Wouter Frieling from NEWIN, the Dutch wind industry's association, is also disappointed. "We are going back. Not to the negotiating table, but to parliament. This agreement will not enable the country to meet its 1000 MW target for 2000," he says.
Frieling, who works for WEOM, a project development firm that grew out of turbine manufacturer NedWind, is not expecting a surge of activity on the wind market. He feels the new tariff is no recompense for the government axing its wind support programme from the end of the year. "If anything, investing in wind energy in the Netherlands will become more difficult. An investment subsidy shaves off the very expensive top of your bank loan. A kilowatt hour payment does not give this option."
Although critical of the tariffs agreement, the consensus of opinion in the Dutch wind community is that Pawex had no choice but to accept the offer made by the utilities through their association, EnergieNed. Pawex negotiator Ernst van Zuylen says that had they turned EnergieNed's offer down, wind energy would have been out in the cold. "We had to agree to this offer to retain political and public goodwill. We would have been looked upon as moaners who never have enough if we had said no." But after five years of negotiations, the agreement can only be described as Dutch comfort.
On June 30, Pawex and EnergieNed, with the mediation of the Ministry of Economic Affairs, agreed on a price of NLG 0.163 for each kilowatt of wind fed into the grid. The price is made up of a standard tariff of NLG 0.077-0.08, the highest electricity distribution companies are willing to pay to external suppliers of electricity, along with NLG 0.054/kWh from money the distribution companies have allocated for their Environmental Action Programme. The final three cents come from exempting sustainable energy, including wind, from a general energy tax, to be launched in January.
Wind turbine owner and development consultant, Dirk van Ham, has long said that it would do no harm to abolish the 35% capital subsidy of wind turbines, which has hitherto been available in the Netherlands, as long as it was replaced by an obligation on utilities to pay a reasonable tariff. But the agreed NLG 0.163 cents is not reasonable at all, he says. Only in windy areas will it make an investment in wind power worthwhile. A reasonable price would have been in the order of NLG 0.185/kWh or more, he says.
Meantime, Ernst van Zuylen hopes the difference between what is being offered and what is necessary may be at least partly bridged by two tax deduction schemes introduced specifically for wind energy. One is the so-called Greenfund-regulation. It allows investors in environmentally sound initiatives to pay less tax on the interest earned on their investment. No one is sure yet how that translates into the price per kWh, but Van Zuylen thinks it might give an advantage of one or two cents. The other tax deduction scheme is Vamil, an arrangement under which an investment in environmentally sound initiatives can be written off against tax at any time, even earlier than would normally be allowed. According to Van Zuylen this can drag companies or investment funds into wind energy that have made a huge profit one year and are not too keen on also paying a huge amount of tax on it. He does not dare guess what the effect of this Vamil regulation could be.