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Netherlands

Netherlands

First indication of government thinking -- Subsidy re-evaluation

Dutch economics minister Laurens Jan Brinkhorst has given the first indication of what his promised re-evaluation of the government's one year old renewables support package will hold. He is proposing a number of measures intended to streamline the package, introduced on July 1 last year.

Among the changes, Brinkhorst proposes raising the number of hours of operation at "full load" for which a wind turbine is eligible for the current MEP price subsidy. The stipulation that turbines are eligible for the subsidy for the first ten years of operation, or first 18,000 full capacity hours, whichever comes first, has caused consternation in the Dutch wind community. Many have said that it encourages fraud and the widespread use of machines with inappropriately large generators. This is because "full load" hours are calculated by dividing output by generator capacity.

The increase to 20,000 full load hours proposed by Brinkhorst "is not a solution to the problem" says Mathieu Kortenoever of national wind turbine owner's group PAWEX. He is optimistic, however, that a proposal from the national renewables association DE-Koepel for a "post-MEP" payment to reflect the environmental and social added value of renewable energy will eventually prevail. "These are still just proposals," he says of the minister's initiative. "Ultimately, you are still producing renewable energy and should be rewarded for avoiding the social costs you have with conventional power."

concerns

Kortenoever, whose E-Connection renewables agency is developing a 120 MW offshore wind station, is more concerned about proposals by the Dutch Energy Research Centre (ECN) to cut the MEP rate for offshore wind from the current EUR 97/MWh to EUR 76 /MWh from 2006. "If this goes ahead we might as well end the discussion about offshore permits as nobody will be able to build anything offshore," he says.

ECN justifies the proposed subsidy reduction on the grounds of anticipated power price rises, improved technology and "learning curve" benefits. Kortenoever dismisses the argument: "By 2006, if all goes well, we will have just two offshore projects completed, one of which will be in shallow water. According to Dutch policy all future projects will be in deep water so there will be no technology improvement or learning curve from foreign projects as they are all in shallow water. The Netherlands will have to go through its own learning curve unless the German market takes off."

Kortenoever welcomes a proposal by Brinkhorst to advise the market of MEP changes two years in advance rather than the current 18 months, although Kortenoever points out that the current 18 month target has yet to be met. Brinkhorst also points out that in 2003 there was a EUR 14-20 million shortfall in the MEP budget, which is financed by an annual surcharge on power bills currently pegged at EUR 39 per household. The cause appears to be due to last minute amendments to cogeneration regulations, but will be investigated, says Brinkhorst. The surcharge will be increased if necessary, he says.

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