Q1: Currently, Denmark is seen as a world leader in energy efficiency and the use of renewable energy. How do you see Denmark's leadership on these fronts going forward?

Lars Clausen: In our view, Denmark will remain a leader in the transformation of the energy system. Political consensus, long-term planning and focus on achieving a mix of supply, infrastructure and demand side improvements are pivotal to maintain at the forefront. Our experience with large-scale offshore wind and biomass for thermal power and heating is unique and sound. Our energy efficiency scheme has delivered substantial energy savings year-on-year, and the model has recently been an inspiration to the European Commission in its energy efficiency directive towards 2020.

Q2: What do you think is on the cards in terms of regional energy integration, given that Denmark currently imports a lot of energy from the Nordpool? What can Asian countries learn from Europe's experience in energy integration?

Clausen: Denmark currently has more than double the capacity needed to match average demand, and with further wind parks being connected, it will export an increasing amount of peak production. However, since the Nordic transmission grid is well-integrated through interconnectors and energy pricing is fully transparent on the Nordpool exchange, we currently do not see issues with stability.

Our neighbouring countries to the north have storage capacity and flexible energy production, which ensure a good energy balance. Experience shows that cross-border collaboration on infrastructure and market models smoothen out local bottlenecks, which to an increasing degree will be the issue with more fluctuating renewables in the supply mix.

Q3: Denmark aims to raise its C02 reduction target to 40 percent by 2020 and set a goal of phasing out fossil fuels by 2050. The country's energy prices are already the highest in Europe. Where do you think the balance between economic growth and carbon emissions reduction lies?

Clausen: Indeed, Denmark has one of the highest end-user energy prices per KWh mainly as a result of taxes. However, wholesale prices remain very competitive and retail margins are among the lowest in Europe. It is hard to predict where the optimum lies between growth and carbon emissions from a societal perspective. However, in a Danish context, we have a rather small industrial base of heavy energy-consuming process industries. For the majority of businesses, energy costs are not the main driving factor and hence we see far greater movement among Danish businesses to act climate responsible and leverage this towards their customer base.

From a policymaker perspective, the target is to ensure that the Danish Energy transformation remains GDP-neutral. We spend more on energy, but we gain a leading edge on clean tech technologies, for example, which fuels job creation

Q4: DONG Energy has shifted its focus to becoming an integrated energy company with activities across the value chain. How can such a change to a more integrated operating model help energy companies tackle challenges and seize opportunities in the industry?

Clausen: We believe that our integrated model has been pivotal to ensure our growth in offshore renewables and biomass. By being integrated we have managed to have a more balanced risk portfolio and also capture value both up and downstream. When the energy system undergoing a transformation, we have been able to make investments long-term while having stable income in other parts of the business. And by being active in gas exploration we have also focused on bridging the gap between today's system and a future electrified and carbon-free society. That said, our ability to invest in renewables in an integrated fashion is still driven by favourable regulatory incentives in Denmark and other markets that we operate in.

Q5: DONG Energy is developing a flexible Smart Grid to ensure the balancing of electricity generation and electricity consumption. Can you give us an update on how the Smart Grid project is progressing? What are some of the insights you have arrived at?

Clausen: We typically refer to smart energy when we talk about the downstream transformation of the energy system. For us, a smart grid is about running and managing the distribution grid as effectively as possible through automation and monitoring. In many ways, this is always the soundest way to create more value out of existing grid assets. However, greater value is extracted when end-users start to behave flexibly. We may then reduce or postpone investments significantly, in fact, up to 25 percent.

So, smart grid and customer flexibility are what we term smart energy. Smart energy also enables interesting new value propositions to customers, for example in more flexible offerings. Some of our learnings have been that thorough analysis and analytical tools are more crucial than making large-scale investments in the grid "just to be safe". We have also clearly learned that customer flexibility is difficult to orchestrate since many parties need to be aligned all the way, from the customer to the retailer, to the grid and the trading side. But we are making good progress.