the same send the current out into a common tion and innovation projects: “As a TSO, way as gas. When there is grid of trading cables between the we’ll have to integrate quite a bit more a surplus of wind energy, it North Sea countries. In other words, renewable energy from offshore wind can be converted into gas the vision of having one or more arti- farms in the North Sea in the coming and stored or distributed to ficial islands or platforms at Dogger years, as all scenarios show that off- consumers. NSWPH may Bank is both about economies of scale shore wind power generated in the therefore also become a in offshore wind power generation, North Sea will be expanded substan- centre for Power-to-Gas (P2G) about the perspectives for cost-effe- tially more than it is today. If the North and for trading with P2G. ctive roll-out and system integration Sea Wind Power Hub vision can be of large volumes of wind power in realised, it’ll be a significantly cheaper

FIVE OTHER R&D PROJECTS WITH ENERGINET AS PARTICIPANT

BEST PATHS: The project is to contribute to overcoming MULTI-DC: The project is to pave the way for an integrated the challenges in connection with the integration of energy system across the Nordic countries. The project renewable energy into Europe’s energy mix. The objective will develop methods for optimising the management of is to develop new technologies that can add capacity electricity connections. The pioneering example for the and flexibility to the transmission grids and the overall project is Kriegers Flak, which is a combined interconnec- European electricity system. tion, landing point and connection of offshore wind farms.

FUTUREGAS: The project will ensure improved integration SMARTNET: The project is to create the framework for of gas into Denmark’s energy supply for the benefit of optimising the interaction between transmission system the climate. The project will analyse how gas can best be operators and distribution system operators when infor- produced based on renewable energy, and how we can mation for monitoring and utilising ancillary services effectively integrate gas into the overall energy system. need to be exchanged. This may, for example, concern reserves and balancing, voltage, control and management PROMOTION: The project is to investigate and develop of overload – both at national level and in a cross-border better technical and regulatory solutions for offshore context. electricity grids, where electricity from offshore wind farms can be harvested and traded to more countries. OPEN ENERGY DATA PROMOTE INNOVATIWHAT- IS ENERGY DATA SERVICE? ON IN THE ENERGY SECTOR

API – machine-to-machine Data guide – Dialogue forum – online exchange of data stream- overviews, guides and forum where everyone can lines the use of data in metadata that help the participate in the dialogue applications and services. user locate data. on Energinet’s data.

Energy Data Service is an open data portal which regularly publishes energy data from Energinet. Here are three functions in Energy Data Service which you can beneﬁt from.

89,530 21 PAGE VIEWS at www.energidataservice.dk DATA SETS. At Energy Data Service, you can from June to December 2017. ﬁnd data sets about electricity production and consumption, the wholesale market, ancillary services, transmission capacity, CO2 emissions and gas quality. FOCUS ARTICLE OPEN ENERGY DATA PROMOTE INNOVATION IN THE ENERGY SECTOR

The energy sector needs innovation and new business models if Denmark is to become independent of fossil fuels by 2050. Free energy data can provide consumers with completely new opportunities for understanding and adapting their energy consumption for the benefit of their wallets and the green transition. A more flexible energy consumption which smoothly integrates with green energy production is crucial when Denmark, in the next phase of the green transition, is to successfully harvest the remaining half of the renewable energy. READ MORE 30 Annual Report 2017

Saturday 17 June 2017. Denmark’s Smarter and greener energy Niels Ejnar Helstrup Jensen sees Political Festival on Bornholm. Minister consumption Energy Data Service as a tool for for Energy, Utilities and Climate Lars Energinet has large volumes of data guiding decision-makers and private Christian Lilleholt presses a red button about the energy system at its dispo- citizens towards a greener and more with a dramatic gesture. A moment sal, for example CO2 emissions data flexible energy consumption. Data later, a tube filled with confetti explo- and consumption and generation data. about the volume of green energy and des, engulfing everyone in a rain of These data are now available to every- the current electricity price may in fu- multi-coloured paper. The Minister has one in Energy Data Service, where ture give you an indication of when, for just launched Energinet’s web portal: users are offered easy access to our example, you should briefly switch off Energy Data Service. energy data. For example, Energy the electrical heating or charge your Data Service gives users API access electric vehicle. Lead project manager Kristine Bock (Application Programming Interface) to was present at the launch at the all data on the portal. This machine- Data for active and flexible consumers People’s Political Festival (Folkemødet). to-machine exchange of data is essen- In 2017, 43.4% of Danish electricity She remembers the relieved happiness tial for the streamlined use of data in consumption was covered by wind she felt that summer morning on the apps and data services. power, and in 2050, Denmark’s total island of Bornholm: energy consumption must be covered “If energy data are to genuinely bene- by renewable energy sources. This “I was very pleased and proud, but fit society, it must be possible to incor- requires increasing flexibility in both also aware that we’re nowhere near porate them automatically in the pro- consumption and generation. And the the objective of the project. We had ducts and services that can make our consumers may get to play a bigger only just started our journey towards energy consumption smarter and role if they get intelligent automated setting energy data free.” greener,” explains Niels Ejnar Helstrup solutions which ensure that they use Jensen, market specialist in Energinet, energy at times that are best suited to Energy Data Service will make it and continues: “Data from Energy Data the fluctuating generation of renewable easier for entrepreneurs, researchers Service, such as electricity prices and energy. and businesses to use energy data CO2 emissions, can give consumers the from Energinet for new services and opportunity to play a role in obtaining “Consumers will demand products and business models, for the benefit of a cheaper electricity bill or a smaller services that can help them use the society and the green transition. carbon footprint.” energy when it’s cheapest, and reduce

In future, we’ll have more mobile devices, robots and intelligent products in our daily lives. And the free energy data can help to accelerate this development. This gives consumers completely new opportunities for understanding and adapting their energy consumption for the benefit of their wallets and the green transition.

Said Lars Christian Lilleholt, Minister for Energy, Utilities and Climate, after the launch of Energy Data Service. Annual Report 2017 31

energy consumption when this makes ged once or twice during that drive, in sense,” says Niels Ejnar Helstrup order to help test the portal, you have a Jensen. highly dedicated user. And we have quite a few of those,” says Kristine Bock. In 2020, all Danish electricity customers will have a remote-read electri- According to the lead project manager, city meter, where consumption is mea- the exchange of experience among sured on an hourly basis instead of on users and with Energinet is an impor- an annual basis. This considerably in- tant part of Energy Data Service: “We creases the volume and the level of want to ensure that everyone who uses detail of energy data, which creates a the portal has the opportunity to learn greater incentive to switch on electrical from each other,” says Kristine Bock. appliances at times when electricity is Therefore, the users can, for example, cheap. communicate with each other and Energinet’s employees in the portal’s A platform has been created in discussion forum. cooperation with the users Energy Data Service has been devel- The idea behind Energy Data Service oped in cooperation with the users of arose from Energinet’s Strategy Plan the web portal: entrepreneurs, re- 2014, in which Energinet undertook to searchers and businesses. They were build an easily accessible platform with involved from the start of the project, energy data. and their input has increased Ener- ginet’s focus on creating a service Energy Data Service has been launch- containing the functions and data the ed, but is still being developed. Entre- users request and wish to use. preneurs, researchers and businesses can now use data from Energinet for “When a man chooses to embark on new products and services that sup- a seven-hour drive, and that in an port the green transition and the digita- electric vehicle which needs to be char- lisation of the energy sector.

Energy Data Service’s potential is limitless. I see opportunities for developing businesses based on data from Energy Data Service. Energinet’s strong focus on security and accessibility strengthens my belief in the potential of the portal because it’s crucial for businesses’ willingness to develop products based on your data.

Henrik Bjerregaard, Head of Smart Energy at CLEAN. (CLEAN is a Danish cleantech cluster that communicates knowledge and supports cooperation between large and small businesses, public authorities and knowledge institutions.) 32 Annual Report 2017

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