Dutch Pull the Plug on Offshore Wind Subsidies

Published December 30, 2011

The nation known for its iconic windmills is throwing in the towel on offshore wind power, as Dutch officials have determined the Netherlands can no longer afford large-scale subsidies for expensive wind turbines that cannot produce electricity at economically competitive prices.

The decision is a powerful blow against renewable power advocates who have long asserted Holland proves renewable power can be practical and economical.

Offshore Wind ‘Very Uncompetitive’
“Offshore wind remains a very uncompetitive option,” Dutch Minister of Economic Affairs Maxime Verhagen told Wind Directions: The European Wind Industry Magazine.

“Offshore wind remains a very expensive option in the near future. The Dutch government is willing to invest in innovation to bring down the costs of offshore wind energy, but prices must come down considerably before large scale investments can again be supported,” Verhagen was quoted as saying.

Despite large subsidies from the Dutch government, wind power provides merely 4 percent of Dutch electricity. With government pulling the plug on subsidies for offshore wind power generation, that number is likely to shrink further.

Offshore Cost Factors
Winds off the coast of the Netherlands and other nations often are more suitable for wind power generation than land-based sites, but it is more expensive to build and maintain wind farms offshore than on land. Drilling the seabed to support turbines is difficult and expensive; salt water and salt air corrode offshore turbines very rapidly; accessing offshore turbines for regular maintenance is costly; and connecting offshore turbines to the power grid presents unique challenges.

The Netherlands will continue to subsidize land-based wind turbines, but public opposition is growing against the large turbines that many say are blighting the landscape and posing special health risks.

“Even if it is accepted that carbon dioxide outputs should be reduced, governments have gone about this in a very inefficient and expensive way,” said economist Philip Booth, program director of the UK’s Institute of Economic Affairs. “They must wake up and appreciate the cost—both financial and environmental—of their energy policies.”

Offshore wind turbines came online in the Netherlands in 2006 and cost Dutch taxpayers more than $5 billion last year.

Subsidies ‘Despicable’
“This just shows the folly of government subsidies,” said Julian Morris, vice president of research at the Reason foundation. “Transferring the cost to consumers is despicable. If companies are not able profitably to generate electricity without subsidies or other forms of coerced payments, they should not be generating electricity—period.”

“It’s a climatic fact that during some of the coldest periods in Europe, the wind doesn’t blow, so you need the backup of other energy sources anyway. Maintaining both [wind and conventional power generation] is expensive and inefficient,” said Eamonn Butler, director of the UK-based Adam Smith Institute.

“With markets and currencies collapsing around their ears, the people of Europe are wondering why they should provide subsidies for expensive ‘green’ initiatives that don’t actually work,” Butler explained.

Track Record of Failure
Matthew Sinclair, director of the UK TaxPayers’ Alliance, predicts further cuts are on the way. “Cuts in subsidies for wind power in the Netherlands are just the latest example of a trend across Europe as politicians reluctantly acknowledge that subsidies for renewable energy are much too expensive. Further cuts are almost certainly still to come as the affordability crisis in the European energy sector unfolds,” he said.

“Those who defend wind always point to some far-off country as an example of how successful it can be,” noted British environmental journalist James Delingpole, author of Watermelons: The Green Movement’s True Colors. “‘Look at Spain! Look at Germany! Look at Denmark! Look at the Netherlands. . . !’ they say.

“But in every case, when you actually look at the details, you discover that in each one of those shining examples, the wind energy experiment has driven up utility prices, increased taxes, caused power surges or power shortages, damaged the environment, and enriched the very few at the expense of the many,” Delingpole said.

D. Brady Nelson ([email protected]) is a Milwaukee-based economist.