Hans Bienfait sent me the following open letter in a comment, and asked for my thoughts on this proposal. I generally agree with this open letter. Therefore I am happy to reproduce it in full. I will add some comments at the end.
H.E. Mr. H. Kamp, Groningen, 2015, May 8th
Minister of Economic Affairs
2500 EK Den Haag
Dear Mr. Kamp,
In this open letter, the text of which will be available on our website, we request that supplementary to the Energieakkoord (Energy Agreement), you make SDE+ subsidy available for utility scale solar energy (PV farms) in Greece, with the aim to i) achieve the compulsory share of sustainable energy in 2020, ii) strengthen the Greek economy, which is also in the interest of the Netherlands, iii) create a new source of sustainable energy for Europe and in the long run for the Netherlands, iv) create jobs in both countries. A declaration of intent expressed at very short notice by the Dutch government that it wishes to help strengthen the Greek economy will have a positive effect on the current negotiations with Greece.
The necessary transition of the energy supply from fossil fuels to sustainable energy sources is increasingly being realized on a small, local scale. There is nothing wrong with that, were it not that decentralized production of energy in the densely populated countries of northwestern Europe is simply incapable of satisfying the demand of the local population. But, utility scale production of sustainable energy on own land and waters is equally incapable of achieving the same goal of a practically completely fossil-free energy supply. This fact has been convincingly demonstrated by professor David Mackay in his book Sustainable Energy – without the hot air. 1) In his capacity of Chief Scientific Adviser for the UK Ministry of Energy and Climate Change, MacKay has strongly influenced the energy policies of your colleagues in the UK.
The problems pointed out by professor Mackay are also relevant in the relatively short term of daily politics in the Netherlands. The Algemene Rekenkamer (Chief Audit Office) recently declared in its report Stimulering van duurzame energieproductie SDE+ 2) (Stimulation of sustainable energy production SDE+) that the Netherlands is very unlikely to attain the goals of the Energy Agreement if the course of action is not changed, and will thus fail to produce the results to which it has committed itself in the EU.
We propose that you supplement the energy policy formulated in the Energy Agreement. In so doing we see no reason to treat energy otherwise than we treat other economic goods. As a liberal you are undoubtedly aware of Ricardo’s Economic Law: “Produce a good at the location with the highest revenue, and let trade increase global prosperity.” Application of this law has resulted in enormously increased prosperity almost everywhere.
The output of sustainable energy production is closely related to geographical circumstances and thus to location. We look at onshore wind as an example. Wind turbines in Friesland have a markedly higher yearly output than they have in Limburg. In order to entice investors to build wind turbines in Limburg you have been compelled to increase the SDE+ base tariff in that province to around 30% higher than that for Friesland. Every wind turbine situated in Limburg instead of in Friesland is costing the Dutch energy consumer extra money for many years to come and is a contravention of Ricardo’s Law. This is justified by the necessity to share the inconveniences of the turbines fairly among the whole Dutch population.
Now we wish to bring another example to your attention which is far more important in terms of volume than onshore wind in the Netherlands: sustainable generation of electricity in Europe. Besides decentralized generation such as by solar panels on roofs and small isolated wind turbines, centralized generation is of essential importance. The most important technologies are offshore wind in Northern Europe and solar power stations in Southern Europe. Offshore wind in the North Sea has a reasonable potential, but the potential of solar power stations in Southern Europe is practically unlimited. For that reason PV power stations (fields with solar panels) and CSP power stations (fields with mirrors and a central receiver) play a leading part in the scenario’s of the International Energy Agency IEA. Yet investments in solar power stations in Southern Europe are completely absent in the Dutch Energy Agreement, regardless of the fact that EU regulations allow such investments to be included in the target, which is that 14% of the total Dutch energy consumption should be from sustainable sources by 2020. In order to determine whether the Energy Agreement is optimal, i.e. in accordance with Ricardo’s Law, the Energie Centrum Nederland (ECN, Dutch Energy Centre) has carried out a number of studies under the name RES4LESS 3). One conclusion is that the kWh cost of a CSP power station in Southern Spain is lower than that of a wind farm in the North Sea. Therefore we think it is strange that that there is no room at all in the Dutch program, as laid down in the Energieakkoord, for investments in utility scale solar energy in Southern Europe.
We have to conclude that the Energieakkoord contravenes sound economic principles that have held good for 200 years, and that the Dutch energy consumer will pay more than necessary for the financing of the 2020 target. In the case of onshore wind there is a valid reason for deviating from Ricardo’s Law. In the case of utility scale generation of sustainable electricity in Europe it is however our opinion that there is no valid justification for breaking this economic law. The employment argument is hardly relevant for Dutch labor because all projects are tendered internationally, as they should be in Europe. The Dutch business community can profit handsomely from investments in sustainable energy, on the basis of quality and the application of all technologies that are relevant and in which expertise has been built up. That includes technologies that are almost exclusively employed outside the Netherlands, such as utility scale solar power. It is well known that we happen to be surrounded by a large amount of foreign country.
We are fully aware of the fact that the Energieakkoord is a compromise, just as the government coalition agreement is. Nevertheless the Energieakkoord should be implemented energetically. But, given the probability that implementation of the Akkoord will not suffice for the attainment of the 2020 goal, we request that you take measures now to extend the Akkoord, and not to delay this until the evaluation planned in 2016. We request that during the extension options are also considered that are currently lacking in the Akkoord.
In the hope and expectation that you are receptive for our argument, and willing to consider the option of making the SDE+ subsidy available for sustainable energy generation in other EU member states, in accordance with the proposal put forward in the Audit Office report, we wish to draw your attention to one Southern European country in particular, namely Greece. In 2011 the government of Greece presented an ambitious plan, Project Helios, 4). This plan consists of the construction of PV (photovoltaic) power stations with 10 GW total peak power output, placed on state-owned land with a total area of 200 square km. The power will be exported to Central Europe.
Implementing the Helios project has the following advantages:
— Expansion of Europe’s production of sustainable energy with a technology of almost
— Strengthening of the the continental high voltage grid, not just for the transport of solar
power from South to North, but also for the transport of wind power from North to South;
— Strengthening of the Greek economy (also in our interest) by adding a new export product with
high economic and societal value;
— Contribution towards the reduction of the Greek national debt, as already proposed in
June 2012, see 5).
Although the contribution of solar energy to the power production of Greece has risen substantially over the last years, to a total peak capacity of 3 GW, its only source is PV on rooftops of residential and industrial buildings. There are as yet no PV power stations in Greece, i.e. large stretches of land covered with hundreds of megawatts of PV panels. Little has been realized of the ambitions that were voiced during the unveiling of the Helios project in 2011.
In view of the advantages listed above we have taken the liberty of bringing the almost forgotten Helios Project to the fore once again. Via the Greek embassy in The Hague and the Dutch embassy in Athens, the plan together with an explanatory note now lies on the desk of your colleague at the Greek ministry of Reconstruction of Production, Environment and Energy. All Greek officials with whom we have been in contact have up till now shown high interest for our proposal. The importance of a revitalization of the Helios Project is clearly evident to Athens. However, in the present maelstrom of the negotiations with the EU, the ECB and the IMF and in view of the laborious reforms that are necessary in Greece it is unreasonable to expect that the Greek government will give substantial political and bureaucratic attention to the Helios Project. Unless extra incentives are provided by other countries.
We request that you provide this extra incentive for the Helios Project, because this enormous project is obviously in the interest of Europe, and therefore of the Netherlands. You can provide the first impulse by offering the prospect of SDE+ subsidy for utility scale solar power in Greece produced by PV farms with peak capacities of at least 100 MW. The output is sold to the Greek national grid and the grids of neighboring countries to which it is connected.
Failure of the current negotiations with Greece will have far-reaching repercussions for Europe and the Netherlands. It is the responsibility of all governments involved, and therefore also of the Dutch cabinet, to stay calm and do everything that is necessary to rebuild and strengthen the cooperation with Greece. We therefore make an urgent appeal on you to inform the government of Greece at short notice about your intention to facilitate part of the sustainable energy production for the Netherlands to be carried out on Greek territory, by offering the prospect of SDE+ subsidy for utility scale PV power stations. With this trust inspiring measure you can make the difference.
Dr. E. H. du Marchie van Voorthuysen,
director of the GEZEN Foundation
1. David J.C. MacKay, Sustainable Energy – Without the hot air, freely available fromhttp://www.withouthotair.com
2. Algemene Rekenkamer, Rapport: Stimulering van duurzame energieproductie (SDE+) 16 april 2015,http://www.rekenkamer.nl/dsresource? objectid=21812&type=org
3. Francesco Dalla Longa et al. ECN, Cost-Efficient and Sustainable Deployment of Renewable Energy Sources towards the 20% Target by 2020, and beyond, Summary of case studies for cooperation mechanisms, September 2012, http://www.ecn.nl/docs/library/report/2013/013015.pdf
4. Ministry of Environment, Energy and Climate Change of the Hellenic Republic, Project Helios, The Greek Solar Energy Project, November 2011, http://www.gezen.nl/wordpress/wp-content/uploads/2015/04/Helios-Project-Presentation_nov2011_European-Parliament.pdf
5. Marco Witschge et al. Uitweg voor de Eurocrisis – duurzame energie concessies. Werk die staatsschulden weg met zon en wind NRC Handelsblad, 4 juni 2012,http://www.gezen.nl/wordpress/uitweg-voor-de-eurocrisis-duurzame-energie-concessies/
Here are a couple of comments.
The open letter says that “EU regulations allow such investments to be included in the target, which is that 14% of the total Dutch energy consumption should be from sustainable sources by 2020.” It does not specify these “regulations”, but I assume they are talking about Joint Projects under Article 7 and 8 of the Renewable Energy Directive.
In contrast to joint project with third states under Article 9 (like African states for the Desertec project), there is no need to have solar electricity generated in Greece in the Netherlands for this to work. The Greek and Dutch governments only have to agree about what amount of renewable energy should be transferred to the Dutch goal of 14% from the Greek generation.
This is one reason that large scale solar joint projects are, all things equal, easier to pull off inside of the EU as in African states. Another one is that Greece has some problems, but it is still much more stable and wealthy than most Northern African states.
I agree completely with what Ricardo said, which is, in translation for the present context: Put your solar installations where the sun shines.
I note that this makes even more sense in the European Union, where there are no legal trade barriers for delivering electricity everywhere (though there still are large barriers because of lacking power line infrastructure).
From a German perspective, I would like to add this. Right now, German taxpayers are bailing out Greece, without receiving anything in return. It makes more sense to invest in massive solar projects in Greece and get at least some return, improve energy stability and independence of the EU as a whole, and help barely avoid the collapse of civilization from global warming.
In other words, if Germany has money to throw away into the endless sinkhole of Greek debt bailouts, we should have money for this kind of thing as well.
Maybe the GEZEN Foundation could send a copy of this letter to the German government.