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Dutch roadmap will reduce gas and see offshore wind provide huge increase in electricity

Mon 14 May 2018 by David Foxwell

Dutch roadmap will reduce gas and see offshore wind provide huge increase in electricity
By minimising risk and providing roadmaps for future development the Dutch Government has provided opportunities for industry

A debate about energy, climate issues and future energy policy in the Netherlands could see offshore windfarms rolled out at a greater rate than that envisioned in a recently published offshore wind roadmap

As recently highlighted by OWJ, the Dutch Government has unveiled an Offshore Wind Energy Roadmap setting out plans for the further development of offshore wind energy, including an additional 7 GW between 2023 and 2030.

Considering the windfarms that have already been built and those that will be built between 2019 and 2023 under the current tender scheme, the government aims to achieve an aggregate installed Dutch offshore wind capacity of approximately 11.5 GW by 2030.

The roadmap specifies which windfarm zones will be released for development in the Dutch sector of the North Sea, when this will occur, the projected generation capacity of these zones and when they will enter operation.

Windfarms to be developed in the coming years will be in three windfarm zones: Holland Coast (West), North of the Wadden Sea Islands, and IJmuiden Far Offshore (IJmuiden Ver).

Like the current roadmap for the period up to 2023, the new roadmap will provide guidelines for the further development of offshore wind energy for the period up to 2030.

Under the National Energy Agreement concluded in 2013, five offshore windfarms with a total capacity of 3.5 GW will be built in the Dutch sector of the North Sea until 2023, in addition to existing windfarms, which have a total capacity of 1 GW. The government plans to open tenders for the newly-announced windfarms in 2021 and the Ministry of Economic Affairs and Climate estimates that building them will create 10,000 jobs.

The plan set out in the roadmap is ambitious, but still more impressive targets for offshore wind could be set in the context of ongoing debate about energy policy, now that the Dutch Government has set out plans for a national climate agreement and an integrated national energy and climate plan.

Debate about the plan follows a February 2018 letter from the country’s minister of economic affairs and climate policy setting out the government’s objectives for the climate agreement. Importantly for renewable energy and for offshore wind, this includes an overall goal to reduce CO2 emissions by 49% compared with 1990 levels by 2030. The letter also contained guiding principles for achieving the CO2 reduction goal and focused among other areas on specific objectives for five sectors including industry, which has a relatively large CO2 reduction target compared with some others.

In an exclusive interview in early May, Netherlands Wind Energy Association director Berend Potjer told OWJ that the main aim of the roadmap was to provide long-term stability in the offshore wind energy market to encourage investment. “A previous roadmap successfully achieved this,” Mr Potjer explained. “Now the government wants to renew and extend this successful policy.”

As highlighted above, the new roadmap’s predecessor stipulated that five offshore windfarms should be completed by 2023, increasing Dutch offshore wind capacity to some 4.5 GW. The new roadmap calls for more offshore windfarms generating 7 GW to be realised between 2024 and 2030 but, as Mr Potjer explained, in the lead up to the overarching climate and energy agreement, industry bodies have been asked for input and for their views about future energy policy.

Within the context of this debate, Mr Potjer said, it is possible that targets for offshore energy could rise above those only recently set out in the roadmap.

“We believe that more ambitious targets are possible if certain issues such as grid connection are addressed by the government,” he told OWJ. “The minister asked us and others to make proposals that could help the Netherlands reach the 49% CO2 reduction target. It is our view that, rather than building out 1 GW a year until 2030, 2 GW a year is feasible given the right kind of support and the right kind of policy.

“One important issue that obviously would need to be addressed in order to make this possible is grid connection. The electrification of society is another,” he said.

As he also explained, there is a related energy issue the government in the Netherlands is wrangling with: the use of gas from gas fields in Groningen.

In March, the Dutch Government said it would phase out gas production from the Groningen field – once Europe’s largest – by 2030, because of the effects on infrastructure of small but damaging earthquakes caused by the extraction of gas from underground reserves.

The gas reserves in the province of Groningen have been exploited since the 1960s but as extraction has gone on, subduction has occurred, leading to the earthquakes. “This has led to some damage to infrastructure, hence the government’s decision,” Mr Potjer said.

“Extraction and its effects are one issue but playing into this is the debate about climate and energy and the desire to reduce CO2 emissions,” he said. “It will be possible for industry that uses it to find other sources of gas. The government wants industry to stop using Groningen. This will need the gas industry to restructure itself somewhat, but the question that is being asked is if the government wants to reduce CO2 emissions in the long-term, why not look for alternatives to gas now?”

As Mr Potjer also explained, organisations making submissions to the government about the climate and energy plan were also asked to provide input about costs and, with zero-subsidy bids becoming more common in northwest Europe – including the recent zero-subsidy deal for the Hollandse Kust Zuid offshore windfarms – offshore and onshore wind have both been identified as 'cost negative'.

The tender to develop the Hollandse Kust Zuid offshore windfarms two 350 MW windfarms to be built by 2022 that will be the world’s first to be built without public subsidy was won by Swedish energy company Vattenfall, a bid made possible partly as a result of the Dutch Government’s willingness to take on and manage a share of the project risk, in this instance assuming responsibility for grid connection.

As WindEurope chief executive Giles Dickson said when the result of the tender was announced, the Dutch Government has successfully minimised risk linked to offshore wind by providing clear visibility about future market volumes via the use of roadmaps. It has also committed to bring in a carbon floor price at national level which will help the business case for offshore wind.

Apart from playing an important role in framing future climate and energy policy in the country, the Dutch Government believes implementation of the new roadmap will provide a significant boost for Dutch business and the economy. It stated that this could amount to €15-€20Bn (US$18-24Bn) in investments and the creation of the 10,000 jobs mentioned above.

The Netherlands Enterprise Agency hopes to increase the Netherland’s market share in offshore wind energy (currently said to be 25% of the European market) and secure exports to Asia and the US. At the same time, it said, affordable sustainable energy will provide Dutch industries with a competitive advantage which will have a knock-on effect for related industries.

The Dutch Government also wants non-electrical energy consumption to become much more sustainable. This will require a transition to sustainable electricity for use in industry, heating and mobility. It will also lead to the manufacture of ‘green molecules’ such as hydrogen that have been discussed in the climate agreement negotiations.

Echoing Mr Potjer’s comments about what the NWEA sees as the long-term potential of offshore wind, the enterprise agency noted earlier this year when the roadmap was unveiled, that the government could designate new windfarm zones over and above those already designated when it sets out its vision for climate and energy later this year.

According to law firm CMS’ partner Cecilia van de Weijden*, apart from grid connection, one other issue that could affect the roll-out of new offshore windfarms is wildlife protection, primarily of seabirds, an issue that came close to blocking development of a quartet of high profile offshore windfarms in Scotland.

It is anticipated that the windfarms will use new-generation offshore wind turbines with capacity of at least 10 MW.

She explained that according to the roadmap, the envisaged 1.4 GW in the Hollandse Kust (West) area may be tendered in a single round, possibly in 2021, to facilitate further cost reduction. The offshore grid that connects windfarms in this area to the onshore grid may follow the same route as the connection from the Hollandse Kust (Noord) park. Combining the offshore grids offers several potential advantages, such as reducing the timescale for the licensing process, reducing harmful environmental effects from construction of the grid and making efficient use of offshore and onshore space.

A 0.7 GW windfarm in the Ten Noorden van de Waddeneilanden wind energy area will be located close to the Gemini offshore windfarm, she explained, noting that designation of this particular area for offshore wind responds to the ambitions of the province of Groningen to play a role in future sustainable energy scenarios. However, the offshore grid that will connect these windfarms will cross the Wadden Sea, which has been designated as a particularly sensitive sea area.

“The third wind energy area, IJmuiden Ver, is by far the largest, but the southern part of this area will not be used for the development of windfarms given its potential designation as a Natura-2000 site,” she said. “At the moment, no decision has been made on the capacity to be specified in individual tenders in relation to this wind energy area.

“According to the roadmap, the government is considering two tenders of 2 GW each (in 2023 and 2025) or four tenders of 1 GW each (between 2023 and 2026). In deciding on the optimal capacity per tender, factors to be considered include optimal capacity of the offshore grid, an expressed desire by certain parties for very large tenders, and the optimal windfarm capacity of 1 GW to 1.5 GW, as advocated by the wind energy sector.”

As highlighted previously by OWJ, the roadmap also considers construction of a small island out at sea as an alternative to large offshore high-voltage direct current platform, and a decision about the offshore grid design is expected later this year.

The roadmap also confirmed the Dutch Government’s desire to realise non-subsidised, zero-subsidy offshore windfarms as soon as possible and for this purpose a bill to amend the Offshore Wind Energy Act will be submitted to parliament shortly.

* The Dutch 2030 Offshore Wind Roadmap

 

 

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