Subsidy break for frustrated farmers

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The Netherlands has reintroduced investment subsidies for small non-incorporated wind power producers. An additional NLG 12.5 million is available for supporting wind power projects this year under a new "Subsidy Regulation for Energy Provision in the Non-Profit and Special Sectors." As of March 10, private investors in wind energy are eligible for a 20% subsidy on the purchase price of new wind turbines.

The regulation extends an existing subsidy for non-profit making organisations, such as parish councils and water boards. The extra pool of cash attempts to make up for the failings of a tax-break scheme which should have made wind turbine ownership attractive to private people. It will mainly be available to independent farmers wishing to erect turbines on their own land.

The economic affairs ministry emphasises that the subsidy does not represent any dilution of its policy for liberalisation of the energy sector. According to the ministry's Jan van Diepen, the regulation is "a specific solution to a special problem." It is intended to end the stalemate over the eligibility of privately financed wind projects to tax relief under the Energy Investment Depreciation (EIA) scheme. EIA is one of a series of fiscal measures introduced to stimulate wind investment after direct subsidies ended in 1995. But with the Dutch revenue service designating wind turbines as a long term investment rather than a commercial investment, the EIA has been little used by small scale investors such as farmers who make up the backbone of independent wind power production in the Netherlands.

Mathieu Kortenoever of the association of independent turbine owners, PAWEX, welcomes the subsidy, but says it is no more than an "adequate solution for the problems of some of our members." He estimates that just 30% of the independent sector will be eligible for the subsidy. The remaining 70%, who have formed limited companies for wind development, will still receive no financial support from the government.

Annual 30 MW extra

The economic affairs ministry says the subsidy will secure an additional 30 MW of wind capacity a year. To date Kortenoever estimates that some 25 MW of projects have been affected by the confusion surrounding tax break incentives such as EIA.

The new regulation has been sent to Brussels for approval by the European Commission and at present any subsidy awards are provisional. However, as an extension to an existing subsidy regulation, the ministry does not foresee any problems in securing EC approval. The total budget of the subsidy program, including the NLG 12.5 million allocated to wind, amounts to NLG 32.5 million. Most of the finance will be handled by inter-governmental organisation Senter, with applications for wind power subsidies being dealt with by government agency Novem.

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