Dutch fall out of love with windmills

When the Netherlands built its first sea-based wind turbines in 2006, they were seen as symbols of a greener future.

Towering over the waves of the North Sea like an army of giants, blades whipping through the wind, the turbines were the country's best hope to curb carbon emissions and meet growing demand for electricity.

The 36 turbines -- each one the height of a 30-storey building -- produce enough electricity to meet the needs of more than 100,000 households each year.

But five years later the green future looks a long way off. Faced with the need to cut its budget deficit, the Dutch government says offshore wind power is too expensive and that it cannot afford to subsidize the entire cost of 18 cents per kilowatt hour -- some 4.5 billion euros last year.

The government now plans to transfer the financial burden to households and industrial consumers in order to secure the funds for wind power and try to attract private sector investment.

It will start billing consumers and companies in January 2013 and simultaneously launch a system under which investors will be able to apply to participate in renewable energy projects.

But the new billing system will reap only a third of what was previously available to the industry in subsidies -- the government forecasts 1.5 billion euros every year -- while the pricing scale of the investment plan makes it more likely that interested parties will choose less expensive technologies than wind.

The outlook for Dutch wind projects seems bleak.

COUNTRY OF WINDMILLS

For centuries, the Netherlands has harnessed wind power, using windmills to drain water from low-lying marsh and turn it into arable land.

Now however, one of the most densely populated countries in Europe -- with 489 people per square kilometer (0.6 miles) compared to 356 in Belgium or 192 in Luxembourg -- is falling out of love with its iconic technology.

Arguments over the high cost and maintenance of sea-based turbines, as well as complaints from residents about unsightly land-based models, have brought the Dutch to an impasse.

Offshore wind farms produce more electricity than onshore ones but it costs twice as much as onshore wind power due to the higher cost of materials, more expensive drilling methods, and more complex maintenance.

Wind turbines in the sea need to be more robust to withstand strong winds and salt water; their maintenance some miles away from the coast requires special equipment and transportation.

Drilling the seabed is more expensive as it requires a specialized workforce and equipment. Then there's the additional cost of connecting the offshore farms to the grid.

Onshore, wind turbines face local resistance.

In 1994, a group of entrepreneurial farmers around the Dutch town of Urk got together and decided to build the country's largest onshore wind farm with 86 wind turbines nearby. Maxime Verhagen, then minister for economy, innovation and agriculture, said this would be enough to supply 900,000 people.

The project has since been adapted to meet changes in legislation and 20 years after it was launched, construction may finally start this year and be completed in 2014. The only thing holding up the project now is a lawsuit filed by local residents. They say the 30-meter-high wind turbines will spoil their views.

"If we have wind turbines here this old picture will be destroyed," said the mayor, Jaap Kroon. "We are also concerned about the safety and noise."

Ironically Urk itself used to be an island until windmills were used to drain the surrounding land and connect it to the mainland. The Dutch Wind Energy Association says about half the country's onshore wind projects such as the one in Urk are disputed.

"People don't want big wind turbines in their backyards," said Kasper Wallet, an energy consultant. "They think it will impact the value of their property."

SHORT-TERM SAVINGS?

Renewable energy meets just four percent of the Netherlands' total energy consumption. That makes the country's target for its share to rise 14 percent by 2020 challenging enough.

"We have come to the conclusion that the most likely targets with the current policy to be reached will be in the range of 8 to 12 percent," said Paul van den Oosterkamp, manager of the Energy Research Center of the Netherlands (ECN), an independent institute for renewable energy.

Under the government's new system aimed at attracting private sector involvement, known as SDE+, investors will be able to apply in four phases to participate in renewable energy projects, with government subsidies set between 9 and 15 cents per kilowatt hour of produced electricity they produce.

A spokeswoman for the ministry of economic affairs, agriculture and innovation said this would not cover the current subsidy cost of offshore wind projects.

"Some technologies like offshore wind, tidal and wave energy and solar are on average more expensive than the SDE+ maximum cost price," said Esther Benschop in an email to Reuters.

Dutch power firms say wind remains key to meeting green energy targets but is still too expensive for them to manage alone.

Dutch grid operator TenneT, which became a major player in German electricity transmission after it bought E.ON's high-voltage grid, has complained about the cost of connecting offshore wind farms to the national grid because of the expensive materials, particularly cables, involved.

It currently has nine projects in Germany involving wind farms where it has run into financing difficulties and is seeking a stakeholder.

Nico Bolleman -- managing director of Netherlands-based Blue Technologies, a company which develops platforms for offshore wind turbines -- says fairer comparisons need to be made when calculating the cost of wind power.

"Even if you take everything into account, wind energy is not expensive. Take into account the hidden costs of fossil fuels. For example, transport of coal generates more carbon dioxide emissions and no-one calculates that into the electricity price."

Others insist the negative impact will be short-term.

"The new subsidy scheme is not supportive, (but) offshore wind is a long-term game," said Greven Hein, spokesman for Dutch utilities firm Eneco, recently given subsidies to build a 129 megawatt offshore wind farm.

"In a couple of years it will be back on the agenda."