The European Commission has authorised a €5 billion ($5.4 billion) Danish state aid/taxpayer subsidy scheme to fund the development of offshore wind energy. This measure was approved under the "clean industrial deal state aid" framework, which the commission adopted on June 25, 2025.
The scheme is intended to fund the construction and operation of two specific offshore wind farms, known as Hesselø and North Sea I Mid. While Hesselø is expected by the Danish Government to have a capacity of at least 0.8 GW, the North Sea I Mid project is expected to reach a minimum capacity of one GW.
Together, these two facilities are projected to generate approximately 7.8 TWh per year. This combined annual production would represent the equivalent of about 25 per cent of the total electricity produced in Denmark during the previous year.
Subsidies will be provided for a period of 20 years through a monthly variable premium under a two-way contract for difference. Under this mechanism, beneficiaries will receive payments when the reference market price falls below a predetermined bid price.
Conversely, the beneficiaries must pay the Danish authorities if the reference price exceeds that bid price. The commission stated that the aid will be awarded via a competitive bidding process to ensure the market functions properly.
The commission concluded that the scheme is necessary and proportionate to facilitate the development of economic activities important for the region. It also noted that the design prevents producers from being compensated during periods when the market value of production is negative.
