Brighter year ahead but lots of market unease -- Slower 2004 for Netherlands

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While the Netherlands' total installed wind capacity may have edged over 1000 MW, Dutch wind development in 2004 was disappointing. Not only did the year end with the demise of the country's last remaining domestic turbine manufacturer, Zephyros, but new installations were down around 15% on 2003's record year. Just 199 MW was installed in 2004, compared with 233 MW in 2003, and net capacity gain was down some 25% due to the high number of turbines decommissioned. Some 29 MW was taken out of action to give a net capacity increase of 170 MW. As a result, by the end of 2004 the Netherlands' total installed capacity stood at 1078 MW, enough to meet 2.2% of the country's electricity demand, says Dutch wind monitoring service Wind Service Holland (WSH).

While there appears to be no structural reason for the sharp rise in decommissioning, industry players suggest it could become a long term trend, thanks largely to the way renewable energy support is given under the government's Environmentally Friendly Production law, the MEP. Under the legislation's "full-load hours regulation," an MEP subsidy of EUR 0.049/kWh for onshore and EUR 0.068/kWh for offshore wind is paid to operators, but only for the first 20,000 hours of full load hours operation. While this time limit was raised from 18,000 hours in July, its existence removes the financial incentive for companies to continue operating a turbine beyond that time, suggests Mathieu Kortenoever of wind turbine owners association Pawex.

"Rather than carry on generating power with a machine which is no longer collecting MEP, people will simply stick up a new one which does collect the subsidy," he says. As smaller machines take longer to hit their full load hour limit, the regulation could encourage the installation of inappropriately large turbines on inland sites, warns Vestas Nederland's Aad de Poot.

Things look brighter for the industry this year, De Poot adds, suggesting some 250 MW will be built by the end of 2005. Of this Vestas expects to provide around 180 MW, significantly up on the 69 MW it installed in 2004 -- not including the 88 MW installed by NEG Micon which is now part of Vestas. "At the moment we've got an eighty per cent market share which you can't really expect to maintain," says De Poot. "I anticipate our market share will eventually settle around fifty to sixty per cent, which is entirely satisfactory." Vestas booked two of the year's largest projects, a 10.45 MW wind farm at Zeewolde, Flevoland and a 12.6 MW project on the Maasvlakte near Rotterdam. It was, however, Germany's Enercon, which ranked third behind Vestas and NEG Micon in the overall table for new development in 2004, which was behind the country's largest project, a 22.5 MW wind farm alongside Rotterdam's Hartelkanaal in Zuid Holland.

Yet again there was no change in the geographical distribution of Dutch wind power, with project development mainly in five provinces (table). Flevoland again topped the table with 74 MW, but growth in the region could come to a screeching halt. The regional council is discussing whether to impose a moratorium on new projects.


While the 2001 Bestuursovereenkomst Landelijke Ontwikkeling Windenergie regulation set specific wind targets for each province to ensure development is distributed throughout the country, no less than five provinces again recorded a blank scorecard, while Brabant's capacity actually fell by 6 MW as a result of project decommissioning. While 2004 has been a bit of a damp squib, Diederik Samsom of the opposition Labour party PvdA, a staunch wind supporter, remains convinced the country's onshore wind target of 1500 MW by 2010 will be met. This will happen even in the event of a moratorium on new build in Flevoland, he says, as simply repowering existing plant in that region along with plant in Friesland will see the Netherlands hit the target.

The lowest point of the year came with the less than surprising demise in December of Zephyros, bringing an end to domestic turbine manufacturing in the Netherlands. Most observers comment it was not unexpected. "As a country we've missed the boat as far as turbine manufacturing is concerned but that doesn't mean we have lost out on a wind industry," says Samsom.

"We have to convince major manufacturers such as Vestas that the Netherlands, with its extensive coastline, is the optimum place to build plant for manufacturing offshore turbines. To do that we have to convince them that we have a stable investment climate as regards wind and stop changing the support package every two years. If we don't do that big companies will move to Scotland or the US, but not the Netherlands."

Threat to subsidies

A potential threat to convincing companies to invest, some say, comes in the form of the "beleidsregel cumulatie toets," or policy regulation cumulative test, implemented in December 2004. Introduced to ensure Dutch turbines are not contravening European subsidy regulations in aggregating MEP payments with the various tax breaks and fiscal incentives available, this calculates the actual subsidy being paid to individual turbines. Opinions regarding the impact the test will have are divided.

For Kortenoever it is a "sword of Damocles hanging over the industry's neck," while Samsom suggests it could force many project developers to recalculate expected returns and rethink project plans. It could, he adds, put a significant brake on the sector. Aad de Poot of Vestas on the other hand is more positive. He argues the test is necessary to maintain public faith in wind. "The MEP payment is purely to compensate renewable energy producers," he says. "If the public get the impression we are profiting from this payment, that will be disastrous for the support for wind. It will only be positive if the sector is subjected to checks to make sure it isn't misusing public funds."

The move to increase transparency in this way comes at a time when opposition to wind development has shifted focus. In 2004, the anti-wind lobby moved its attention from onshore to offshore wind development, arguing it will be a "colossal waste of public money." As a result, the Dutch Energy Research Centre (ECN) is to issue a report setting out all the costs and benefits of offshore wind. The report is of vital strategic significance, says Samsom, stressing the forthcoming five years will be a critical period for renewables in the Netherlands and throughout Europe.

"As awareness of the unsustainability of fossil fuels increase, there is a danger that European governments will be panicked into investing in nuclear energy if renewables are not ready to fill the gap," he says. "At the moment that just isn't the case. We need to see a real take-off of offshore wind and biomass in the next five years." The Netherlands' target for offshore wind is 6000 MW by 2010.

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