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  • Real Estate
  • March 01, 2019

Offshore wind energy is one of the foundations of Dutch climate policy and is required in order to achieve a 49% reduction in CO2 emissions by 2030, in line with the Paris climate objectives, and thus to maintain the country’s quality of life. The Dutch House of Representatives is currently considering the bill to amend the Offshore Wind Energy Act [Wet Windenergie op zee]. The market is demanding greater certainty for developers of offshore wind farms and there seems to be support for this in the House. This is good news because it increases the likelihood that the Dutch offshore wind farms that are planned for construction, will in fact be constructed.

The bill was submitted to the House of Representatives on 26 November 2018. The essence of the Offshore Wind Energy Act will remain unchanged. The bill foresees the establishment of a new distribution of powers as a result of the changed portfolio structure of the ministries, making the Act in future appropriate to energy carriers other than electricity, and extending and amending the procedures for granting permits on the basis of experience with, and results of, the previous three tendering procedures. On 17 January of this year, the House of Representatives held a hearing in preparation for parliamentary debate on the bill. The Permanent Committee for Economic Affairs and Climate Policy has talked to interest groups such as the Dutch Wind Energy Association, various energy companies, and other relevant knowledge organisations. At the hearing, market parties argued that it is uncertain whether the Dutch Government’s current policy will actually lead to construction of the desired offshore wind farms. The Netherlands Wind Energy Association (NWEA) noted that not all the planned wind farms can be built without a subsidy if there is not more demand for renewable electricity. At the moment there is uncertainty regarding the growth in demand. Will all Dutch homes soon be heated by electricity instead of natural gas? Will existing coal-fired power stations be closed down and, if so, when? All this affects the electricity price and therefore the viability of offshore wind projects.

As a solution to this uncertainty, both the NWEA and others parties referred to the “contract for difference” model. That in fact means a fixed price for sustainably generated electricity. During parliamentary questions, various parties responded enthusiastically to the contract for difference model, and there would seem to be fairly broad support for offering security to wind farm developers. The Government already undertook last November that the amended Offshore Wind Energy Act would not make that impossible, although the Government was not enthusiastic. The Minister of Economic Affairs and Climate Policy, Eric Wiebes, said at the time that “a complex legal process” would be required, which he found undesirable. Nor, according to the Minister, would it provide the market with any incentive to construct the necessary wind farms without being subsidised. It is questionable, however, whether that is in fact correct. A fall in the price of electricity provides money for the developer, whereas a rise costs it money. If the expected electricity price is higher in the long term than the fixed price, then a fixed price for renewable electricity will automatically become superfluous.

Click here to read the parliamentary bill.
Click here to read the report of the hearing.

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