New market structure postponed

A renewables finance package proposed by the Dutch government -- strongly criticised by the renewables industry and opposition parties -- will not now be implemented on January 1, says secretary of state for finance Steven van Eijck.

He concedes that his plans to trim renewables support through the introduction of a new environmentally friendly electricity production (MEP) law will need further discussion. The new law will be given a full parliamentary reading in the spring. In its place will come an amended version of the existing system, which is based on an eco tax, known as REB, levied on all electricity except green power. The amended version will retain the REB, but apply it to green power at a reduced rate of i0.012/kWh. Meanwhile, the existing production incentive of NLG 0.02/kWh will remain in place for wind and solar -- and tax breaks to encourage renewables investment, due to be scrapped, will also be retained until new legislation is adopted.

Van Eijck describes the interim support system while the MEP is further discussed as "less favourable, but nevertheless fiscally sound." Until now, the exemption of green power from the REB has allowed customers to buy it for the same rate as grey power. The new REB tax on green power changes this balance, but is far less than the EUR 0.029/kWh proposed in the MEP law.

A major change is that the production incentive retained for wind and solar is no longer applicable to hydro and biomass, with the aim of stopping a considerable flow of Dutch tax revenues to foreign producers. To meet the consumer demand for green power, much of it had to be imported.

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