May 26, 2010 / 8:26 PM / 9 years ago

DONG Energy's coal phase-out progressing: CEO

COPENHAGEN (Reuters) - Denmark’s DONG Energy DONG.UL could accomplish quicker than planned its 30-year strategy of weaning itself off reliance on coal in favor of wind and other clean energies, its chief executive said.

“The scaling back on coal has been faster than we anticipated when we made the plan, and the amount of new investments in wind has been bigger than we expected,” Chief Executive Anders Eldrup, an architect of that strategy adopted last year, told the Reuters Global Energy Summit on Wednesday.

State-owned DONG Energy currently produces 85 percent of its electricity and heat with fossil fuels, above all coal, and gets 15 percent from renewable energy resources, mainly wind.

But over the next 30 years, it aims to stand that proportion on its head, though gas — a fossil fuel — will remain in its arsenal of “clean” energies alongside wind and biomass that will grow to 85 percent while coal’s share shrinks to 15 percent.

As part of that “85/15 strategy,” DONG aims to reduce its carbon-dioxide emissions per hour of electricity produced to 15 percent of the current level by 2040, with a halving of CO2 emissions to occur within the next 10 years.

“My impression is that we will be able to do this faster than we set up in our plan even though we have set a target to do it at a frontend-loaded speed,” Eldrup said. “Each year in our annual report, we will make a detailed report on whether we are on target or not.”

COAL OUT, WIND IN

To get started down that path, DONG Energy last year decided to halt investment in four big coal-fired power plant projects in Germany and the UK, the best-known of which was a plan for a plant near Greifswald.

“Our company is not in a position, and does not want to be in a position, to build more coal-fired plants,” Eldrup said, adding that the group is closing a quarter of its coal-fired capacity in Denmark and may chose to convert them to biomass.

DONG has also stepped up new investment in offshore wind power developments where it is already the world leader, having established half of all the offshore turbines in the world.

“When we look to our (capital expenditure), we twist it so that the lion’s share goes to the renewables side and especially to wind,” Eldrup said.

He noted that CAPEX projects to 2015 are either decided already or on the drawing board, so the company has a good idea of what will happen up to then.

Last year DONG’s investments were 20 billion Danish crowns ($3.30 billion), but this year’s net investment plan has been cut to 10 billion crowns due to the financial crisis.

About half of new investment goes to wind power parks, Eldrup said.

Last year, the company opened the world’s biggest offshore wind farm, its 209-megawatt Horns Rev 2 development in the North Sea off Jutland.

In two weeks, it will inaugurate in the UK the 175-MW Gunfleet Sands wind developments. It is working in the Irish Sea near Liverpool on the 365-MW Walney wind farms for a startup next year.

It is a partner in the 630-MW London Array in the Thames Estuary, which will be the world’s biggest offshore wind farm when it begins producing in 2012, and it has filed an application to build Denmark’s future biggest, the 400-MW Anholt park.

Additional reporting by Christopher Johnson, Peter Dinkloh and Camila Reed in London

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