Abstract
The long-term political goal in Denmark is to be free of using fossil fuels in the production of electricity. One way to achieve this is by increasing the renewable energies part of the aggregated electricity consumption. With this political goal kept in mind, this master thesis analyzes how to increase the private incentive for investing in windmills and how to improve the integration of the increased part of wind energy in the Danish power system.

The Danish power system has, so far, been able to handle the renewable energies part of the aggregated electricity consumption but during the last couple of years the situation has worsened. The inflexible production system, inflexible power consumption and the bad projection of the expected wind power production, based on information that dates rapidly, are all factors which explain why Danish power is not able to handle an increased part of renewable energy. To improve the system, action must be taken and this master thesis analyses and discusses initiatives on how to improve the system and increase the private investments in windmills and enhance the integration of wind energy. The analysis is built on a case study of Thise mejeri, a Danish dairy company, and the initiatives concern changes which benefit Thise mejeri. Additionally, the private investment incentive is examined and an economical calculation is made to evaluate the profitability of Thise mejeri investing in a windmill. To evaluate the profitability and sensitivity of the investment, an analysis of the sensitivity is made with production and market prices as the two analytical variables.

The result of the analysis is five initiatives that will improve the integration of wind energy in the Danish power system and increase the private incentive to invest in windmills. Initiative I concerns an extra charge to producers of windmills if they use the production from the windmill directly in their one production. As the system is now, they achieve an extra charge if they sell it in the system. However, this extra charge should also be paid to them if the use it itself. This initiative increases the financial incentive to invest in windmills and relieves the grid for electricity, and the wind energy enhances its integration in to the system. Initiative II concerns time depending net tariffs where the amount, which Thise mejeri has to pay in net tariffs, depend on the time for which they demand the electricity and, thereby, use the grid. In periods with high load on the grid it is more expensive to demand and transport electricity on the grid compared to situations with low load on the grid. This relives the grid in periods with high load and enhance in integration of wind energy. The third initiative concerns the PSO-tax, a tax covering the extra charge and money to research to renewable energy and decentralized power plants. The tax has to be dynamic and depends whether the power production is based on renewable or not. This will make the consumption of renewable energy more desirable and improve the integration of wind energy. Initiative IV takes the present power system and changes it from giving extra charges to renewable energy production to forcing non renewable energy production to pay an extra charge to sell its production. In that way, the renewable energies are not forced up to an artificial price level and non renewable energy production is punished. Finally, the last initiative changes the tax and VAT exemption from including all production companies to only concerning production companies that use renewable energy to cover their energy consumption. This favorites the renewable energy production and takes part in the improving of the integration of wind energy.

Concluding, the internal production conditions for Thise mejeri are analyzed in order to improve the integration of wind energy to the power system. With an aggregated power consumption of more than 6.000 MWh of which the production of cold covers 2.100 MWh and with a production of heat by oil boiler equaling 9.200 MWh, internal improvements must be possible. The employment of a heat and cold storages could reduce the electricity used to produce cold and substitute some of the oil used to produce heat. Additionally, the storage of heat and cold could be useful when the grid is overloaded with electricity. Thise mejeri can purchase the overload of electricity, either from their own windmill or from the market, and via a heat pump transforms it to heat and cold. Thereby, they enhance the integration of wind energy in the power system. The analysis indicates the potential of the cold and heat storage and further technical analysis is necessary to determinate where in the production process of Thise mejeri heat and cold storage can be useful and to determinate the cost of establishing a heat and cold storage. A regulation of their power consumption would also improve the integration of wind energy and, furthermore, reduce their expenditure significally. By substituting the entire peak load with an equivalent load in the off peak period, Thise mejeri could have saved 180,623.90 DKK in 2009. This illustrates the potential of a flexible consumption and a technical analysis is needed to determinate the exact flexibility in the production process in Thise mejeri.