4.3.1 Aims, definitions and developments All global scenarios indicate that renewable energy will have an increasingly important part to play during the next century. In order to be well prepared for this, the Third White Paper on Energy includes a specific target for renewable energy. This target is developed in more detail in the action programme The Advance of Renewable Energy32and measures are set out in order to achieve it. The target was and still is that by the year 2020, 10% of energy consumed in the Netherlands must be supplied from renewable sources. In the recent
Implementation Policy Document on Climate, a target of 5% is set for the year 2010.33
32Parliamentary Papers II, 1996/97, 26 276, no. 1
33The progress report Establishing Renewable Energy states that the definition has now been refined: plastic fractions in waste and industrial heat
pumps are no longer classified as renewable energy, but as energy conservation. This change has a neutral effect on the CO2balance. The target
for renewable energy should, strictly speaking, be reduced from 10% to 8% as a result of this change in the definition. The Cabinet considers, however, that this would give out the wrong signal, and is therefore still aiming for 10% renewable energy by 2020.
Future developments and costs
KEMA and ECN recently carried out a study on the expected development of renewable energy in the Netherlands34to update the studies dating from several years ago. For the year 2000 ECN expects the share to be 1.3%. The two institutions respectively concluded that the share of renewable energy produced within the Netherlands by the year 2010 would be 2.6% and 3.7%.35According to these same institutions, additional policy measures and imports of renewable electricity could bring the target of 5% by 2010 within reach. It is also clear that the facilities for renewable energy in the energy tax will be vital in encouraging the growth of renewable energy. A rough comparison shows that the additional cost of 5% renewable energy as compared with fossil energy is about NLG 2.5 billion per annum.36Partly for this reason it is important to focus on the cost-effectiveness of options when making efforts to establish renewable energy.
4.3.2 Demand, supply and directions of policy
In March 1999 the Lower House voted in a motion37in favour of a compulsory share of renewable energy, combined with the introduction of a system of green certificates. By doing this the House indicated that it considers the time is right to make use of the legal possibility of making renewable energy compulsory, at least in part. This was once again emphasised in the Lower House in the debate on the Implementation Policy Document on Climate Policy. The AER has also spoken out in favour of an obligation in its recommendation on renewable energy.38
34 See: ECN, De bijdrage van duurzame energie in Nederland tot 2020, 1999
35 KEMA 1999, Stimulering duurzame energie, 1999. KEMA does not assume any technological progress, but ECN does.
ECN therefore arrives at a higher share of renewable energy.
36 ECN (1999) and calculations by the Ministry of Economic Affairs, April 1999.
37Motion by Dutch MP Crone and co. (Parliamentary Papers II, 1998/99, 26 303 no. 55)
One important question is whether an obligation is the answer to the slow growth in renewable energy and whether this instrument will bring the target of 5% by 2010 and 10% by 2020 any closer. In order to answer this question properly, a number of studies have been carried out for this
Energy Report:
• A market survey to gain an accurate view of the potential demand for renewable energy. This survey was used to assess how much support there is among private consumers and businesses for buying eco-power.
• A study on the supply of renewable energy. Renewable energy policy can only succeed if renewable energy is actually on offer. The study was used to analyse the problems in more detail.
The demand for renewable energy
In addition to the supply, the potential demand for renewable energy among consumers and businesses is important in defining its potential in the market. A market survey has been carried out in order to gain a clearer picture of the potential demand. This survey focused on the price that people are willing to pay for eco-power, the degree of support for eco- power and the importance attributed to government policy in this area.
As regards the level of interest and willingness to pay for eco- power, the survey showed that more than 40% of those businesses and households who are not buying any ‘green’ energy at the moment would be willing to buy it at the current higher price (which, offset against the zero energy tax tariff, comes out a few cents above the price of ordinary electricity). The majority of households and businesses rejected an obligation to buy ‘eco-power’. In surveys of this type, some distortion due to the need to give socially acceptable answers must be taken into account. However, even if only one-quarter of the indicated potential is genuine, this means that more than 750,000 Dutch households and over 50,000 businesses are willing to buy ‘green’ energy at the current higher price or even slightly more. Support for the voluntary use of renewable energy is therefore considerable. Simply realising the potential demand mentioned above could double the consumption of renewable energy.
The supply of renewable energy
Of the various types of renewable energy, biomass and wind energy are the most attractive in the short term: the technologies used have been more or less fully developed, and the price of the power produced (including the tax benefits) is competitive under normal market conditions. In practice, however, the supply of renewable energy is lagging behind. This was the reason for commissioning the Ecofys agency to study what hindrances to supply exist in practice and how these can be remedied.40
Solar energy
In the longer term, solar energy (solar PV) is a promising renewable option. Although there are already
approximately 77,000 solar panels installed in the Netherlands at the moment, solar energy still accounts for a very small proportion of the electricity supply (0.01%). This is because solar PV is still too expensive to achieve a real breakthrough. A single kilowatt-hour of solar power costs about NLG 1.35, as compared with a price to the end user of approximately NLG 0.25 for electricity generated by ordinary (fossil) fuel. In order to equip a home with solar cells to supply all the electricity it needs, an investment of more than NLG 50,000 is required.
In order to achieve a breakthrough the price of solar PV must be brought down considerably. Manufacturers are investing heavily in research and development in order to save costs and increase production through
automation. They are expecting that the price of solar cells can be reduced by a factor of three or four within a few years.
The government is investing in research into new, improved solar cells and is funding demonstration projects. Practical experience is therefore being acquired in built-up areas (for example in Amersfoort-Nieuwland). The annual government budget for solar PV is
approximately NLG 50 million. Over the next few years the government will be devoting more attention to encouraging the market introduction of solar PV. Novem is allocating a budget of NLG 6 million this year to the development of small network-linked systems for individual homes.
Solar power is still much more expensive than electricity generated in conventional power stations. A growing interest in the market for solar power, combined with the possibility of a further drop in prices, however, make this a very promising market.
39 See: Intomart, De vraag naar groene energie, 1999
100% eco-power
Since August 1997, 20% of electricity consumed by the Ministry of Economic Affairs consists of eco-power. The core Ministry accounts for approximately 3 million kWh per annum in all. As a supporter of eco-power, the Ministry recentlprecently decided to make the transition to 100% eco-power.
According to Ecofys, the supply of wind energy from onshore locations could increase fourfold in ten years to 55 PJ if licensing procedures are accelerated, if the burden of proof concerning conflicts with local zoning plans is reversed and if local authorities themselves take more active steps to look for and identify locations for wind turbines.
According to Ecofys, in ten years the supply of energy from biomass in the Netherlands could increase sixfold to a total of 80 PJ if renewable heat is rated more highly in the existing ‘eco-power’ system, if flexible emission requirements are imposed on biomass power stations and if the image of waste as an energy source is improved.
In both cases the continuation of the existing tax incentive schemes, and certainly also the eco-label system for distribution companies after 2000, will be vital. Together with the opportunities in local and individual markets, Ecofys considers that it should be possible to achieve a supply of 5% renewable energy by 2010.
The development of biomass as a renewable energy source depends, among other things, on the availability of biomass, including the non-plastic fraction of waste. Not only the supply and demand of biomass have a part to play here, but also the link with policy on waste and the emission requirements imposed on biomass installations. More stringent requirements in relation to waste result in additional costs, efforts and processing time. It is therefore desirable to make a clear distinction between biomass streams for energy generation that are and are not classified as waste. The existing legislation and regulations on emissions for biomass installations is unclear and leads to local differences in the approach to the use of biomass in the energy supply.
In order to promote the optimal use of the various biomass streams, it will therefore be important to eliminate any lack of clarity and limit uncertainties. The Ministries of Housing, Spatial Planning and the Environment and Economic Affairs are currently working on the definition of specific emission requirements for the use of biomass as a fuel.
Other forms of renewable energy have not yet been fully developed, and are therefore still too expensive (electricity from sunlight), or else they only form one potential part of a range of measures to limit the use of fossil energy. In this sense heat pumps and solar boilers are competing with energy conservation measures, particularly in built-up areas. In the longer term (over ten years), electricity from sunlight (solar PV) has the potential to make a major contribution towards the energy supply. Due to the high price of solar PV, it is not used very much at present (approximately 7 MW of installed capacity), but through a combination of research, development and demonstration projects this option will be given firm support over the next few years. The government spends NLG 50 million on this every year.
Obligation or no obligation?
The introduction of an obligation to buy renewable energy is attractively simple. It would seem to be easy to achieve and to offer a guarantee that the targets will be met. This is, however, illusory.
• A compulsory share of renewable energy is focused on the demand. Research has shown that this is not where the main problem lies. The real problem is in the supply: administrative problems (locations) are hindering the growth of wind energy; unclear and probably excessively strict environmental legislation on biomass emissions and lack of clarity about what should and should not be classified as waste could hamper the growth of biomass; high costs are an obstacle to rapid growth of photovoltaic conversion of solar energy (solar PV). An obligation will not solve these problems;
• Higher demand with supply lagging behind will only result in higher prices.
• In principle, European legal stipulations limit the possibility of providing support (subsidies and preferential tax treatment) to renewable energy.
• While support for eco-power is considerable within the context of the existing voluntary approach, an obligation will not enhance motivation. Certainly not if it results in an increase in the cost of eco-power to users.
• Finally, in order to be able to create an obligation, an effectively functioning system of green certificates would be necessary. The introduction of green certificates is unique in Europe and in the world. This means that we cannot learn from the experience and mistakes of others. It therefore does not make sense to link an obligation to such a new system from the outset.
40 See: Ecofys, duurzame energie in de aanbieding, 1999
Wind energy
There are currently approximately 380 MW of wind turbines in operation. At the end of the 1980s the policy target was set at 1000 MW by 2000. The Ministries of Housing, Spatial Planning and the Environment and Economic Affairs concluded a voluntary agreement in 1991 with the seven windiest provinces. It was found that the locations for wind turbines are often designated at the regional planning stage, but then fail at the local land-use planning or planning permission stages, or during the environmental licensing procedure. This shows how important it is to enhance support at regional and local level. The Renewable Energy Project Agency and Novem are working on this by providing information and support to local authorities. Integration into the electricity network sometimes also presents a problem. Windmills are often situated in sparsely
populated areas where integration into the network is difficult.
The conclusion is that preference should be given to an option where an obligation focuses not on the demand, but on the conditions determining the supply. At the same time it is also clear that efforts need to be considerably stepped up. We shall consider this in more detail in the sections below.
4.3.3 A promising approach
Encouraging renewable energy will require a great deal of extra effort in the following areas:
• Encouraging demand.
• Encouraging supply, for example by resolving administrative problems.
• Developing a system of green certificates; and • Imports.
Encouraging demand
The energy tax will increase sharply on 1 January 2000 and on 1 January 2001 (see table 4.1). In time, this will compensate for the MAP when it is withdrawn in due course. There is a lot of interest in renewable energy. Power companies are noticing that the eco-power they offer is being snapped up. It is expected that the stimulus created by the zero tariff for eco- power will boost interest still further. It is important, however, that this scheme should be brought to the attention of private consumers and businesses. In the past, power companies have been quite reluctant about this, partly due to the limited supply. Efforts to increase the supply will therefore also have to be accompanied by effective marketing of eco-power. Encouraging supply
Although there is an adequate potential supply of renewable energy at an attractive price, its development is lagging behind expectations. As indicated in the action programme The Advance of Renewable Energy, the removal of administrative obstacles will be the priority during the next few years. New campaigns are:
• Onshore wind energy, large-scale
Identifying locations for wind parks of at least 50 MW through a partial revision of the Electricity Supply Structure Plan. This will happen as far as possible in consultation with the provincial administrations involved and making use of new opportunities available under the Town and Country Planning Act.
• Onshore wind energy, small-scale
Legislation will be prepared to force local authorities, if necessary, to create the required space for wind energy facilities. Within the framework of preparations for the Fifth Policy Document on Town and Country Planning, it will also be investigated whether it may be useful for the provinces to manage the licensing procedure for wind energy projects.41
• Offshore wind energy
Preparations for a 100 MW near-shore project are progressing apace. Work is also continuing on removing administrative and legal obstacles to the construction of large offshore wind parks, so that the huge potential of these, 4000 to 6000 MW according to Novem, can be unlocked.
• Biomass
Work is being done in consultation with the Ministry of Housing, Spatial Planning and the Environment on the definition of specific emission requirements for the use of biomass as a fuel. This project is linked with the National Waste Management Plan, to be drawn up in 1999/2000, which promotes the processing of combustible materials in installations with optimised energy efficiency. • General
Chapter 3 refers to the efforts to allow all players in the market to offer eco-power from 1 January 2001. Consumers currently based in a delivery area where the supply of renewable energy is inadequate will be able to buy renewable energy elsewhere.
Green certificates
KPMG has been commissioned by the Ministry of Economic Affairs42to carry out a study into the possibility of setting up a system for tradeable green certificates. Green certificates are a kind of certificate of guarantee for renewable energy. The study showed that a system based on voluntary purchase is simpler to set up than a compulsory system. It is possible to integrate this with existing information systems for the measurement and calculation of electricity and gas
consumption. This means that the additional cost of setting up the system can be limited. On the basis of this study a project will be started up soon to develop a system of tradeable green certificates for electricity, gas and heat. This system should become operational in 2001.
Imports
Imports of renewable energy are already taken into account in the Third White Paper on Energy. Of the 288 PJ of renewable energy expected in 2020, 18 PJ should come from imports. It is not yet clear how large the international market for renewable energy is. Countries are increasingly setting their own targets and will prefer not to export their renewable energy.
International trading in renewable energy may, however, have an incentive effect: countries with more facilities to produce renewable energy can sell it in countries that are not able to produce as much.
41The AER has also recommended measures along these lines in its recommendation ‘Government policy for the long-term energy supply’.
Finally
Renewable energy is growing, but not fast enough. The supply and the cost are both significant problems. A lot of new policy will be put in place in the near future, following the broad guidelines set out in this chapter. This new policy can be expected to make possible a sharp increase in renewable energy during the period up to 2002. We therefore expect to be on target to achieve 5% renewable energy by 2010. The evaluation in 2002 will determine whether the existing range of