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Netherlands

Netherlands

Year of development highs and policy lows -- Dutch hopes pinned on new government

As expected, Dutch wind development records were smashed in 2006, thanks to completion of the 108 MW Egmond aan Zee offshore wind farm. In total, 336 MW of new wind plant was installed, far surpassing the country's previous record of 226 MW in 2003 and reversing the downward trend for new installations seen in 2004 and 2005. In total, at the end of 2006 the Netherlands had 1559 MW of wind capacity.

Denmark's Vestas continues its overwhelming dominance of the Dutch turbine supply market with Germany's Enercon playing catch up. Accounting for 216 MW of the new capacity in 2006, Vestas supplied more than double the 102 MW it achieved in 2005 to bring its cumulative Dutch tally to 713 MW, accounting for just over 45% of installed capacity to date. Enercon saw a 243% increase in its new installations, supplying 127 MW in 2006 compared to just 37 MW in the previous year. It now accounts for 16% of the Netherlands' total installed wind capacity.

axed

Any thought of celebrating the industry's success in 2006 was quick to evaporate. As soon as the 1500 MW milestone was in sight, the market's major incentive system, the Milieukwaliteit Elektriciteits Productie (MEP) incentive payment for wind kilowatt hours, was in August withdrawn by the government. Introduced in 2003 to help meet a target for 9% of the country's electricity to come from renewables by 2010, the MEP was expected to last for at least ten years and paid wind power producers EUR 65/MW for a term equal to 20,000 production hours, which is around seven to eight years. With the 9% target achieved mid year, economic affairs minister Joop Wijn said the need for the MEP had gone. "That was the target, there is no reason to continue," he stated.

The industry, which had feared the subsidy could be reduced, was left stunned at its withdrawal. Fears of a market collapse have been rife ever since. A new coalition government has since come to power, comprising the Christian Democrats, the PvDA (Labour) and the Christian Union. Commentators believe wind power will fair better under it.

Diederik Samsom, renewables specialist for PvDA, notes that when the MEP was first envisaged, large turbines with capacity rating of 2-3 MW range did not exist. In hindsight, he argues, targets could have been more ambitious. Acknowledging the "huge crash" in investments since the MEP's withdrawal, he says while there were some negative points about the system, there "was no justification to stop it completely." Samson says he is convinced a replacement subsidy or renewables stimulation program will be high on the agenda of the new government and a restructured market will be up-and-running before June. The government has already said it wants 20% of total Dutch energy to come from renewables in 2020.

ON HOLD

Until a new market policy is decided, plans for wind development have been put on hold, although projects already well underway prior to the announcement are continuing. Unless a revised MEP system is announced, 2007 "could be a lost year for wind energy in the Netherlands," says Mathieu Kortenoever of project developer E-connection and secretary of the Netherlands Wind Energy Association. The association has already proposed fundamental changes to the old MEP which, if implemented, would mean an end to unpopular windfall profits for wind producers and a fairer pricing system acceptable to the wider power industry.

Notwithstanding his warnings for 2007, Kortenoever is quietly confident for the Dutch wind market's long term future. "In the short term there is still uncertainty but in the medium and long term I am optimistic," he says emphatically.

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