Development set to dive in coming year -- Record 2008 looks like a one off

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To all appearances, the Dutch wind market was back on track last year, with an annual record of 490 MW of new wind plant taking wind capacity in the Netherlands past 2.2 GW. The net increase, accounting for 22 MW of decommissioned plant, was 468 MW, a 150% improvement on the market's performance in 2007 and about 42% better than the previous record of 336 MW set in 2006. By early last month, following the addition of a further 17 MW in January, 2057 turbines with a combined capacity of 2233 MW were operating in the Netherlands, reports Wind Service Holland (WSH).

Just under half of Dutch wind capacity, 1056 MW, is provided by 24 installations, with four of those, including two offshore plant, accounting for 25% of the total, adds WSH. Total annual production from wind plant is now 5.2 TWh, representing 4.6% of Dutch electricity supply, up from 3.3% at the end of 2007, says WSH.

Appearances, however, can deceive. Wind power in the Netherlands looks set to take several steps backwards. Just two new projects totalling 13.6 MW are under construction, one of which is a repowering project. Another 58.7 MW has been permitted, with repowering accounting for 18.55 MW of that. "The prospects for 2009 are not good," says WSH. "In recent years, mainly due to local resistance, many projects have been delayed or rejected. Another major handicap is the economy as a result of a defective subsidy regime and additional funding problems [created] by the credit crisis."

Subsidy flop

Yet another wind power market framework was introduced by the Dutch government in 2008, the Stimuleringsregeling Duurzame Energie (SDE), an incentive program to support the development of around 2000 MW of onshore wind capacity, targeting 500 MW a year from 2008-2011. But subsidy applications for the 2008 allocation, subject to a December deadline, failed to take off and the government is already some 404 MW short of its goal for onshore wind project approvals.

In January, economy minister Maria van der Hoeven reported that just 85.7 MW of onshore wind projects had been granted SDE subsidies under the 2008 allocation, with a further 9.7 MW still being processed. A rise in applications is expected this year, particularly after the government's February 20 announcement of a 7% hike in purchase prices for onshore wind production in 2009.

SDE last year offered an incentive payment for wind of EUR 0.028/kWh, with the government guaranteeing a total purchase price of EUR 0.088/kWh for projects approved in 2008. The EUR 0.028/kWh incentive was based on a market price for electricity at the time of EUR 0.06/kWh. The incentive is adjusted each year in line with electricity price movements, so this year, the subsidy for projects approved in 2008 has been increased to EUR 0.032/kWh. Industry critics warned, however, that the EUR 0.088/kWh target price set last year was insufficient to ensure project viability in all but the highest wind speed areas, especially in a time when capital costs are rising.

Purchase price hike

For projects approved in 2009, the target purchase price for wind production has been raised to EUR 0.094/kWh for 2200 hours of operation at the equivalent of full load (a 25% capacity factor). Energy Centre Netherlands (ECN) advocated the rate in December following consultation with the industry. It improves on ECN's earlier recommendation of EUR 0.091/kWh, made in October and takes into account the rising cost of an installed wind plant. According to ECN this is now EUR 1325/kW, up by EUR 75/kW. Maintenance cost increases are EUR 24-25/kW.

Prospective offshore developers have fared worse than their onshore counterparts. While offshore wind accounted for 120 MW of the new additions in 2008, the sector has effectively lain dormant for a year waiting for the government to set offshore rates under the SDE. Offshore rates are not now expected until November (page 119). The government's goal is for 450 MW of new offshore capacity to be built by 2011 and total offshore capacity to reach just over 6500 MW by 2020.

Key players

Most wind development activity in the Netherlands last year was in the northern province of Groningen. It climbed from sixth position in the provincial rankings in 2007 to second in 2008 and now lies only behind Flevoland (table), reports WSH. Among equipment suppliers, Denmark's Vestas retained its crown as market leader for the seventh consecutive year, supplying 254.5 MW, which includes all of the 120 MW installed off the Dutch coast. By the end of the year, Vestas had installed a total of 1326 MW in the Netherlands, accounting for around 60% of the country's cumulative capacity.

On land last year, the 134.5 MW installed by Vestas was not enough to put it ahead of Germany's Enercon, which installed 228 MW, says WSH. Enercon's cumulative sales tally in the Netherlands rests at 500 MW, or just over 22% of the market. The only other active supplier last year was German Nordex, which has 95 MW turning in the Netherlands in total.

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