According to a new and preliminary assessment by the Danish Energy Agency, the solar cells, which are located in 73 different municipalities and have a combined capacity of 7.4 megawatts, do not comply with the law, newspaper Jyllands-Posten reports.
The power produced by the units is the equivalent to the annual consumption of 1,356 households.
The legal issue with the cells is related to them not being administered as separate companies from associated buildings or fixtures, a legal requirement when solar panels are installed as part of new developments or major renovations.
Failure to comply means that municipalities do not pay full tax for the energy generated by the units.
An investigation of the issue was ordered by energy and climate minister Lars Christian Lilleholt after it emerged in December last year that Silkeborg Municipality was one of the local councils using the illegal solar power generation.
“We are surprised that the resumption of our investigation has shown that there are so many such units in municipalities,” the Energy Agency’s section leader Jakob Henrik Juul told Jyllands-Posten.
Municipalities said that solar panel installations are less economically viable if municipal resources must be used to set up and run companies to manage the power generators, before then purchasing the resultant energy at the correctly taxed rates.
Jacob Bjerregaard, chair of the environmental and energy supply committee with municipal representative organisation Local Government Denmark (Kommunernes Landsforening), said he found it difficult to see the reasoning for the rules.
“Unless (new) laws are made (at parliament), this will probably end with some of these expensive installations being switched off,” Bjerregaard said.
Lilleholt stressed he did not want to see the solar cells decommissioned but said that “municipalities’ green investments must not be driven by speculation in tax avoidance through illegally installed solar energy panels.”