Essent is an energy company with its roots in the Netherlands. We provide our customers, private as well as business, with energy plus a number of additional products and services. Apart from electricity, gas and heat, they comprise maintenance of central heating and hot-water equipment, as well as a range of cablecom products, such as cable TV and radio, broadband internet access and telephony.

Essent is a vertically integrated energy company, which means we generate most of the energy we supply. To generate the energy, we use conventional methods, such as coal-fired plants, alongside waste incinerators and, to an increasing degree, sustainable sources such as wind energy and biomass. While regarding the Netherlands as our home market, we also operate in the neighbouring countries of Germany and Belgium.

In the Netherlands, we are the market leader in the energy market measured by turnover and the number two cable TV company by number of customers. The impending deregulation of the energy market was already casting its shadow ahead in 2003. Trends inherent to a free market were felt for the first time on the Dutch energy market. There was increased competition between energy companies (certainly when it came to green electricity), amalgamation of energy companies (the merger of Eneco and REMU for example) and the bankruptcy of one energy company (EnergyXS). In those turbulent times, Essent kept a firm hold on its position. Regarding green electricity, we are the leader in the Netherlands with a market share of 31%. Moreover, we are the largest Dutch producer of sustainable energy. The changes in the subsidy scheme in favour of
domestic generation that the government implemented in mid-2003 confirmed once again the correctness of our sustainable-energy strategy.

By Rob Remmers:
Essent is putting effort into preserving energy supplies further by using sustainable energy on an increasingly large scale. With this approach, Essent is helping to protect the global climate and reduce the dependency on fossil fuels for the generation of energy. All our activities concerning generation, deployment, sales and development of sustainable energy are managed by the Sustainable Energy Business Unit, which provides the coordination between the Energy, Retail, Waste Management and International divisions. Together, they ensured that Essent grew to become the Netherlands’ largest producer of sustainable energy and market leader for sales of green electricity to private and small business customers. A variety of sources can be used in the generation of sustainable energy, only two of which are abundantly available in the Netherlands: wind and biomass. As we consider it important that as much as possible of the sustainable energy that Essent supplies to Dutch customers should be generated by us and in the Netherlands, we decided to restrict our investments in sustainable generation capacity to wind and biomass. In practice, this will largely depend on current government incentive policy, as well as on the availability of construction and operating licences.

By Rob Remmers
In 2003, we made further investments under the programme to convert our power stations to co fire clean biomass. Two thirds of the sustainable energy generated by Essent is already produced using these energy sources. The sustainability of clean biomass has to be fully safeguarded. To achieve this, we developed the Essent Green Gold audit and certification system, in operation since May 2003, to guarantee that the origin of the biomass can be trusted. Owing to the long ongoing uncertainty surrounding the future of the incentives for sustainable energy, we were unable to make any major investments in 2003 in the expansion of our wind farms in the Netherlands. We did decide, however, to replace and upgrade windmills at existing sites. The first of these repowering projects will be carried out in 2004. New regulations meant that in autumn 2003 we were also able to resume our detailed planning for the development of new sites. We expect to carry out these plans in 2005 and beyond. The other sustainable sources we can call on are landfill gas, solar energy and hydropower. In 2003, however, we finally decided against the construction of a third hydroelectric power station (on the Maas, near Borgharen) for financial and technical reasons. With total energy generated of 684 GWh in 2003, Essent is the largest producer of sustainable energy in the Netherlands.
We supply sustainable energy to consumers under the brand name Groene Stroom and to companies under the brand name Groen Zakelijk. The number of Groene Stroom customers increased significantly again in 2003. We have over 800,000 customers, equivalent to a market share of 31%, which makes Essent the market leader in the Netherlands. The number of customers for Groen Zakelijk also increased sharply. Under the brand name Duurzaam Gas, we launched a completely new environmentally friendly product in 2003, intended for organisations that need to heat complexes, such as housing associations and healthcare institutions. The gas comes from landfills managed by Essent, where the gas is fed into the distribution network after undergoing a number of processes. The product, which is covered by the same incentive schemes as Groene Stroom, was received enthusiastically by the market.
As long as conventional (grey) energy remains relatively cheap on the European market, sustainable energy will continue to be an expensive alternative. Accordingly, to make our contribution in meeting the government’s sustainable energy target (10% sustainable energy by 2020), we depend on an adequate system of financial incentives. When the government decided to drastically reduce the subsidy on the large-scale generation of sustainable energy from clean biomass with effect from 1 January 2003, Essent had no alternative but to stop its activities in this area in the Netherlands. Generating the energy in the Netherlands could simply no longer compete with importing it, so Essent was likewise compelled to obtain it from outside the country. The situation remained unchanged until the implementation in mid-2003 of a new scheme to encourage environmentally responsible generation (Milieukwaliteit Energie Productieregeling, MEP), which provides for a phased increase of the payment to producers. At the same time, however, the government initiated moves to reduce the encouragement of demand in stages, which in a number of years would remove the reduction in regulatory energy tax enjoyed by purchasers of sustainable energy. The result of these moves is that, although the financial incentives certainly benefit producers of sustainable energy in the Netherlands, it remains to be seen whether the demand for this type of energy will stay at its present level.
The above development might also impact the trade in green certificates (referred to as guarantees of origin from 1 January 2004). Green certificates serve as proof that energy is generated using sustainable methods and are a condition for receiving MEP subsidies or regulatory energy tax refunds. Trading, however, assumes a certain level of generation based on sufficient demand for sustainable energy.

For more information about Essent see:
www.essent.nl