Innovation and institutional change: the transition to a sustainable ...

Evolution of decentral cogeneration in the Netherlands 149
Table 5.4: Total decentral cogeneration by sector (GWh)
Waste
incineration
Energy
distributors
Food
industry
Paper
industry
Chemical
industry
Other
ind.
Horticulture
Healthcare
Other Total
1990 2618 192 1190 1261 5534 387 327 142 593 12244
1991 2890 378 1166 1285 5735 381 389 169 294 12687
1992 3096 674 1405 1289 6130 391 550 182 331 14048
1993 3374 1595 1341 1363 6522 377 686 187 386 15831
1994 3356 2342 1554 1477 7328 366 802 232 364 17821
1995 3492 2802 1860 2127 8027 382 1014 279 380 20363
1996 4064 4203 2677 2490 8341 481 1580 486 673 24995
1997 4809 4753 2624 2542 8502 555 1666 525 719 26695
Source: Central Agency for Statistics, The Dutch energy economy, 1990 - 1998, 1991 – 1999.
Expansion of cogeneration created over capacity in the electricity system
The increase in cogeneration and its preference over central generation (due
to the obligation to purchase against fixed feed-in tariffs in the Electricity
Act) led to a deteriorating market position of the central producers. The
decrease in their market share forced producers to increase supply tariffs for
distributors, but in the fixed tariff structure this also triggered higher
remuneration tariffs for cogeneration. This tariff structure locked-in
investments in cogeneration and accelerated their expansion. Every increase
in cogeneration decreased the market share of central production,
consequently increasing the remuneration tariffs for decentral production,
further increasing attractiveness of investments in decentral cogeneration
(ECN, 1995; Vlijm, 2002; Köper, 2003: 52). The increase in cogeneration
contributed to over capacity in the Dutch electricity system and attacked the
system of central electricity planning by the SEP. Therefore, the SEP
initiated a moratorium on investments in cogeneration in 1994. SEP and
EnergieNed agreed to postpone or to cancel 29 about 460 MW planned
decentral cogeneration capacity, financially compensated by SEP (40 mln.
Euro). Industry strongly opposed the moratorium as they argued that
ineffective planning of SEP had caused over capacity. Their viewpoint was
that cogeneration contributed to the attainment of national environmental
goals and SEP had not anticipated these advantages in its electricity
planning 30 . SEP, however, refused responsibility for over capacity because it
could only count for real installed decentral installed capacity, and not for
planned decentral capacity in the biannual electricity forecasts of demand
29 The total reduction of planned capacity was estimated to amount 1.100 MW in the years to
follow (Press release SEP / EnergieNed 27-01-1995)
30 Environmental goals not feasible without cogeneration (In Dutch), NCI: orgaan van de
Vereniging van de Nederlandse Chemische Industrie, 1994, vol. 22: 4-5