Today, the Amendment to the Offshore Wind Energy Act of the Ministry of Economic Affairs and Climate will be published. With this act, the minister regulates the roll-out of offshore wind until 2030. The wind sector is currently building wind farms at sea without subsidy, and would like to continue to do so. Long-term certainty about the development of demand is crucial here. This requires strict government control. NWEA has three suggestions for strengthening the act. The wind sector warns for the risk that the roll-out of offshore wind will slow down sooner or later. This also jeopardizes the crucial contribution of offshore wind to achieving the climate objectives. Let alone that this law could accelerate the sector to achieve the 55% reduction target.
NWEA is pleased that the minister has included the option in the memorandum of changes to tender lots for 40 years. This makes the business case for offshore wind farms more profitable and ensures cheaper green electricity. The minister also recognizes that it is crucial that supply and demand (especially in industry) are better linked. This is evident from, among other things, the AFRY report and the recent InvestNL report.
At the same time, NWEA is still very concerned about the development of demand, especially in relation to the chosen tender method. This places the risks entirely on the wind sector, while the uncertainty about the development of demand is strongly determined by government decisions. The wind sector has shown in recent years that it can build at increasingly lower cost price. That makes wind the cheapest green source. At the same time, the potential for that demand is enormous, as approximately 90% of the Dutch energy supply is still based on fossil energy. With the approach proposed in the law, the government ignores the principle that the risks can best be placed with the party that can influence them most. NWEA asks the government to steer more tightly on demand development and to take more control here. That is possible and it must be to keep up the pace.
Proposed changes to the law
That is why NWEA advises to amend the bill on three points. Firstly, by incorporating the option “Contract for Difference”. Due to the low risks, the social costs of this system are low and any surplus profits are returned to the government. Several other countries are using this system. This disrupts the level playing field in this international market.
Second, by adding an option to the law that combines an auction with a reserve price. This ensures the development of offshore wind farms and when high returns are expected in advance, these will translate into higher bids in the auction. This will flow to the State.
Thirdly, by legally anchoring the monitoring of market conditions. This ensures that prior to choosing a tender instrument, the current market conditions are carefully considered on the basis of independent research.
Finally, the wind sector is asking to get started as soon as possible with the combination of tenders with electrification. The basic idea is that a tender will be launched in which parties submit a proposal that includes both the wind project and the consumption of the electrons or hydrogen in their bids.
Read the full letter from NWEA to the EZK Committee in the House of Representatives here (in Dutch).