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Dutch want more after offshore wind tenders deliver the goods

DISPATCHES | The success of its first tenders bodes well for offshore wind in the Netherlands unless political upheaval gets in the way, says Bernd Radowitz

The current series of Dutch offshore wind tenders built up a head of steam after two spectacular 700MW auctions this year produced rock-bottom prices that were a game changer for the industry.

The conditions in the Borssele area may have been particularly good, but even if low steel costs and interest rates were to rise again, no one really expects offshore prices to rebound to anywhere near their previous level.

It is also very likely that the industry can expect more big and exciting news from the Netherlands – unless elections in March were to destroy the Dutch offshore honeymoon.

At a workshop in Utrecht last week on the next auction in 2017 for the 700MW Hollandse Kust South 1&2 zone organised by the Netherlands Enterprise Agency, the more than 100 participants present showed a lively interest in the upcoming tender even if not all details are set in stone yet.

In a typical Dutch pragmatic attitude, the government showed that it is advanced in its preparations not only for the next tender, but also way beyond that.

The key question the offshore sector wants answered as soon as possible is what will happen after 2019 when the last of five 700MW offshore tenders from the current series has been carried out.

There are no official statements by the government in The Hague, but it became clear that the current administration under Prime Minister Mark Rutte from the liberal People’s Party for Freedom and Democracy (VVD) is thinking about continuing its successful offshore wind policy with new tenders after 2019.

The government by year-end may make the first suggestions on what shape Dutch energy policy could take after a current cross-party energy pact runs out.

But given general elections on 15 March for the Dutch parliament, the administration is understandably cautions over giving too concrete news or targets.

The big unknown is just how big the right-wing populist Party for Freedom (PVV) under their leader Geert Wilders will become. Wilders in the past has denounced a “climate hysteria” among the established parties and called climate policy a “leftist hobby of the elite”.

Borssele 3&4 on track to deliver lowest offshore wind price

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In a poll last week published in the De Volkskrant newspaper, Rutte’s governing VVD came out just above the PVV – although both were able to garner less than 20% of voter intention.

Rutte’s coalition partner, the once-mighty Labour Party (PvdA), currently can count on less than 10% of the vote, which sets up very complicated coalition negotiations even in the best case during the spring of 2017.

None of the established parties want to form a government with Wilders, but after the Brexit vote and Trump’s election eroded the faith in opinion polls, fears about a Dutch government led by an anti-immigrant climate skeptic are increasing.

If Widers can be contained, hopes are high for a successful continuation of the Netherlands' current progressive renewables policy and an expansion of the offshore wind programme is likely.

A so-called “transition coalition” set up by 39 companies is pushing for a faster, more ambitious energy transition in the country. It wants concrete climate targets for 2030 and 2040, a new national development bank for green energy projects, and a bundling of economics, the climate and energy issues into one ministry.

Among the companies are heavyweights such as Siemens, Dutch utility Eneco and oil major Royal Dutch Shell.

Shell, which has traditionally been very influential in The Hague, is trying a come-back in offshore wind and seems to be lobbying the government behind the scenes to boost the country’s offshore capacity several times above the 4.5GW in accumulated capacity targeted for 2023.

Shell currently is cautious about giving concrete details about its offshore wind strategy, but that could change after the winners of the recent 680MW Borssele 3&4 tender are announced.

After the Netherlands was this year's star of the global offshore wind industry, it may very well be in for more positive surprises in 2017.

In Dispatches, Recharge journalists offer a personal insight into the issues shaping the development of renewable energy around the world

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