Competing Market Regimes: When and where are supply and demand able to shake hands? An exploration of demand side policies in the Danish energy transition

The transition to a renewable energy system has received high political and academic attention within the field of economic policy. However, this attention has tended to focus on supply side policies such as feed-in tariffs for renewables. As the wind power and photovoltaic capacity accumulates, policies on the demand side are needed. This working paper shows that current demand side policies favours international electricity trade while hindering local trade of wind energy across energy sectors. In an explorative calculation, it is shown that the opportunity costs of electricity export from Denmark exceeds the income on the Nord Pool market. In other words, the current Danish electricity market arrangement does not maximise value. New policies are needed for the demand side of a wind based energy system.