The Danish Energy Agency was ordered by the Danish Parliament to find a method of allocating financial subsidies so as to reduce the debts faced by barmark plants in Denmark. Debts that primarily arose against a background of rising prices for fuel for these plants and natural gas in general.
What are barmark plants?
In simple terms, a barmark (bare ground) plant is a decentralised energy producing plant typically located here and there in small local communities, often on bare ground close to consumers, where there was no collective heating supply already in place. The primary purpose of the plants was to supply local households and companies with environmentally friendly energy at competitive prices.
Had to be distressed
The Danish Parliament’s main condition for the allocation of subsidies was that the plants should be distressed. A plant was defined as distressed if its estimated long-term heating price exceeded the price of individual oil-fired central heating.
The Danish Energy Agency hired FORCE Technology’s Energy and Environment Division to draw up an accurate and comprehensible calculation method which would benefit those barmark plants which were really in need of subsidies.
FORCE Technology communicates in a way that can be understood
Head of section and economist at the Danish Energy Agency Heidi Ebdrup says of the Agency’s choice of partner, “Throughout the entire process we have enjoyed a close and constructive relationship with FORCE Technology, not least because of its unfailing instinct for finding a good balance between technology and politics, two aspects which are extremely important in this matter. Moreover, the company’s ability to communicate in a language which even the layman without a technological foundation can understand has been quite apparent.”
Financial basis for allocation
Essentially, the finances of these plants are rather obscure. But FORCE Technology together with the Danish Energy Agency drew up a financial basis for allocation which simplified the calculation of long-term heating prices and compared this figure with an established oil benchmark.
Thorough technological support and documentation
“Getting across all of the various parameters which had to be taken into account has been a pretty hectic business, but FORCE Technology managed to give us full technological support and has documented everything in a detailed spreadsheet, which has enabled us to defence our arrangements without any major problems”, says Heidi Ebdrup.
Against this background, the Danish Parliament authorised two relief packages which allocated subsidies to 72 different plants for the reduction of DKK 370 million worth of debt. Eight plants received more than DKK 10 million, whilst the majority received between DKK 1 and 5 million.
The Auditor General of Denmark gave the go-ahead for the calculation base
Subsequently, the Danish Auditor General’s office was assigned to examine whether the calculation model for the payment of the relief packages to the barmark plants had been carried out in accordance with the conditions set by the Danish Parliament.
The Auditor General’s office found that the Danish Energy Agency’s and FORCE Technology’s calculation model had created a uniform and administratively suitable basis for evaluating whether plants were distressed or not. Thus the method accorded with the conditions imposed by the Danish Parliament and was approved without further comment.
