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Netherlands

Netherlands

Dutch wind market closes down -- No reprieve from parliament

Expectations that the Dutch parliament would vote to reinstate the Milieukwaliteit ElektriciteitsProductie (MEP) renewables subsidy last month were dashed when the second chamber chose to back the government's decision to halt the program. The wind power industry now seems resigned to at least a year's hiatus in the Netherlands. Its one hope rests with a new government as Dutch elections approach on November 22.

At the end of September hopes were high that the stop -- implemented by government on August 18 -- would be over-turned, or that at least some measures would be introduced to soften the blow (Windpower Monthly, October 2006). But economic affairs minister Joop Wijn got his way, with 75 members of parliament supporting his decision to stop the MEP and 65 voting against. A majority of the maverick Lijst Pim Fortuyn party surprisingly supported Wijn, though its economic affairs spokesman, Wien van den Brink, a farmer, voted to retain the renewables law.

The MEP, which stands for "electricity generation environmental quality," was introduced on July 1, 2003, and expected to last for at least ten years. Under the legislation, wind power receives a production subsidy, which in July was reduced to EUR 65/MWh for new plant, down from EUR 78/MWh previously. The subsidy supports a specified volume of total production, typically achieved after about 11-12 years of operation, given Dutch winds.

Wijn was steadfast in his argument last month that with the Netherlands on course to reach its 9% renewable energy target by 2010, the MEP budget was used up. The lack of parliamentary opposition to Wijn's axing of the MEP seems to have surprised even his own staff. "They did not ask anything more, the majority did not ask to reopen the MEP scheme," say Wijn's spokesperson, Judith Thompson. "So that is the end of it."

A small olive branch offered by Wijn makes EUR 27 million a year available for ten years for household scale renewables on farms and for greenhouse owners. It is not available for wind projects. Wijn also offered EUR 70 million as compensation for investors who have started development of a renewables project in the expectation they would get the MEP subsidy. Diederick Samsom, renewables spokesman for the Dutch labour party, PvDA, says the compensation is a "waste of money." It would have been better invested in renewable energy projects. If the PvDA wins the elections, it will restore the MEP subsidy.

Since the unexpected disappearance of the MEP on August 18, all further wind development has ground to a halt, says Samsom. "We have a one year stand-still on investment." He points out that once the election is over, a new government has to take office, which must consider a new market framework and pass relevant legislation. That then has to be approved by the EU administration. Even with a fast track process, there will be no new renewables law before the end of summer next year, says Samson.

Meantime the Netherlands is progressing with two offshore demonstration projects in the North Sea. Shell's 108 MW Noordzee project delivered its first electricity to shore last month. All 36 Vestas 3 MW turbines are in place and the wind station is to be fully connected before the end of the year.

Site work on the 120 MW Q7 project, to be completed in March, 2008, has started and the last pieces of the financing puzzle for the EUR 383 million wind farm fell into place on October 25. It is the first non-recourse project financing for an offshore wind development (Windpower Monthly, July 2006). Vestas and Van Oord Dredging and Marine Contractors are building the wind farm 23 kilometres off the coast at Ijmuiden for ENECO Holding, Econcern and Energy Investment Holdings. Vestas Offshore will initially operate the wind station under a five year warranty, operations and maintenance contract.

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