A wind farm kept out of the wind (disadvantage compensation)
Wind energy plays an important role in the context of energy transition. Windmills rise up both on land and at sea. The realization of windmills on land regularly encounters resistance from, for example, local residents or environmental and nature associations. There are many examples in the Netherlands of years of protracted procedures against the construction of onshore wind turbines. These are often based on the alleged damage to the living environment, health and nature (flora and fauna). There is also much opposition to offshore wind turbines. In addition to resistance from environmental and nature associations, among others, operators of wind farms can also “bother” each other. A ruling that nicely illustrates this is the December 27, 2023 ruling by the Administrative Law Division of the Council of State (“the Administrative Law Division”) on a request for disadvantage compensation regarding an offshore wind farm.
What was this case about?
At issue was a wind farm consisting of 43 wind turbines (‘Windpark A’) erected in the North Sea 23 km off the coast near Noordwijk aan Zee. The permit for Windpark A was granted in 2009 and its official commissioning took place in 2015. The contention of the operator of Wind Farm A was, in short, that damage would be suffered as a result of later, at a distance of 1 km, licensed and established wind farms (collectively: ‘Wind Farm B’). Indeed, Wind Farm B, due to its location (it encircles Wind Farm A on its eastern, western and southern sides) would cause Wind Farm A to: “substantial wake losses, global blockage and an increase in turbulence” resulting in a decrease in production and therefore a loss of revenue. Thus, the wind shadow caused by Wind Farm B towards Wind Farm A as a result of reduced wind speed and increased turbulence would result in reduced energy output (“the wake effect”) for Wind Farm A. The operator of Windpark A submitted a request for disadvantage compensation to the Minister of Climate and Energy (‘the Minister’) in connection with this damage on the basis that the granting of a permit by the Minister to Windpark B caused disadvantage towards Windpark A which should be eligible for compensation (‘the Disadvantage Compensation Request’).
Decision-making and reconsideration
The Minister rejected the Request for Disadvantage Compensation and took the position that the disadvantage caused by Windpark B to Windpark A on January 21, 2013 (the moment of the investment decision by the operator in Windpark A) was foreseen on the basis of concrete policy intentions. As a result, the Minister ruled, the risk of that disadvantage was accepted by the operator of Windpark A at the time and that that disadvantage is therefore for its account. To substantiate this, the Minister invoked, among other things, the National Water Plan of 2009 in which the search area Hollandse Kust was designated with the aim of finding space for one or more larger wind energy areas with a total area of 500 km2 for the benefit of 3,000 MV. Given the fact that the further offshore and onshore wind farms are from the coast, the more expensive it is to construct an electricity connection between them, the operator of Wind Farm A, as an energy company and future wind farm owner, could have known that the Hollandse Kust area, located close to the coast, would be the most attractive for realizing wind energy. The Minister therefore believed that at the time of the investment decision (January 21, 2013) the construction of other wind farms in the vicinity of Windpark A was foreseeable. This foreseeability was additionally based on official research in 2010 into possible wind energy areas. This official study would also have been sent to, among others, the operator of Windpark A at the time and this study also showed that Windpark A could be located near other wind parks.
The objection filed against this rejection was subsequently declared unfounded by the Minister. In the context of the reconsideration in objection, the Minister still considered that, as Windpark A argues, despite the fact that the central government had exerted pressure on Windpark A to realize the wind park, that does not mean that at the time of the investment decision she did not have to take into account the possibility that the situation at the site would change in an unfavorable direction. To the extent that Windpark A argues that the search area was too large and undetermined, the Minister points out that the task was so large that designation of a broad search area was necessary. The Minister further believes that no significance can be given to the size of the chance that the damage would not occur and that the most unfavorable effect of a concrete policy proposal is decisive. Wind Farm A then appealed the decision on objection.
Ruling of the court
On appeal, it is up to the Administrative Law Division, as the highest administrative court, to render a final judgment. The operator of Windpark A argued, among other things, that the official study from 2010 did not show any concrete policy intention to realize offshore wind parks on plots in the vicinity of Windpark A. In that context, attention was drawn to the search area in question (from Texel to Hoek van Holland) which, with an area of 1. 210 km2 is so incredibly large and indeterminate that on that basis Windpark A did not have to take into account the arrival of (three) other offshore wind farms around and closer to Windpark A. Moreover, it was explicitly noted in the official study that staggered location of wind farms is the starting point in order to benefit as much as possible from the wind front. Furthermore, the official study identified two wind energy areas and to the extent that the arrival of future wind farms had to be taken into account at all, according to the operator of Windpark A, it would have had to take these two wind energy areas (only) into account. It is also argued by Windpark A that it is not reasonable to hold against it the most unfavorable effect of the policy proposal in the 2010 official study, and that it would not have been possible to realize three other wind parks around Windpark A on the basis of a change in the law at the time.
The Administrative Law Division does not go along with the operator’s views and considers, among other things, that in determining the foreseeability of damage, no significance is given to the size of the chance existing at the time of the investment decision that the damage would not occur. At the time of the investment decision, Windpark A had to assume the most unfavorable outcome of the policy proposal as included in the 2010 official study. That study showed that new wind farms would be located in the vicinity of Windpark A. That, as the operator argued, the siting of the lots was not optimal in some respects is not important in this regard, according to the Administrative Law Division. The argument that it would be impossible to construct new wind farms around Wind Farm A before the Wind Energy at Sea Act came into force on July 1, 2014, was also rejected by the Administrative Law Division. To this end, the Administrative Law Division considers that despite the fact that under the old law there was a lack of steering possibilities on locations of wind parks in an area suitable for offshore wind energy, this does not mean that the realization of new wind parks around Windpark A under the old law: “was legally, or otherwise, excluded.” The argument that for Windpark A, at the time of the investment decision, it could not be foreseen that it would be confronted with much larger wind turbines in the future (larger rotor blades / greater power) is also ignored by the Administrative Law Division. To this end, it is considered that new generations of wind turbines follow each other in rapid succession and this situation at the time of the investment decision for Wind Farm A was no different.
Conclusion
According to the Administrative Law Division, the disadvantage caused by Windpark B towards Windpark A at the time of the investment decision was therefore foreseeable for the latter. With that, that disadvantage comes for its own account of the operator of Windpark A because it is deemed to have accepted the possibility of realization of the negative development at the time of the investment decision. In that context, therefore, advancing technology must also be taken into account. This ruling once again underlines the importance of thoroughly investigating the planning situation at the time of a proposed investment decision, including the possible future (negative) developments on the basis of concrete policy intentions as well as the state of the art and developments within that framework.
Information
If you have any questions on this subject, please contact Ben van Nieuwaal.
