The Dutch government has presented a National Energy Accord for Sustainable Growth that seemingly represents a new national consensus on energy and climate policy. However, the Accord, which was negotiated by a wide range of civil society groups, environmental organisations, business lobbies and trade unions, has not been signed yet, and is still quite vague. Perhaps more important for “sustainable growth” prospects in the Netherlands is the news that the country will get the world’s densest network of fast-charging stations for electric cars. Energy Post editor Karel Beckman reports from his home turf.
Being based in the Netherlands, I sometimes tend to ignore the news that’s right under my nose, for fear of being accused of insularity. However, having returned from an off-the-grid holiday in Portugal, I found there was so much significant news to report from my home country, that I decided to dedicate my first post-holiday post to a round-up that I think will be of interest to readers everywhere.
I’ll start with the boring part – the “policy” side. The political landscape in the Netherlands has been decidely bumpy in recent years. Six cabinets in 10 years. I think it’s fair to say that the five previous mostly right-wingish governments did not give too much priority to promoting sustainable energy or energy efficiency, or indeed to the whole climate issue, resulting in climate policies that have been as volatile as oil prices and as “intermittent” as wind and solar power.
However, the new Right-Left coalition of free-market Liberals (VVD) and social-democratic Labour (PvdA) that started in November 2012, is showing a bit more ambition. This is no doubt owing to the influence of Labour, the minority party in the coalition and the second biggest party in the Dutch Parliament. Since March of last year, the PvdA is being led by Diederik Samsom, a former Greenpeace activist who ran his own “green” energy company before he went into politics. He has a degree in nuclear engineering and became something of a sensation in Holland at the time of the Fukuyama disaster when he appeared on numerous television shows to explain to the public what was happening in Japan. (A politician with a scientific degree!)
National Energy Accord
This does not mean, though, that Samsom and his Labour Party are going out on a limb to push the climate agenda. They are not taking any electoral chances. In fact, the climate and energy policy of the new cabinet seems designed to avoid political risk as much as possible.
What the government did was to ask the Social and Economic Council (SER), a high-level advisory body, to give an “Advice” on climate and energy policy. To be exact, the previous government did so in June 2012, but the new government repeated that request. Specifically, what the government asked the Council to do is give an assessment of the Dutch economy’s “adaptive powers in the light of climate change, rising energy prices, reduced availability of fossil fuels and global competition”. (Letter of Minister of Economic Affairs Henk Kamp to the Dutch Parliament, 28 November 2012).
The Council replied with an offer to do a lot more than that: it offered not just to give an Advice, but to concoct nothing less than a National Energy Accord for Sustainable Growth. The Council said it was time to end policy uncertainty once and for all. It would try to get all the chickens in one coop (business, labour unions, environmental organisations, think tanks, etc.) and hatch a big climate and energy plan that would enable the Netherlands to reconcile the seemingly irreconcilable and combine Sustainability with Economic Growth.
Signed by whom, you may ask? Well, it is better to ask who was NOT part of the negotiations.
Needless to say, the government was more than happy to consent to that plan: it would be a big victory if they could finally achieve national consensus on energy and climate. And national consensus is what now has been reached. Well, seems to have been reached.
On 12 July, right before the Parliamentary recess, the government triumphantly announced that an “outline agreement had been reached to come to a National Energy Accord for Sustainable Growth” (letter of Minister Kamp to the Dutch Parliament, 12 July 2013). The emphasis should be on the “outline”, however: the Accord has still to be worked out in more detail – and it has still to be signed, which is expected to happen at the end of August.
Old coal plants closed
Signed by whom, you may ask? Well, it is better to ask who was NOT part of the negotiations. They were conducted by four Committees of 20 people each, assisted by a secretarial staff of 20 people, and guided by a Steering Committe of another 13 people. A regular Who’s Who in Dutch energy. And if anyone was not part of these intimate deliberations, they could still be a member of one of the “sounding board” groups that were formed to provide input to the debate.
In view of the wide scope and background of the participants, you will not be surprised to hear that the “outlines” of the agreement that were made public by the government on 12 July were on the whole somewhat abstract. For example, Minister Kamp announced that “agreement has been reached over a cost-effective expansion of renewable energy that offers certainty for investors, creates jobs, stimulates innovation and helps to strenghen the competitive position of Dutch business”.
But Kamp had very few concretes to offer. The Accord says that private citizens can get a “tax discount” if they invest in “local renewable energy sources”. A “robust legal framework” will be developed for offshore wind power “before 2015”. A “comprehensive plan” will be made to make use of industrial waste heat. Efforts will be made to come to an “integral development of energy infrastructure that takes into account the increasing volatility of supply and demand”. Renewable energy must make up 14% of total energy consumption by 2020 and 16% by 2023: not news at all, as 14% is simply in line with EU requirements. “A broad range of measures” will be taken that should enable the Netherlands to “more than fulfill” the 1.5% annual energy savings requirement of the EU. In 2014 and 2015 all houses in the Netherlands will get an “energy label” – and if you think that’s impressive: this too is simply a requirement of another EU Directive that the Netherlands should have carried out long ago.
The Minister has even promised that the Accord will lead to a “substantially lower financial burden for business and private citizens”. Clearly, he did not want to ruin anyone’s holiday.
The most ambitious part of the Accord may be the promise that “old coal-fired power stations that were built in the 1980’s will be closed under certain conditions”. But it does not say which conditions. Closure of old coal plants will also “limit” the amount of biomass that can be used in coal-fired power stations, said Kamp – a demand that environmental groups have been particularly vociferous about. Kamp furthermore announced that the government will “take the lead in coming to a long-term vision on carbon capture and storage, while keeping in mind public acceptance”. Meaning they apparently don’t have such a vision yet, even if they have been talking about CCS for years. Interestingly, the transport sector – which one of the four Committees was dedicated to – is not mentioned at all in the Minister’s letter.
Apparently to ensure that no one would be offended by the Accord, Minister Kamp also wrote that investments will be made “in all possible options for renewable energy”. He emphasized that the government is not asking any sacrifices from the public: he said the Accord has the ”ambition to increase the economic value of the clean energy technology chain four fold by 2020”. He even promised that it will lead to a “substantially lower financial burden for business and private citizens”. (!) Clearly, Kamp did not want to ruin anyone’s holiday.
However, it seems that some specific measures have already been negotiated under the Accord, even if they have not been officially announced yet. The Dutch energy news agency Energeia spoke to several Committee members who are mentioned by name and who gave more details on what was agreed. For one thing, they say that five coal-fired power stations will be closed, but only under the condition that the existing Coal Tax is scrapped by the end of 2015 and all current legal procedures against newly to be built coal-fired power stations will be stopped. This last is unlikely to happen. A spokesman from Greenpeace, who are part of the Accord, tells Energy Post that this condition is out of the question. “We would never consent to that.”
The sources Energeia spoke to also say that the Accord includes a “pathway” to the building of 4,500 MW of new offshore wind power. This last, if true, would be by far the most remarkable – and concrete – measure to come out of the Accord. In recent years, the Netherlands has been very reluctant to spend too much money on offshore wind. The Dutch North Sea has only two small offshore wind parks at the moment totalling 247 MW compared to e.g. 380 MW for Belgium, 921 MW for Denmark and over 2,000 MW for the UK. Thus, the Accord would signify a major change in policy in this area – in fact, a return to old ambitions of previous Dutch governments who at one time wanted to build 6,000 MW of offshore wind in Dutch waters.
These (apparently) new Dutch offshore wind ambitions were given a big boost on 1 August, two weeks after the announcement of the Accord, when the Canadian sustainable energy producer Northland Power announced that it has “entered into agreements for the rights to acquire a majority equity stake in Gemini, a 600 MW offshore wind project” 85 kilometres off the Dutch coast.
So just when you thought that the Dutch can only talk and accomplish nothing without massive government subsidies – the new Dutch disease? – I am glad to say there has been another piece of news that shows some real entrepreneurial spirit.
Northland plans to take a 55% share in the €2.8 billion project, which also includes Siemens Financial Services (20%), HVC, a joint venture in sustainable energy owned by 48 Dutch municipalities and water regulatory authorities (10%), dredging and engineering company Van Oord (10%) and the “independent energy innovator” Typhoon Offshore (5%), a company founded and owned by Dirk Berkhout, specialising in “acquiring permitted North Sea offshore wind projects” and bringing those projects to fruition.
According to the consortium, if Gemini gets built, it will be one of the largest offshore wind farms in the world, producing “2.5 TWh annually – enough electricity to power more than 785,000 households”. By my calculations this means the companies are assuming that the wind farm will be operational 47.5% of the time, rather optimistic. They are also assuming households use 3184 kWh per year, which seems very modest.
If Gemini gets built, the Netherlands will at last be catching up with their neighbours when it comes to offshore wind. Obviously Gemini is heavily supported by the government, but how much public support the project gets exactly is not certain yet.
Northland states in its press release that the wind farm gets “a premium price [from the Dutch government] for the large majority of the wind farm’s output for 15 years”. How high this price is, it does not say. Nor, strangely enough, will you find this information in most media reports.
I checked with the Ministry of Economic Affairs and it turns out to be quite a complex matter. First of all, the government has made a reservation for a maximum amount of subsidy, namely €4.2 billion. This, at any rate is the amount that was allotted to the project in 2010, when the licence was still owned by a company called Bard. It is mentioned in a letter to Parliament from the then-minister of Economic Affairs Maxime Verhagen (13 February 2012). In another letter to Parliament from yet another ex-minister of Economic Affairs, Maria van der Hoeven (now Executive Director of the International Energy Agency), of 10 May 2012, an amount of €4.5 billion is mentioned. Again, that’s the maximum.
The exact amount of subsidy, however, is related to the wholesale electricity price level. The owners of Gemini are guaranteed an income of 17 eurocents per kWh for 15 years. The government makes up the difference between the wholesale market price (with a minimum of 4 cents per kWh) and this level of 17 cents.
Based on the current wholesale electricity price of about 5 cents per kWh in the Netherlands, the subsidy would amount to 12 cents per kWh. This means that under the current market circumstances, if Gemini produces 2.5 TWh per year, as it plans to do, it will get €300 million annually (for 15 years). However, if wholesale electricity prices go up, the amount of subsidy will go down. The subsidy scheme has been approved by the European Commission and will start running in 2016, regardless of whether Gemini is operational or not. So, for example, if the project becomes operational at the end of 2017, it will only receive a subsidy for 14 years.
Whaever the exact level of subsidy will turn out to be, it is likely to be quite hefty. It could easily run into several billion euros. What this means is that if the National Energy Accord will really include a target of 4,500 MW for offshore wind, and if these new wind farms are subsidised in the same generous way, there will not be much money left for other “options in renewable energy”. Not, that is, if the government will also keep its promise for a “substantially lower financial burden for business and private citizens”.
So just when you thought that the Dutch can only talk and accomplish nothing without massive government subsidies – the new Dutch disease? – I am glad to say there has been another piece of news that shows some real entrepreneurial spirit. The Netherlands will get the world’s largest (i.e. most dense) fast-charging network for electric cars. Yes, now we’re talking. Or maybe I should say: now we’re not talking anymore. We’re into the action.
The association of petrol station operators contested Fastned’s licence in court, arguing that they had an exclusive government permit to sell “transport fuels” at those locations.
The Dutch company Fastned has won a licence from the Dutch government to build 200 fast-charging stations throughout the Netherlands. They will be located “within 50 kilometres of all the country’s 16.7 million inhabitants”, says international engineering giant ABB, which has won the contract to build the charging points. For more technical information on the charging stations, see ABB’s press release.
Fastned is a start-up company owned by Michiel Langezaal and Bart Lubbers, who is the son of Ruud Lubbers, the longest-tenured Prime Minister the Netherlands has ever had, from 1982 to 1994. (Those were the days.) Ruud Lubbers has always had an active interest in energy: he is the founding father of the Energy Charter, one of the founders of the Rotterdam Climate Initiative and a former Chairman of the Energy Centre of the Netherlands (ECN). His son has shunned politics, but he owns a wide range of business activities, including interests in dealerships of electric cars and electric scooters. He started Fastned in 2011.
Interestingly, Fastned will build its fast-charging stations along the Dutch motorways right next to the existing petrol stations. In fact, the association of petrol station operators contested Fastned’s licence in court, arguing that they had an exclusive government permit to sell “transport fuels” at those locations. Recently, however, a judge ruled that their permit only extends to petrol and diesel, clearing the way for Fastned to become a direct competitor with the petrol stations.
Lubbers believes that his “countrywide network of locations will lay the basis for the commercially viable development of e-mobility.” He said: “I foresee a race towards faster charging and larger batteries throughout the car industry.”
Let’s hope so. From my part, I promise I will keep you posted.