Welcome To the Windenergy technology Watch
This weblog is dediacted as a tool for gathering and sharing information and views on the topic of wind energy sector. This undertaking is a part of our academic assignment in the graduate course of ‘Technology & Policy’ at the ‘Eindhoven University of Technology’. Here we will cover technology and policy issues on the wind energy sector in the Netherlands. We very much appreciate your comments and insights, as it is essential for creating an interactive and useful weblog.

Problem definition
Current Dutch offshore wind energy policy does not seem to be helping the wind firms to grow in the sector. There are barriers from the policy institutions and these seriously hamper the goals of producing 6000 megawatt in the year 2020. It is widely believed that policy shifts incentives could change this situation dramatically and would help building up a strong wind energy sector.

Research question
What policy measures could be undertaken to facilitate the entry of the Dutch wind firms and what policy incentives could be used to stimulate them, such that the Dutch wind energy initiative of producing 6000 megawatt in the year 2020 could be achieved?

Problem definition
Current Dutch offshore wind energy policy does not seem to be helping the wind firms to grow in the sector. There are barriers from the policy institutions and these seriously hamper the goals of producing 6000 megawatt in the year 2020. It is widely believed that policy shifts incentives could change this situation dramatically and would help building up a strong wind energy sector.

Research question
What policy measures could be undertaken to facilitate the entry of the Dutch wind firms and what policy incentives could be used to stimulate them, such that the Dutch wind energy initiative of producing 6000 megawatt in the year 2020 could be achieved?

The future of wind energy lies in the offshore sector. This because of the shortage of land size in Northwest Europe, the availability of higher wind speeds for higher energy production at sea and at last the marine environment gives more stable winds with less turbulence and less wind shear, facilitating the design of cheaper turbines with a longer lifetime.

This shift from onshore production to offshore production is going on in several countries across Europe. Examples of that are Germany, the United Kingdom and especially Denmark. The Netherlands are lagging behind in developing offshore wind energy production. Why are Dutch firms not taking this opportunity to develop offshore wind energy farms?

After making the analysis of Dutch wind energy sector, it seems that the wind energy industry can not allocate sufficient volumes of resources to the generation and application of new technologies.

Even though there are some initiatives articulated by the Dutch Government in various levels, (in parallel with the EC directives and objectives etc.), the current policies implemented are not working properly for the wind energy sector. Market inefficiency is still continuing and it seems that government intervention with more proper means should require for this inefficient market.

The main problems are the inappropriate policies and imperfect distribution of information across the economic actors in the sector. And it is thought that the institutions, which are the main actors to implement these policies in this immature (unfortunately it is still thought to be immature for the Netherlands) market; seem not very well coordinated to stimulate the diminishing sector.

How can we change this?

- The main policy maker in Dutch wind energy sector (Ministry of Economic Affairs, EZ) should make policies not only for the large scale wind energy producers, but also for the small scale producers. EZ must have some policy measures to encourage entrepreneurs to get into this market. For example, the government can guarantee the connections of small scale wind firms to the national electricity grid. And next to that the requirements of the contract that the wind energy supplier has to undertake can be less strict.

- Another policy measure should be a shift from voluntary to a compulsory usage of green energy including wind energy. This means that both consumer and suppliers should, for example, use or supply at least 3% of green energy of its total. To stimulate the use of green energy, this percentage could rise every year with a certain rate. The existing Dutch energy companies, have to search for new ways of generating green energy. They have to become more innovative. The idea is that these companies will among other things invest in Dutch offshore wind energy.

- The collaboration with the experienced countries (like Denmark and Germany) should be encouraged, not specifically in the research but more in the real-case implementation of the small scale wind turbines. This small scale implementation has been the key for success in these countries and could be a road to success in The Netherlands as well. The knowledge flowing between universities, research institutions and the small scale wind energy producer should be enhanced. At this moment in time it seems that the generated knowledge is too scientific and complex and therefore not ready for the firm to apply directly. More practical knowledge is required. An interaction mechanism should be developed that more direct applicable knowledge flows from the research institutes and the universities towards the entrepreneurs. Market needs should be taken into account by the R&D institutions. Next to that more offshore knowledge gaining projects like the near shore wind (NSW) demonstration project (27,2 million euros, 100 Megawatts) should be undertaken by the government or stimulated by the government.

- An important improvement could be reached if the main policy actors assumed a more reflexive attitude, by reflecting upon their own role in the policy process through the years. Furthermore the inclusion of other stakeholders in the process of policy formation would allow for more diverse sources of knowledge to be drawn upon, with the possible result of finding better solutions for lagging implementation.

1. Bargaining power of customers.
The customers do have a significant bargaining power. They are very sensitive to price. If the final price of the power generated by off shore wind farms will be higher than the price of energy generated in a conventional way, they will not buy the energy. As there are many other possible resources for energy in the liberalized energy market its easy to switch from supplier.
2. Bargaining power of suppliers.
The suppliers of the offshore wind energy technology have a major bargaining power. This specific knowledge is essential in order to develop this new type of energy generation in The Netherlands. The competition within the supplier market is not too high, because there is a concentrated market of only a small number of firms. The economies of scale of the existing suppliers have the advantage that they can supply with a lower marginal price. The development of a wind farm has to be on a large scale in order to keep costs low. Therefore only a few firms can be in the market in order to have the advantages of economies of scale. The volume of the possible sales therefore is very important to the suppliers
3. Threat of new entrants
The market is a completely new market. This gives the same kind of opportunities for each new entrant in the market. It will be harder for companies to enter without any specific knowledge and experience in the field. Therefore it is probable that companies from e.g. England and Denmark will penetrate this new market, because they already have experience in their home countries. It is also probable that larges companies will enter the market because of the necessity of high investments and economies of scale. The government has to make sure that new entrants will have the possibility to supply the generated wind energy to the existing grid. Next to that the government has to make policies to make sure the price of the energy will not be higher than the prices of conventional energy production. This could be done by making use of feed-in tariffs.
4. Threat of substitute products
As mentioned before in the other threats of this market it is essential that the price of offshore wind energy will be at least not higher than the price of substitute energy sources. No major barriers should exist for customers to make use of offshore wind energy, like switching costs. This can be accomplished with policies created by the government. The advantage of this type of energy production could be that it attracts customers because of the characteristic of being durable.
5. Intensity of competitive rivalry.
The rivalry of this new sector will not be too high. Only a few firms will be able to meet the requirements to develop a new wind farm, because of the high entry costs and the necessity of knowledge. The power of buyers in the first place will be of the major influence. They will determine with their consuming behavior whether this new source of energy will be used. In the second place, the power of the policy makers will be very high, because of their influence on the price compared to substitute products.

During the course of the weblog assignment we’ve tried to collect and share information on different topics related to the wind energy sector in accordance with the requirement of deadlines. Below you’ll find a summarized version of our findings in line with the deadlines.

Very successful policy initiatives have been implemented in the wind energy sector in Denmark and Germany. A multilevel interaction among key actors in the sector played a key role in their success. The Netherlands have somehow implemented policies related Fixed Feed in Tariffs, “Fixed Premium” or “Environmental Bonus, Tax Incentives, subsidies but the Dutch wind energy sector lacks of contacts between the researchers, the wind turbine producers and policy institutions which resulted in failure of many potential projects and therefore need to be address immediately and with caution . Involving all stakeholders in the scenario is one of the issues as well. The problem with the wind farms dependency on the distributors for the physical connection to the grid, the conditions for feeding in etc must need to be softened. Government subsidies and environmental sustainability slogan should continue to bring awareness among people and the progress of policy assessment should be continued on timely basis.

With the goal of sustainable energy solution many countries are trying to develop their wind energy sector. In the case of the Netherlands the top ten competing countries are Germany, Spain, USA, Denmark, and India, Italy Japan, UK and china. The Netherlands has a seventh position in the list. Companies who are competitive in the sectors are Vestas(DK),Gamesa(ES), Enercon(DE) , GE energy(USA), Siemens(DE), Suzlon(India) Nordex(DE). Among dutch manufacturer NedWind Rhenen BV, Lagerwey are two major players in the industry. Using Market share, and power production capacity, and firm size as indicators the leaders and laggards are determined. Some other data that we’ve looked at are the patent data and R&D spending.

The main driver in the Dutch wind energy sectors is technological advances compared to the other counterparts and the factors that “wind” the essential element in moving the wind turbine is in abundance in the off share of Netherlands all the year round. Large Subsidies funded by the government and slogans and goal of reaching a ‘sustainable energy solution’ is a key to the industry’s moving force. The wind energy turbine manufacturers, power supplying companies and Dutch key technological universities, ECN are the main innovator in the field. Technology transfer (packaged, Vertical) has been a major means of innovation supply in the sector. Many international, intra-national, and supranational wind energy associations plays important role in channeling the innovation in the sector. Examples are: World Wind Energy Association (WWEA), European Wind Energy Association (EWEA) etc.

In the ‘wind energy’ sector the Netherlands is in leading position however, it’s way behind its German, Danish, American and Spanish counterparts. In the case of wind energy ‘technology’ development the Netherlands was in the second position following Denmark but they have failed to capitalize on their early mover advantage. The Netherlands has allocated over 300 million dollars to wind energy R&D in last two decades- the third largest national public expenditure after the US and Germany. The Dutch market is dominated by Danish manufacturer Vestas holding followed by Germany’s Enercon ,Denmark’s NEG Micon, GE Wind and Nordex. In terms of policy consideration Dutch wind energy sectors is a follower of Danish experiences as it’s been found in numerous policy initiatives. However, the lack of contacts between the researchers and the wind turbine producers is a factor in the Netherlands that brought in failures to develop viable large wind turbine technology

Strengths:
- Intellectual resources
- Availability of locational resources
- Positive consumer perception
- Environmentally friendly

Weaknesses:
- Lack of infrastructure
- High developing costs
- No guarantee for grid connection
- Lack of collaboration
- Lack of experience

Opportunities:
- To reach the goal of 6000 MW in 2020
- To get a bigger market share
- Technological improvements to be more competitive
- Growing sector creates economies of scale
- More collaboration brings less barriers

Threats:
- Tough foreign competition
- Lobby of big energy producers

Click on the links and scroll down for explanations of the SWOT analysis