Last week, the Dutch Minister of Economic Affairs, Mr Kamp, presented emergency legislation in respect of the offshore power grid and onshore wind farm development to Parliament. The new draft bill became necessary after the Senate’s dismissal of the comprehensive overhaul of the Power Act and Gas Act (the “STROOM” package), late December.
The proposed “Act Wind at Sea and Land” is an attempt to safeguard that the planned two offshore wind tenders (the “Borssele tenders”) can be held in this year. If so, they can be counted against the Dutch stated ambition of 14 % renewable power in 2020.
The proposal takes various essential rules from the STROOM package and adapts them to operate in the context of the current Power Act and Gas Act. It is the Minister’s intention to discuss this draft in Parliament before April 19 and put it on the statute books before April 1. In case the proposal cannot pass through both Houses of Parliament in such an expedient manner, the two tenders will have to be postponed and the Dutch 2020 renewable target cannot be met. As the Minister does not wish to increase the frequency of the tenders, this will also have a detrimental effect on the timing of the subsequent tenders and thus the achievement of the Dutch 2023 targets.
The draft creates the regulatory framework to: (i) create an offshore grid, (ii) appoint the Dutch TSO, TenneT, as grid operator of such offshore grid, (iii) pay damages related to construction delays and interruptions in the connection, and (iv) expedite and facilitate the connection of onshore wind farms.
To that end, the proposal calls for a Governmental development framework, that can be used by the offshore grid operator to devise its quality and capacity plan. The framework defines the grid operator’s functionality and evaluates costs, zoning and environmental aspects and the consequences to the grid operator. The first framework will run up to 2023 and is based on the 3450 MW offshore target contained in the 2013 Energy Accord. The proposal also holds several changes related to socialization of onshore grid investments.
The proposal creates a liability regime for the grid operator in relation to construction delays and interruptions in power transportation. It puts a best efforts obligation on the developer and the grid operator to coordinate their construction planning. In case the developer is not delayed and construction delays occur in respect of the grid despite the efforts to coordinate, certain consequential damages, as well as lost - and deferred income, will be compensated. These costs are set out in further detail in a Ministerial Decision and will include costs like extra storage costs, extra financing costs and vessel reservation costs. Lost subsidy revenues will in principle not be compensated, as will non-availability costs related to the customary maintenance.
The proposal contains various changes to the tariff system intended to avoid that the energy intensive industries would be charged disproportionately for costs related to the construction of the offshore grid. Such costs will henceforth be funded by a direct subsidization scheme. The proposal provides that damages paid by the offshore grid operator shall be reimbursed by the national TSO, except in cases of gross negligence. Finally, various changes are proposed that reduce the financing cost of offshore grid related capex.