Dutch market again under threat -- Full load time bomb

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Ignoring widespread criticism from the Dutch wind industry, newly appointed economics minister Laurens Jan Brinkhorst is to go-ahead and implement a new market framework for Dutch wind power from July 1 without revising a ruling that limits power purchase payments to the first 18,000 full-load hours of operation, or the first ten years of a wind turbine's operational life, whichever comes first.

While the Dutch wind community is generally happy with the Environmentally Friendly Electricity Production (MEP) law, which offers a EUR 0.049/kWh production incentive to onshore wind and EUR 0.068/kWh to offshore, turbine manufacturers argue that the full-load mechanism for awarding the incentive will lead to inefficiency and stifle innovative design.

Vestas Nederland says that because a full-load hour is determined by a turbine's annual output divided by its rated capacity, the ruling will encourage the use of machines with exaggerated rated capacities (Windpower Monthly, February 2003). Dutch Lagerwey the Windmaster has added its voice to the criticism, with Hans Duivenvoorden saying the mechanism is a "stupid rule that promotes inefficient turbines: the bigger the turbine, the bigger the subsidy. Our 750 kW turbine is more efficient than a 900 kW turbine, but you get less subsidy for it."

Vestas Nederland's sales manager, Rob Tomesen, would prefer a more finely tuned mechanism for working out how long the incentive should be paid, based on a reference turbine and a sliding tariff and time scale that reflects a site's relative productivity -- as used in Germany. "This is a much better system as it encourages manufacturers to design machines for all sorts of locations," he says.

Brinkhorst acknowledges there may be a problem and says he will review the situation in a year's time. This has just compounded the error believes opposition energy specialist Diederik Samsom of the Dutch Labour Party (PVDA). "This effectively means that nobody will invest in new wind farms over the next twelve months until they know what the situation is," he says.

Samsom also accuses the government of suppressing a report by accountants PriceWaterhouseCooper and renewables concern Ecofys which challenges the assumptions of the study underpinning the MEP package. That study, by Dutch energy research centre ECN, assumes that wind power will fetch EUR 0.021/kWh on the market, which added to a EUR 0.029 green power credit and the MEP incentive amounts to payments of EUR 0.099/kWh for onshore wind, rising to EUR 0.118/kWh for offshore. In practice, however, it is unlikely the full EUR 0.029 credit will be passed to renewables producers. Instead, power retailers will use these funds for green power marketing and publicity.

According to industry insiders, the PriceWaterhouseCooper review disputes ECN's assertion that the MEP package will stimulate wind investment and concludes that under these conditions -- the full-capacity ruling and the absence of any step-down program should the MEP be discontinued -- investment in new wind projects will be unprofitable. "The ministry says that the conclusions of the review have been included in the report but, according to the people who were involved in the review, that is not true at all," says Samsom, who is calling for an emergency debate on the regulation and the publication of the full report.

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