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Combatting the impact of the coronavirus on the Dutch renewable energy sector

09/04/2020

It may be premature to determine the long-term impact of the coronavirus on the environment. In the short term, some of the emergency measures undeniably have had a positive environmental effect, but they have also raised a number of questions and concerns about renewable energy projects.

This article addresses a few of the key issues the Dutch renewables sector faces as a result of the coronavirus, together with the measures proposed, or being considered, by the Dutch government to support the renewables sector.

Recognition as a vital sector

To limit the impact of the coronavirus, the Dutch government calls upon everyone to work from home as much as possible. An exception is made for ‘vital sectors’ that are allowed to continue business to support the country. Such vital sectors include the health, social services, food, transportation, education, media and communication sectors.  

It was, however, unclear whether renewable electricity producers are considered a vital sector. At the request of the Dutch Association of Wind Energy (NWEA), the Ministry of Economic Affairs and Climate Policy clarified this by confirming that the sector is indeed considered vital. Consequently, corrective and preventive maintenance can still be performed during this crisis period. In addition, suppliers and service providers that play an essential role in the continuation of electricity production are also considered to be vital. 

Project delays jeopardise subsidy entitlement

Due to the coronavirus, many construction projects face significant delays or have come to a halt due to labour shortages and disruptions of supply chains as a result of delays in equipment manufacturing and transportation embargoes. 

For renewable projects in the early development phase, the result may be substantial delays in the permitting process since many local governments are closed or have their staff on a modified schedule for safety reasons. In addition, at this moment it is not possible to organise the usual consultation sessions with the local community. As a result, developers may fail to obtain an environmental permit in time for the 2020 autumn application round for the SDE++ subsidy. This means that they will not be able to participate in the autumn application round since an environmental permit is a prerequisite for participation.

A potential solution may be found in a postponement of the autumn subsidy application round that is currently scheduled to take place from 29 September to 22 October 2020, or alternatively to allow developers to apply for SDE++ subsidy on the basis of a design permit, instead of a formal permit. These two suggestions made by NWEA are now being discussed with the Ministry. 

Renewable projects that have already received a subsidy award decision but are not yet operational risk losing their subsidy entitlement, as due to construction delays, they may not be able to reach commercial operation within the period set out in their subsidy award decision. 

This is acknowledged by several parliamentary groups, who have requested the Minister of Economic Affairs and Climate Policy to grant a one-year postponement to projects with a subsidy award decision that requires them to become operational in 2020.

Other measures

Companies that face liquidity issues as a result of the coronavirus can request deferral of their tax payment obligations, including the Energy Tax and the Sustainable Energy Surcharge (ODE). As the crisis continues, more measures may follow.

Due to the crisis, new legislation will be postponed such as the amended Offshore Wind Energy Act, the new Energy Act and the Heat Act 2.0. There will also be a postponement of the government’s action plan to reduce greenhouse gas emissions to 25% by 2020 following the Urgenda decision by the Dutch Supreme Court, which ruled that the Dutch state had acted unlawfully by taking insufficient action to prevent climate change. Ironically, the required emission reduction has been achieved as a result of the crisis.

For more information on the impact of the crisis on renewable energy in the Netherlands, contact the local CMS experts.

 

Authors

Picture of Cecilia Weijden
Cecilia van der Weijden
Partner
Amsterdam
Maurits-Rabbie-CMS-NL
Maurits Rabbie
Advocaat
Amsterdam
Marcellina-Rietvelt-CMS-NL
Marcellina Rietvelt
Advocaat
Amsterdam