Market forces kick into play in the Netherlands

Dutch wind seems to have returned to a pattern of steady growth after its "crisis" in 1997. This market status report examines yearly Dutch growth fluctuations in the wind business in a liberalised market after the end of government subsidies in 1995. The report also examines the performance so far of the Green Label system, a market in renewable energy certificates.

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With a further 39 MW capacity installed in the Netherlands in 1998, bringing the national total to 363 MW, Dutch wind seems to have returned to a pattern of steady growth after the "crisis" year of 1997. Although the 1998 figure for new capacity from Projekbureau Duurzame Energie is again down on the 48 MW installed in 1996 and a far cry from the 102 MW of 1995, it represents an improvement on 1997, which saw a mere 30 MW installed.

In part, the fluctuations in yearly growth over recent years reflect the struggle of the Dutch wind business to find its feet in a liberalised market after the end of government subsidies in 1995. The development surges of 1995 and 1996 were due largely to the rush to complete projects before the expiration of subsidy deadlines, while the poor performance of the sector in 1997 was widely attributed to the absence, beyond a handful of fiscal incentives, of any coherent free-market system to stimulate investment in wind.

A utility organised market in tradeable renewable energy certificates, the Green Label system, was launched in February last year. It was intended to fill the market vacuum post subsidies and pre free market. The 1998 returns will inevitably be read as a verdict on the performance of the system.

Green labels verdict

Had the end of year count not only registered the loss of eight 160 kW Bouma wind turbines in Vlissingen, but also their replacement by eight 750 kW NEG Micon units, the 1998 total would have been 45 MW, rendering a positive verdict on the system. The Micon turbines, however, were not due to come on-line until early 1999, which puts a damper on the statistics. Whether the 1998 addition is 39 MW or 45 MW, it nonetheless compares well with an average annual growth of only 20 MW under the expired wind turbine subsidy program.

A closer look at the figures reveals a market which may be rendered vulnerable by the dominance of relatively few major players. Of the 39 MW new capacity, 19 MW is accounted for by the utility owned Eemmeerdijk wind farm of NedWind 1 MW turbines at Zeewolde, Flevoland.

Coming on-line after more than a decade of bureaucratic delays and legal wrangling, this plant can be seen as a product of the pre-market era. Interestingly, though, the NLG 50,000 wind plant was largely financed from the proceeds of NUON's green electricity scheme -- under which consumers elect to pay a premium for electricity generated from renewable resources. Boosted by government action to reduce the price differential between grey and green power, this peculiarly Dutch twist to free market principles currently seems to be having a more direct impact on the stimulation of new investment than the trade in Green Labels. A number of utilities are reporting a huge growth in green electricity sales.

The second largest new plant, the 4.8 MW Windpark Kneeshoek of eight NEG Micon 600/43 turbines in Anna Paulowna, North Holland, is more obviously a child of the free market. The project became possible only after a deal was struck between a group of North Holland farmers and the Brabant-based utility, PNEM, taking advantage of new legislation allowing utilities to contract for electricity produced outside their distribution areas.

Further evidence of market stimulated growth over 1998 is inconclusive and with the market forces likely to be radically altered by the proposed merger of four utilities, including NUON and ENW, the long term implications for wind are still unclear.

Market pushes price up

In the interim, Mathieu Kortenoever of the Independent Wind Turbine Owners Association (PAWEX) reports that as a result of the Green Label market, the price paid to renewable energy producers is "slowly moving upwards" from the NLG 0.148/kWh level when the subsidy program expired, to around NLG 0.163/kWh at present. "You can either say the glass is half full or it is half empty" observes Kortenoever.

Steadily improving returns have not, however, halted the overall decline of private sector investment. This is partly due to increasing public resistance to the placement of solitary turbines and a planning policy shift towards larger wind farms. Of the 60 new turbines erected in 1998, some two-thirds were located in wind farms with only 20 stand alone turbines. These include the replacement of a Lagerwey 18/80 turbine by a Vestas V 29 unit in Cornwerd, Friesland, and the replacement of a three year old Tacke TW 600 by a Vestas V 47 660/200 in Tollebeek, Flevoland. In total there are currently some 1200 turbines operational in the Netherlands.

Thanks to the 19 NedWind 1 MW turbines which make up the Eemmeerdijk project, the average capacity rating of wind turbines rose from less than 500 kW to 680 kW per unit during 1998. The popularity of the 600 kW class is due in part to the low production costs per kWh and also to the fact that in many locations mast height restrictions preclude the use of larger turbines.

The dominant players

A regional breakdown of new capacity again reflects the activity of the three major utilities, NUON, ENW and PNEM. Flevoland, home of NUON, heads the regional league table with 27 MW, bringing the province's total installed capacity to 93 MW, or 27% of the national total. North Holland added a further 7 MW largely through the Kneeshoek (PNEM) and Velsen projects bringing its share of the national total to 16%. The relative inactivity in Friesland and Zeeland is due in part to the planning policy reviews being undertaken in these provinces.

Outside Flevoland, each of the seven windiest provinces has now achieved approximately a third of the installed capacity targets for 2000 agreed with central government in 1991 -- apart from Groningen, which achieved its 50 MW target in 1996, helped along the way by the 21 MW Eemshaven wind farm of 94 turbines from now bankrupt Kenetech of California.

The dominant supplier for the Dutch wind turbine market is still NedWind, thanks largely to the Eemmeerdijk plant. NedWind's 20 MW takes it to the top of the manufacturer league table. The takeover of NedWind by NEG Micon of Denmark in October means the Danish group can now claim a massive 77% share of the Dutch market. NedWind, with 104 MW of turbines now turning, has passed the 100 MW mark, while NEG Micon has a total of 80 MW of Danish turbines now operating in the Netherlands.

Lagerwey, the only Dutch owned manufacturer of grid-scale wind turbines remaining, again suffered from the decline of the small-investor segment of the market. For the second consecutive year it sold none of its LW 18/80 units in Holland, once the backbone of Dutch wind power production. Having just taken over bankrupt WindMaster (Windpower Monthly, January 1999), however, Lagerwey has won that company's 11% market share and also holds a further 8% as agent for sales of Bonus machines. This means it ended the year with nearly a quarter of Dutch capacity to its name.

The installation of three Enercon E40 units from Germany near Lelystad in Flevoland, together with units on the Roggenplaat in the mouth of the Oosterschelde, brings relative newcomer Enercon's Dutch market share to 2%. Vestas has also booked a slight increase in market share, climbing from 1997's 8% to close 1998 at 9%.

In the near future NUON and ENW's dominance of the market looks likely to be intensified should the utilities' plans for a massive 300 MW plant in the waters of the IJsselmeer along the length of the Afsluitdijk be given the go-ahead later this year. The acceptance of a rival tender by the Ontwikkeling Windpark Afsluitdijk consortium, including Rotterdam-based utility Eneco, which currently has an interest in some 41 MW of Dutch wind capacity, could, however, see the emergence of a major new player on the Dutch wind scene.

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