TILEC Work in Progress: Eric van Damme - Allocating Rights to build Wind Parks in the North Sea

Just like other countries worldwide, the Netherlands has to move to a greener energy supply. Given the country’s location, a relatively large share of supply is expected to come from large wind parks located in the North Sea. The current law only admits 2 procedures for allocate rights for constructing and operating such parks: with or without subsidy. At present, a proposal for a new Law is discussed in parliament. The new Law will allow for four procedures: a subsidy, a beauty contest (with or without a financial component) and an auction. Questions are:

(i) which procedure to use in which context?;

ii) how to then specify the “details” of the procedure that will be used?

For the auction, see the advice of Nera Consulting . In the present context, externalities are important: the North Sea is important not only for wind energy, but also for other economic activities, such as fisheries and tourism, as well as for its non-economic aspects (the ecology). In the presentation, I will discuss to what extent these externalities impact the answers to the two questions mentioned above.