Partnership for a sustainable future

Partnership for a sustainable future ECN Annual Report 2008 1 20 Efficiency & Infrastructure 6 2 Introduction Board of Directors 24 12 Policy Studies Hydrogen & Clean Fossil Fuels 4 38 46 50 52 54 55 56 59 79 Foreword prof. dr. Ruud Lubbers ECN profile: fact and figures Nuclear Research and consultancy Group Energy Advisory Committee, External Review Committees and Consultative groups Supervisory Board and Board of Directors 3 Corporate Governance Report Report Supervisory Board 27 16 Biomass, Coal & Environmental Research Wind Energy Directors’ Report 35 31 Solar Energy Engineering & Services Financial Report Colophon Foreword This is ECN’s annual report for 2008. It was an eventful year in many respects. Barack Obama’s election as president of the United States was obviously of great political and symbolic significance. He impressed me greatly with his victory speech and his timeless credo that encapsulates the spirit of a nation: ‘Yes, we can’. Now that the new US administration’s first measures are being put into effect, I hope that the revitalisation of the American dream will provide a stepping stone to a Green New Deal that tackles both the climate crisis and the economic crisis. In Europe, too, we must reverse the economic slowdown and use it to speed up the transition to a sustainable energy system. Precisely at a time when one crisis appears to exacerbate another - green policy is being shelved, sustainable investments are waning worldwide, financing of green projects is progressing ever more sluggishly - we must seize the new opportunities. It means innovating under financial pressure, with daring and vision. ECN will take up that challenge, provided that we now innovate truly across an international front, preferably at an accelerated pace. If we succeed, the recession may prove to be a blessing in disguise. A precondition is once again an active government: if the government fails to act, 4 ported the package. While the package does not go as far as the plans presented earlier, the fact remains that agreement was ultimately reached on the world’s most ambitious climate proposal. Politically, Europe is clearly taking climate change seriously. The emissions trading system (ETS) has been given an important role in the climate package. The most controversial question was whether companies would receive emissions allowances for free or whether they would be auctioned. It has been agreed that for industry and electricity companies an increasingly large proportion of these emissions allowances will be auctioned step-by-step from 2012 until all emissions allowances go on auction in 2027. This is less pioneering than the EU’s original proposal. But we must wait and see whether the perspectives of the ETS system, before and after Copenhagen, are sufficiently clear to actually lead to sufficient investments. Europe, and particularly the Netherlands, will need all possible options to achieve their climate goals. It means conducting research into the use of sustainable energy, energy conservation and clean use of fossil fuels, all fields in which ECN made substantial progress in 2008. I would like to mention the research into the development of solar modules, wind farm aerodynamics, second generation production of green gas from biomass, capture of CO2 combined with hydrogen production or otherwise, improvement of the efficiency of acoustical and chemical heat pumps and the built environment. The Netherlands is making headway with CCS (CO2 Capture and Storage), although the government is still deferring the decision on safeguarding transmission and storage through Gasunie and EBN. The Strategic Energy Technology (SET) plan came into force in Europe. One of the elements of the plan is establishment of European cooperation between major national energy R&D institutions in the European Energy Research Alliance (EERA). The main goal of this group of leading energy research institutions - which together possess an annual R&D budget of about €1.3 billion - is to speed up development and introduction of new energy technologies. ECN is playing an important role in this work. This initiative is designed to accelerate the development and use of this technology in the market, which is a very good development given the urgency of establishing a sustainable energy system as soon as possible. Compliments are due for the motivation displayed by management and employees in 2008 during their work to fulfil ECN’s mission - the development and marketing of sustainable energy technology. Prof. dr. Ruud Lubbers Chairman ECN Supervisory Board I wish to congratulate ECN on getting a subsidy for the ADEM initiative (Advanced Dutch Energy Materials), which will strengthen fundamental energy research in cooperation with the technological universities. I am also delighted with the growing cooperation with the business community and with the increasing number of energy technologies finding their way to the market. After being shut down in the summer of 2008 due to the discovery of a small trace of gas bubbles in the cooling water circuit, NRG was given permission in March 2009 to restart the High Flux Reactor. This occurred under strict safety precautions and intensive monitoring and fortunately enabled resumption of the production of isotopes for medical purposes. NRG also made substantial progress in developing and producing new radioisotopes for nuclear medicine, effective recycling of plutonium and research into the final storage of radioactive waste. ECN provides knowledge for climate negotiations During the 13th UN climate conference in Bali in late 2007, it was agreed that negotiations would be started in four different fields: mitigation, adaptation, financing and technology. In all of these fields, the United Nations Framework Convention on Climate Change (UNFCCC) is gathering knowledge to support the negotiations. Towards the end of 2009, the negotiations in Copenhagen must lead to a new climate treaty that effectively reduces greenhouse gas emissions in industrialised and developing countries, ensures a fair adaptation policy, and frees up sufficient funding while finding the most practical policy measures for bringing about technological changes. ECN’s contribution to this process in 2008 and 2009 is considerable. In a project for the UNFCCC, employees of ECN Policy Studies are helping to identify the financing needed to get technological changes moving. This gives rise to challenges for the transfer of technology and knowledge, as well as to questions about how to build up the best possible capacity for implementing climate-friendly technology in developing countries. Besides work focused on technology, the international carbon market is another important matter, and will remain so after the Copenhagen summit. ECN Policy Studies employees are assisting the Ministry of Housing, Spatial Planning and the Environment and the UNFCCC in calculating possible reforms and the future of the Clean Development Mechanism. In these projects ECN works closely with partners, for example the Netherlands Environmental Assessment Agency and the Institute for Environmental Studies of the VU University Amsterdam. 5 it will seriously imperil all sustainability plans. The fourteenth UN Climate Conference was held in Poznan in December 2008, at the height of these developments. It has to be said that Poznan was not a historic meeting. The meeting was merely a stopover on the way to the Copenhagen climate summit in December 2009, where a new international climate treaty (post-2012) must be established to succeed the Kyoto Protocol. The major task facing the international community in Copenhagen is to get the US and China on board for a new climate treaty. I am not disappointed about the Poznan results. Poznan gave the parties an opportunity to gather information and to adopt a position in a fastchanging climate context. But make no mistake, the stakes are incredibly high: how should the world respond to the climate change threat that will unfold in its full scale about 50 to 100 years from now? The enormous economic interests involved make joint decisions extremely difficult. Therefore it was reassuring that Europe lined up as one in Poznan. The same can be said of Europe’s fairly unanimous acceptance of the European Commission’s energy and climate package in December: after approval by the member states, 550 members of the European Parliament sup- Ton Hoff Chairman of the Board of Directors Gerald Santing Director Hoff, Van der Klein and Santing do not beat about the bush: the ECN board wants to see new fuel for the misfiring innovation engine, even if it increases the budget deficit. “Precisely now there must be substantial investment in future energy management, not only with plans for the short term like offshore wind farms, but also for the medium and long terms,” they say. “Together with the business community and knowledge institutions, the government must conduct an incisive and innovating industry policy. This is exactly the time to invest in a sustainable knowledge ecoKees van der Klein Director nomy, to allocate extra money for research and to accelerate innovation: invest in a large research infrastructure and assign supernumerary knowledge workers to research and knowledge institutions. Investing wisely now - if necessary at the expense of a budget deficit - will save a lot of money later on.” The business as usual scenario, the Dutch inclination towards consultation and consensus, no longer works according to the ECN board. “We must now invest anti-cyclically to keep people at work and speed up long-term investments to create new technology. The risk of a ‘lock-in 6 effect’, i.e. that we keep using today’s technology because of the crisis, 7 Introduction Board of Directors The conclusion is inescapable: the mushrooming financial crisis and rapidly deteriorating economic crisis form an important theme in a review by the ECN Board of Directors. Even in the last quarter of 2008, there were signs of decreasing activity at branches of industry involved in sustainable energy, resulting in declining and/or deferred investments in innovation. The new activity in the world of sustainable energy has become more vulnerable and the innovations necessary to achieve the is all too real. For the energy system of the future we need future technology, and that requires considerable boldness on the part of the government, similar to the rescue operations of the Minister of Finance for the national banking sector. Otherwise Dutch energy research will be overtaken left and right.” “The money is there already. The implementation of the FES funds in particular can be accelerated. Completion of FES procedures has taken at least two years in recent years. That is too long. Let the money work today so that we can reap the benefits tomorrow, as well as the day after. The preparation and approval of ADEM (see under ‘Deepening knowledge’ – ed.) has had a long lead time, so it is now important to let ADEM mature quickly. The same applies to the ECN proposal for a secondgeneration laboratory for photovoltaic solar cells, which all advisory bodies said was of exceptionally good or excellent scientific quality. An accelerated awarding of FES funds for the creation of this new national laboratory would certainly contribute to a national Green New Deal.” ‘New fuel for misfiring innovation engine’ climate-energy objectives of 2020 and 2050 are under pressure. The effects of this situation on ECN’s medium and long term research are now becoming clear, especially because of the slowdown of industrial contracts. This is certainly the time for extra attention and specific financing aimed at bringing ECN technology to the market. But the economic crisis also creates new opportunities, according to Ton Hoff (Chairman of the Board) and directors Kees van der Klein and Gerald Santing. What is needed? A national Green New Deal. ECN is one of the driving forces behind the European Energy Research In 2008, ECN evaluated and adjusted its 2006-2010 strategic plan in the interim. Four subjects will be very important in the coming years: the international positioning of ECN, the transfer of technology to the business community, relationships with universities and people management. Alliance (EERA) founded in 2008. The main goals of this group of leading energy research institutions - which together possess an annual R&D budget of around €1.3 billion – are to speed up the development and the introduction of new energy technologies. The institutions intend to do so by streamlining national research programmes and avoiding fragmentation, among other things by jointly developing and using state-of-the-art research facilities. Hoff, who has been appointed chairman of EERA, says: “In this first phase the EERA partners have selected several fields that must lead to joint research programmes. They include wind and solar energy, biofuels, CO2 capture and storage, intelligent grids and fuel cells.” Whereas EERA represents the wider European dimension, PETRA (Petten Energy Technology Research Alliance) is a local initiative. Three research institutions in Petten (ECN, NRG and JRC-IE, the Joint Research Centre of the European Commission) are going to cooperate more intensively to make the Dutch town Europe’s energy research capital. Van der Klein: “Many informal ties already exist between JRC-IE, NRG and ECN, both in policy-supporting research and in the development of technology. 8 Technology transfer In 2008, ECN has again worked hard on the development of sustainable energy technology and its transfer to the market. The twin recurring themes in the chapters about the units are intensifying contacts and cooperation with universities on the one hand and expanding and intensifying cooperation with industrial parties on the other. In terms of technology transfer, the year under review saw another increase in cooperation with national and international market parties, resulting in a substantial boost of income from licensing agreements, participating interests, joint ventures and contract research. For the first time ever ECN’s licensing income topped €1 million in 2008. Van der Klein: “The most direct way of bringing knowledge to the market is by cooperating closely with industry and going forward to conduct contract research. All units devoted a lot of attention to this matter in 2008. The BCE unit is cooperating closely with a leading Dutch utility company so as to create a demonstration project to produce Green Gas (SNG) from biomass on a large scale. The objective is to build a demonstration plant of approximately 50 MW as a first step towards the commercial use of the Green Gas technology of ECN. Additionally we signed a number of licensing agreements for advanced solar cells and module technology. The Stirling technology research group of ECN was taken over by Enatec, thus increasing Enatec’s responsiveness and taking a new step towards the market introduction of the micro-CHP technology developed by ECN. The Wind unit concluded new cooperation contracts with the wind industry in 2008 partly due to the ECN Wind Turbine Test Farm at Wieringermeer (EWTW). The unit also made preparations for an Industrial Support Group that will concentrate on transferring knowledge and technology from the Wind research groups to the industry.” Deepening knowledge ECN’s commercial activities continue to stem from its research, in which we pursue constant high quality. While ECN needs to operate close to the market, it must also remain close to fundamental research. Hoff: “The long-term programmes - which map out the broad lines of ECN’s research for four years up to 2010 - guarantee the continuity and quality of our research and ECN is on schedule with formulating a new long-term programme. Where possible we seek intensive cooperation with universities and endeavour to recruit young, talented researchers.” In late 2008, the ADEM initiative of ECN and the three technological universities in the Netherlands resulted in the awarding of € 30 million for materials research in energy technology, followed by the definitive green light early 2009. That is good news given ECN’s ambition to structurally reinforce our ties with the universities, says Van der Klein. “With half of that money we can appoint and train thirty young researchers (doctoral candidates – ed.) for four years. Five will work in Petten on their theses, the other twenty-five will work at the technological universities on ECN-related research. This means new people plus new knowledge and structural cooperation with research groups at the universities. The other half of the money is intended for the purchase of new research equipment. This will enable ADEM to develop into a powerful accelerator and driver of the development and use of energy technology in the Netherlands.” Ties were reinforced in 2008 with the universities of Groningen (gas transition), Wageningen (environmental pollution and environmental geochemistry) and Amsterdam (VU University, environmental research). ECN further signed a cooperation agreement with the Holst Centre in Eindhoven, an open innovation centre established by TNO and the Flemish organisation IMEC. The objective is to enable a switch to large-scale production methods for solar cells, with the prospect of having the technology ready within about five years for use in small consumer products, for example. 9 International cooperation For some time now it has been ECN’s ambition to develop into a leading research institute in Europe and possibly the world. A number of respected research institutes in the United States were visited in 2008 to establish and renew contacts in the expectation that cooperation should be possible in numerous areas of research. Hoff: “The expectations were certainly met. We made an agreement with the Department of Energy (DoE) to seriously examine whether we can step up cooperation in various fields. Similarly, we found that good, concrete stepping-stones existed for cooperation in energy research at the National Renewable Energy Laboratory (wind, solar, biomass and policy studies) and Stanford University (materials research).” Strengthening these ties will allow the three institutions to enhance fulfilment of their mission in Europe, namely to support European government policy through research and technology development and to speed up the transition to sustainable energy systems.” Another milestone was the opening in Wieringermeer of a scale farm that has strengthened ECN’s position among the world’s top in wind energy research. Hoff: “The questions our research at the scale farm must answer how wind turbines in large wind farms react to each other. Similarly, the start-up of the MILENA biomass gasifier, opened by Minister Cramer in September 2008, represents a significant step forwards towards sustainability. The same applies to the PowerMatcher developed by ECN - an application of advanced ICT in the electricity grid - that more efficiently matches electricity demand and supply.” Positioning ECN obviously operates in a challenging and dynamic environment. In this European playing field ECN wants to develop further into an authoritative European energy research institution. Hoff: “To support that positioning we must naturally come up with high-quality research results, but we also need to devote a lot more attention to communicating the results. With this in mind ECN has developed an active media policy, with scope for a proactive approach designed to put matters on the agenda when there is a need to do so. This includes the press lunches that ECN started in December 2008 to explain to journalists the background to energy news. ECN explains developments at national and international level, which fits in well in the leading role that I believe ECN must fulfil in the international debate on energy and climate. The first press lunch dealt with Barack Obama’s influence on international climate policy and the climate negotiations in Poznan. The second press lunch took place in March 2009 and addressed questions concerning CO2 storage and capture. Both press lunches clearly met a need that exists among the media.” Significant progress was made in 2008 on strengthening the internal research infrastructure. The new laboratories in Building 31 were delivered after a long period of preparation and can soon be used, which will undoubtedly have a positive effect on the responsiveness of ECN’s research and the development of high-quality technology. The legal structuring of ECN and its subsidiary NRG - which was going to be changed to a holding company with two foundations operating independently yet in tandem - has been shelved pending developments related to the High Flux Reactor of NRG. Summary Although the 2008 financial result was mediocre, the board is very satisfied with the progress made in the long-term programmes, the greater involvement of commercial parties, the growth in the number of patents and licensing agreements and the greater number of energy technologies brought to the market. This is thanks in part to the commitment and motivation of ECN employees. The board thanks them for their efforts and looks forward confidently to the future. Ton Hoff, Chairman of the Board of Directors The year under review was a very stirring one for NRG (Nuclear Research and Consultancy Group). It was a year that saw the firming up of strategy for the future, but also the temporary shutdown of the High Flux Reactor on account of an irregularity in the primary cooling water system. The decision not to start up obviously had a considerable impact. The impact was financial as well as social - the High Flux Reactor produces medical isotopes that meet 30% of global demand and 60% of European demand. The shutdown of the HFR, which restarted March 2009, pushed down ECN’s financial results. On the other hand, the evolving public debate on nuclear energy means that NRG has very good prospects in various fields. A good example is the research into the recycling and final storage of radioactive waste. The consultancy arm of NRG developed excellently. ECN’s pursuit of even better control of safety, health and environmental risks received an extra stimulus in 2008 through the awarding of the OHSAS 18001 certificate: the international management system for safety & health. Audits made clear that ECN unquestionably deserves this certificate. In 2008 there were no accidents that caused sick leave. This brings the five-year average close to the (provisional) target of 0.8%. While this figure is reason for satisfaction, the further reduction of the sick leave rate will remain the core of ECN’s safety policy in the coming years. Kees van der Klein, Director Gerald Santing, Director Personnel and safety 10 People management is part of ECN’s strategic plan. Three human resources projects designed to bring talent within ECN to full maturity got underway in 2008 - Job Descriptions, Competence Management and the Job Appraisal & Performance System. All positions were subsequently evaluated in the second half of 2008. Santing: “A closely-related subject is the development of a modern remuneration policy in step with market norms. The benchmark of our primary and secondary conditions of employment compared with those of other market parties provided a good basis. There will be greater scope for rewarding employees’ special capabilities and performance, both prominent matters in negotiations with the works council and unions on a new collective labour agreement.” 11 ‘It is promising that making energy systems more sustainable is receiving greater attention’ Policy Studies Remko Ybema, unit manager “In 2008, the Policy Studies unit contributed substantially to energy and climate policies by independently conducting research and advising both companies and authorities. The unit received numerous contracts from the European Commission (EC). In recent years Policy Studies has developed roadmaps for the European Commission for the use of hydrogen and biofuels in the European transport sector, with a substantial role for biofuels in 2030 through the HYWAYS and REFUEL projects. REFUEL (Renewable Fuels for Europe) has produced a roadmap for the first and second generations of biofuels, including a vision on the European potential for biomass, based on acreage in eastern Europe and scenarios for increased agricultural production. REFUEL presented a balanced vision amidst the robust biofuels debate in 2008. The vision boils down to our having to continue using and developing the first-generation biofuels, and in particular that we must make sure that the second-generation materialises. Nationally, Policy Studies is an important adviser to the authorities in The Hague. For the Ministry of Economic Affairs, we determined the costs of sustainable energy system options in cooperation with KEMA. This was used as input for the Sustainable Energy Production Stimulation (SDE) scheme that came into effect on 1 April 2008. The Fraunhofer Institute examined our working method and decided it was sound. For evaluation of the Clean and Efficient programme, the government intends to evaluate the policy before August 2010 and plan new prospects. To this end the unit is working together with the Netherlands Environmental Assessment Agency (PBL) on revising the reference projections. They will be published early 2009. In autumn 2008 ECN and PBL published some provisional figures about the effects of Clean and Efficient at the request of the Ministry of Housing, Spatial Planning and the Environment. Evaluation The global dimension can be found in the substantive contribution made by Policy Studies to the Poznan Climate Summit in December 2008. This fourteenth ‘Conference of the Parties’ was a stopover towards the climate conference in Copenhagen in December 2009. ECN attended the confe12 Interest in monitoring and evaluation studies increased in 2008, among other things because of the European energy efficiency directives and the outcomes of the G8 summit at Gleneagles in 2005. In cooperation with SenterNovem, the unit made major strides for the Ministry of Economic Affairs in the development of a monitoring and evaluation system for energy efficiency and conservation. Scenario analysis models were used to examine to what extent past energy trends can be simulated and explained. The Policy Studies unit is evaluating a tightening up of the building regulations for new dwellings (EPC) for the Ministry of Housing, Spatial Planning and the Environment. The experiences of market parties were inventoried by means of interviews. Additionally, a survey was conducted 13 rence as a ‘Research and Independent Non-Governmental Organisation’. ECN employees made contributions to subjects including the discussion about post-2012 issues, technology transfer and financing, the Clean Development Mechanism and CO2 capture and storage. “One of the highlights of 2008 for me was the Energy and Climate Package of the European Commission that the European heads of state and European Parliament approved in December with only a few changes. Environmental organisations that said that by adopting the agreed package European leaders had ‘turned their back’ on global climate efforts have underestimated its historical significance. The increasing attention for making energy systems more sustainable is promising. You see that more and more companies are focusing on this subject and putting forward initiatives. Members of the public also attach increasing importance to it. Something that will greatly influence this process will be the policy of Barack Obama, who will vigorously pursue cleaner energy usage. For him the economic crisis is an opportunity to give a substantial boost to wind energy, solar energy, clean coal and clean transport. I hope and expect that the US administration will succeed in developing a resolute policy and can speed up the move towards sustainability. In 2008, the Dutch government pressed ahead with national energy and climate ambitions.” among residents of new dwellings about their heating and showering patterns, their health perceptions and their experiences with the home ventilation system. Meter readings are taken periodically. The purpose of this evaluation study is to find out whether the new dwellings are as energy-efficient as may be expected and to provide insight into the potential effects on the health of the occupants. The unit developed a policy-supporting tool for the international HYLIGHTS project. The tool compares different vehicle technologies with respect to price per kilometre and analyses how the various fiscal incentives influence costs. For the Ministry of Housing, Spatial Planning and the Environment and the Ministry of Transport, Public Works and Water Management, Policy Studies developed scenarios for the introduction of electric and plug-in hybrid vehicles. The scenario showed that the reduction of CO2 emissions depends greatly on how electricity is generated, which is related to the time of charging. The same conclusion applies to the introduction of hydrogen as an energy carrier, leaving aside the need to build all production capacity from scratch. The unit also examined an operational concept for electric driving on behalf of the Ministry of Housing, Spatial Planning and the Environment.” ‘ECN is our premier supplier of data on sustainable energy’ “Policy Studies carries out numerous projects for the Ministry of Economic Affairs, but the most high profile one at present is SDE, the Sustainable Energy Production Stimulation scheme. It is one of the Dutch government’s most important tools in the ‘Clean and Economical’ programme. SDE is a subsidy scheme for companies and private individuals who want to invest in sustainable energy. The scheme provides for reimbursement to the enterprise of the ‘financial gap’ of such an investment, i.e. the price difference between producing green and grey energy. Each year Policy Studies calculates this factor for the different types of sustainable energy covered by the scheme. Solid calculations are hugely important to the success of the scheme. A financial gap calculated too high would mean that the government would contribute too much to sustainable projects. A calcula- It is nice to see that Policy Studies can move in step with us when time starts to press for political reasons. There is a shifting of activities so that the right quality can nevertheless be delivered on time. Policy Studies is our premier supplier of sustainable energy data. Given the government’s ambitions for sustainable energy, it is important for the future that Policy Studies will continue to sketch good scenarios to monitor feasibility of policy objectives. This requires good people, good scenarios and good data. ECN will be able to continue playing an important role on the road towards the sustainable energy objectives for 2020. In 2010 there will be an interim evaluation of the ‘Clean and Efficient’ programme. If the results turn out to be disappointing, it will be up to Dutch government to consider possible additional measures and their effects. Policy Studies can play a key role in designing these measures by calculating their effects quantitatively and objectively.” Eric Eijkelberg (Deputy Director of Energy and Sustainability at the Ministry of Economic Affairs) Top five of 2008 1. Requests for advice increased by 10% compared with 2007; 2. Substantial contribution made to Poznan climate conference; 3. Roadmaps developed for the use of biofuels in the European trans14 tion that is too low would mean that enterprises would be unable to make the investment. Both situations are undesirable. Therefore, it is very important for the calculations to be made by an organisation like ECN that possesses sufficient know-how and skills. port sector; 4. Input provided for SDE scheme commissioned by the Ministry of Economic Affairs; 5. Robust innovation routes mapped out for the transport sector (Ministry of Housing, Spatial Planning and the Environment/ Ministry of Transport, Public Works and Water Management). Policy Studies generally supports the Ministry of Economic Affairs in implementing and monitoring energy policy and it does so adequately. The quality of staff is high and they are very motivated to deliver good results. A sign of professionalism is that Policy Studies continuously examines its own functioning critically. In consultation with the Ministry of Economic Affairs it was decided, for example, to have the SDE calculations reviewed by an independent third party, the German Fraunhofer research institute. 15 “The Biomass, Coal and Environmental Research (BCE) unit has two programmes, ‘Biomass and Coal’ and ‘Environmental Research’. Within the two programmes we do not only conduct scientific research, we also develop and implement market-focused technology. The unit has also developed a programme for research into the different aspects that play a role in the sustainable use of biomass. We are further examining seaweeds as an alternative to land-based biomass. The planned agreement with a Dutch sustainable energy company for construction of the first torrefaction demonstration plant is important to the unit. Torrefaction, a kind of coffee-burning process, processes materials like wood or straw so as to create biomass pellets with a high energy density and very good storage and transport properties. The demonstration plant will produce these biomass pellets on a commercial scale and they will immediately be usable in conversion installations. The development of torrefaction is thus extremely important to the use of sustainable biomass in energy systems. The unit has built its own pilot plant on the ECN site. The plant is capable of processing seven tons of biomass each year. 16 MILENA is a gasification technology that will also be marketed a few years from now. Early September 2008, Jacqueline Cramer, the Minister of Housing, Spatial Planning and the Environment, checked the MILENA biomass gasifier at the ECN site against her own sustainability criteria when she officially opened the plant. The plant satisfied all her criteria. The plant forms the basis for the production of green gas, also called Substitute Natural Gas (SNG). Green gas can be mixed into the gas grid or used as a sustainable biofuel, for example in gas-powered vehicles. Together with the OLGA technology (for the removal of tar, ed.), MILENA plays an important role in plans of the New Gas Platform, which is aiming for a share of 50% green gas in 2050. A project was started with a leading Dutch utility in 2008 to demonstrate this technology. The ground these two processing technologies are gaining is evident from the fact that the unit presented torrefaction and MILENA as two examples of successful Dutch technology developments at the Poznan climate conference in December 2008 at the invitation of the Ministry of Housing, Spatial Planning and the Environment. The Labscale Combustion Simulator (LCS) for characterising the combustion and gasification properties of biomass was modified and used to support industry in 2008. The LCS provides a wealth of information about the combustion and gasification properties of different biomass and about pollution behaviour in the conversion processes. An oil company commissioned the unit to develop a setup that converts the synthetic gas obtained from coal gasification into liquid transport fuel. In 2009 this test facility will make an important contribution to developing the technology for the second generation of transport fuels. 17 ‘European objectives are unachievable without sustainable use of biomass as an energy source’ Biomass, Coal & Environmental Research Jan Willem Erisman, unit manager “Brussels is aiming high with its climate and energy package. All sustainable energy options will be needed to achieve the European objectives, including sustainable use of biomass as an energy source. It is good that the European Commission is aiming to formulate sustainability criteria for biofuels, because it will obviate the need for discussion about the greenhouse gas balance or potential competition with food supplies. Biofuels are usable in the same way as fossil fuels. Therefore, they are usable relatively quickly as an important sustainable source for green gas, electricity, heating and transport, and as a green raw material for the chemical industry, with highly promising possibilities for limiting emissions of greenhouse gases. The Biomass, Coal & Environmental Research (BCE) unit marketed some important second-generation technologies in 2008, bringing the production and use of truly sustainable biofuels like ‘green gas’ and biomass pellets a lot closer. The development towards use of biomass that does not compete with food supplies will continue worldwide. There is still a lot to discover for the new generation of biofuels. The unit can make a valuable contribution in this field. We possess the ideal combination of knowledge and technology for producing biofuels, computing environmental effects and developing sustainability criteria.” Technology transfer The BCE unit has licensed two patents for removal of N2O from fluegas of nitric acid factories to CRI/Shell. The Kyoto Protocol names N2O (‘laughing gas’) as an important greenhouse gas. The greenhouse effect of this gas is 310 times greater than that of CO2. That is why the relatively small emissions of N2O account for relatively large part of the total intensified greenhouse effect: an estimated 5% comes from emissions of this gas. CRI has given a commitment to market the technology worldwide, an effort likely to involve a few million euros. In all probability the first plant will be equipped commercially with this technology in 2009. Rohasys, a Dutch SME, has been licensed for four setups for simulation of the leaching of contaminated substances in building materials into ground water and surface water. The first products are expected to be sold in 2009. This development will enable the standardisation and widespread use of the leaching procedures being developed within ECN. Two other Dutch SMEs, Dahlman and Applikon, have reported a strong increase in demand for the OLGA and MARGA technologies licensed by ECN. 18 Top five of 2008 1. Torrefaction and MILENA, both important second-generation technologies, reached the market; 2. ECN torrefaction pilot plant processed 7 tons of biomass; 3. Patents for neutralising N2O were licensed to CRI/Shell; 4. Rohasys was licensed for setups for simulation of leaching of contaminated substances to ground water and surface water; 5. Scientific basis was strengthened by the doctoral research of BCE researchers. ‘Less distinction between fundamental and applied research’ “As researchers at VU University Amsterdam we cooperated intensively with the Biomass, Coal & Environment unit in a European project that measured CO2 concentrations in the atmosphere. The cooperation was so good that it was carried forward into a new European project. We also jointly carried out a Dutch project about the carbon cycle. The traditional relationship between a university and a knowledge institution is that the university does the purely scientific work while the knowledge institution concentrates on applied scientific research. But the dividing line between fundamental and applied research is blurring a little. There is obviously a difference because of the university’s educational function. Some of our graduates work at ECN and some ECN employees work and do their doctoral theses with us. This cooperation will be further strengthened by the appointment of a professor occupying an endowed chair at the VU Amsterdam, funded by ECN, for one day per week. We operate in a very large field of study. In our cooperation with BCE we focus on the greenhouse gas balance in the atmosphere, devoting special attention to laughing gas and methane. Two ECN employees are currently doing their doctoral theses with us on measurements of fluxes of these two gases and of CO2. The intention is for there to be even more joint doctoral candidates in the near future. Sometimes we notice that we would like to go even deeper but that BCE lacks the opportunity to do so. We like to finish projects with a scientific article, but ECN is a project-driven organisation that has to listen to what its clients want - and when time is up or the client feels there is no need for such a conclusion it does not happen. But apart from that our cooperation with ECN is highly satisfactory.” Prof. dr. Han Dolman (Professor of Ecohydrology and Head of the Department of Hydrology and Geo-Environmental Sciences, VU University Amsterdam) The scientific basis of the unit has been reinforced. The unit had 38 scientific articles published in 2008, in journals including Nature Geoscience and Science. The unit regularly engaged in the sustainability debate, among other things by cooperating in a thematic column about biomass in Change Magazine. A BCE researcher obtained a doctorate at Wageningen University on a thesis about Characterisation of natural organic matter in relation to the spread of contaminants in the environment. He demonstrated in his thesis that natural humic and fulvic acids also occur in waste and greatly increase the leaching of heavy metals like copper. This made him the third doctoral candidate at the Environmental Pollution Risk Assessment group within two years. With a part-time professor in Environmental Geochemistry at Wageningen University, the unit now has a very strong scientific basis for conducting environmental research. One of the unit’s researchers obtained a doctorate at Delft University of Technology for research into the reduction of particles in exhaust gases of ships’ diesel engines.” Another example of a large joint project concerns emissions of methane and laughing gas. ECN owns a high mast in Cabauw with instruments that measure the composition of the air. We try to couple these measurements to emissions by means of modelling. This approach is successful because there are now plans to carry out a similar project Europe-wide. Throughout Europe in its entirety, we will create an infrastructure for measuring concentrations, together with major European research institutes. The funding is still uncertain, but there is a project in acquisition under the seventh framework programme. Within that programme BCE is performing measurements and together we are providing the modelling. 19 “Efficiency & Infrastructure (E&I) is the new, concise name of the unit created in 2008 through the merger of the Energy Efficiency in Industry unit and the Energy in the Built Environment & Grids unit. Three programmes are currently elaborated at Energy & Infrastructure: Intelligent Energy Grids, Energy in the Built Environment and Energy Efficiency in Industry. One of the common themes in these programmes is heat management, including the storage of heat. Besides developing heat pumps we are working on the storage and transmission of industrial or other residual heat. There will be intensive work on this subject in the coming years, not only within the ADEM programme of ECN and the three technological universities, but also in the WAELS project, a collaboration of ECN, TNO and Eindhoven University of Technology. The WAELS research has identified salt hydrates as a highly promising material for seasonal heat storage in the built environment. The development of the thermoacoustic heat pump reached a new milestone in 2008. Together with two Dutch engineers, Bronswerk and Dahlman, ECN is working on the development of a thermoacoustic system that uses industrial residual heat as driving force. In this instance the mechanical power produced consists of a very powerful noise wave. The noise pro20 E&I also develops thermochemical heat pumps. For a large carmaker we developed a heat-powered air-conditioner that uses engine heat to provide in-car cooling. This ‘sorption cooler’ was then successfully built into one of the carmaker’s cars. We are also working on and have already tested a heat-powered air-conditioner for residential dwellings. The market has expressed interest in it. Within the Intelligent Energy Grids programme, the unit is focusing on developing technology for the efficient harmonisation of supply and demand of energy (electrical or otherwise). At present the balance between supply and demand is still relatively easy to achieve. However, in the near future consumers will make less use of mains electricity, because they will start producing their own electricity. Moreover, more electric vehicles will be introduced in the market. This may overload the electricity grid. A solution is to make the grid more intelligent. We are establishing contacts in this field with universities and with the market. Internationally, we are profiling ourselves in the field of intelligent grids by participating in forums like the European Smart Grid Platform. 21 ‘Energy efficiency and saving are essential for a sustainable energy system’ Efficiency & Infrastructure Peter Alderliesten, unit manager duced is subsequently used to upgrade another part of the system residual heat into usable heat. This allows you to make purposeful use of otherwise useless residual heat for industrial processes. Industry stands for the challenge to make big savings on energy consumption and this technology will certainly help. Using the thermoacoustic heat engine we achieved a conversion efficiency of 48% of maximum possible efficiency, a world record. The record was an important milestone towards the conversion efficiencies necessary to cre“The ever-increasing energy prices in recent years have resulted in increased attention to energy saving and energy efficiency. The challenge is to retain this attention to the demand side of energy system even with the current low energy prices. After all, without the efficient and effective use of energy, a sustainable energy system will be an illusion and the ambitious targets of the European and national authorities will never be achieved. The potential for energy saving and efficiency is great, but so are the scale and the complexity of the problem. The demand side affects all sectors of society, there is not just one lead player. It is ultimately about how you can fulfil the need for heating, cooling, powering, climatising and lighting across the entire chain with minimum use of scarce raw materials, fossil or other energy carriers and optimum use of the spatial and energy infrastructure; in other words, how to limit losses and wastage. This reduces dependence on energy and increases possibilities for sustainably fulfilling the demand for energy. System and process analyses within and overarching the sectors of the chain are essential to get a better insight into the loss factors and to identify, prioritise and realise promising innovations that contribute maximally to the energy transition.” ate a viable system. We have applied for a patent for multistage thermoacoustic heat pumps in which each stage uses the same acoustical impedance. Software technology that received much attention in 2008 was our PowerMatcher. This smart software technology gears the actions of electrical devices to each other and to the supply of electricity. It provides energy producers with information about the time when the consumer needs electricity. The PowerMatcher determines automatically when the charger of an electric car takes electricity from the grid, for example. It switches on the charger only when it is most economical to do so. This regulates the energy load of the grid so as to establish the most favourable possible total load. It has brought a smart electricity grid another step closer. We developed a third version of PowerMatcher in 2008, incorporating a number of new functions. We will use this version in field experiments and will shortly begin a commercialisation process. In the year under review, we also built a prototype of the Virtual Synchronous Generator (VSG). The purpose of the VSG is to compensate for fluctuations in future energy grids by means of rotating mass. The VSG consists of a computercontrolled 15 kW generator and a 6 kWh Li-ion storage system. We are able to test the VSG using a bespoke experimental mini-grid. Technology transfer Companies are showing more and more interest in ECN’s hybrid membranes. A strategy was worked out in 2008 for using this technology widely in the coming years under the name of Hybsi®, now registered as a brand name. Trials have shown that the different types of hybrid membranes have a large field of application. ECN’s thin-film palladium membranes, developed for the separation of hydrogen, are undergoing a similar development. We have worked out a strategy for wide application of this membrane, under the registered brand name of Hysep®. The interest of industry has resulted in paid contracts to deliver membrane modules for separating hydrogen from a gas mixture. One client wants to examine whether ECN’s Hysep® module technology is suitable for a new and more efficient hydrogen production process for the refining industry; another client is examining whether it can use the Hysep® module technology for its reforming process to be marketed in 2010.” ‘From a technological point of view you need to use energy so efficiently that it renders collective heat transmission and distribution unnecessary’ “After my political career as a member of the South Holland Provincial Executive I am now directing my efforts towards sustaining society. As Innovation Manager of the Rotterdam Climate Initiative, I work mainly on energy efficiency and sustainable raw materials and fuels. Two-thirds of all energy used in the Netherlands is in the form of heat or is released as residual heat. This makes it essential to direct attention towards the heat sector in order to achieve a sustainable energy system. With its port and industrial complex, Rotterdam is like one very large heat accumulator, which explains why heat plays a major role in Rotterdam’s climate plans. The E&I unit played a central role in preparing the WAVINED plan (an acronym for Heat Supply in the Netherlands). The staff possesses an excellent insight into available technologies and the potential role of technology in supplying heat. You notice in talks with fellow engineers in industry that they are highly respected for their knowledge and overview. From a purely scientific and technological point of view, you have to use energy so efficiently that it renders collective heat transmission and distribution unnecessary. A heating grid would then obstruct the continuing efficiency improvement. But when I see that a ‘passive house’ costs between € 20,000 to € 30,000 extra and a heating connection € 4,000 to € 5,000, I would prefer to install a heating grid for the time being. That does not alter the fact that I can always approach ECN if I have questions about sustainability and that the researchers always provide adequate information. But I would like to see ECN give even higher priority to energy efficiency. Sometimes I get the impression that it is treated as a changeling, even though it is the first and most logical step towards achieving a sustainable energy system. I also something think: don’t bury the strategically strongest people with management duties. In Rotterdam we call them ‘urban marines’: we don’t deploy people with a strategic overview in management, but at the heart of society. From there they carry out changes.” George Brouwer (consultant to the Board of Governors of Rotterdam University, and Innovation Manager at the Rotterdam Climate Initiative) 23 Top five of 2008 22 The ECN name is synonymous with quality. What’s more, it is my experience that they are highly dependable; they do what they promise. Because of my administrative way of looking at things, I sometimes feel that in their enthusiasm E&I people become too bogged down in the technology. I then think to myself: with a little more feeling for administrative reality you could achieve even more. The talks I have with E&I employees often boil down to the usefulness of heating grids. 1. Record efficiency in converting heat to sound in a thermoacoustic heat engine; 2. Development of PowerMatcher, a smart software technology that gears the use of electrical devices to the supply of electricity; 3. Highly promising market opportunities for Hybsi® and Hysep® membranes; 4. Prototype of the Virtual Synchronous Generator (VSG) for limiting fluctuations in future energy grids; 5. Marketing of Stirling micro-CHP system for combined generation of electricity and heat in residential dwellings. “Hydrogen & Clean Fossil Fuels is pursuing technologies that enable highefficiency CO2 capture and also production of hydrogen-rich gas. This gas is suitable for producing electricity in large power plants, or for use as transport fuel, preferably in combination with fuel cell systems. In the last quarter of 2008 the first experiments were carried out on the SorptionEnhanced Water Gas Shift (SEWGS) plant of ECN. The SEWGS trial plant converts carbon monoxide and steam into hydrogen and CO2, after which the CO2 is captured and can be stored underground if desired. Initially the plant will be used to test and scale up the SEWGS technology. In the near future we will use the SEWGS plant to simulate the purification of hydrogen produced from coal gasifiers. With this hydrogen we will then be able to produce electricity. These technologies are attractive for industrial processes that use hydrogen on a large scale, as in the refining of crude oil, the manufacture of chemicals and fuel cells for use in the transport sector. Technology transfer ECN’s spin-off company, SulphCatch, signed an agreement with HyGear in 2008. SulphCatch will now become the most important supplier of sulphur-removing adsorbents for HyGear’s hydrogen production units. The adsor bents of SulphCatch have considerable adsorption capacity according to HyGear. European cooperation in the field of hydrogen and fuel cells entered a new phase in 2008. A noteworthy event was the establishment of N.ERGHY (European Grouping on Hydrogen and Fuel Cells) in March. N.ERGHY is a European initiative in which fifty leading universities and knowledge institutions are participating, including ECN. ECN is one of the parties behind the initiative to establish the group that is participating in the Joint Technology Initiative (JTI), a public-private partnership that under the EU banner is bundling research, technology development and demonstrations in the field of hydrogen and fuel cells so as to get innovations to the market quickly. The technology for fuel cells must be ready for market introduction in 2015. The Netherlands is one of the countries where the developments are promising. We are involved in the major Hydrogen Region programme in the south of the Netherlands and Flanders for the purpose of starting up hydrogen applications and infrastructure. 25 ‘CO2 capture and storage enables the responsible use of large reserves of coal and natural gas for the production of electricity and transport fuels’ Hydrogen & Clean Fossil Fuels Frank de Bruijn, unit manager The CATO-1 project funded under the Knowledge Infrastructure Investments Decree (Bsik) stopped at year-end 2008. The project was focussing on developing knowledge and technology regarding CO2 capture and storage (CCS). Through CATO-1, ECN obtained unique test 24 setups for pre-combustion capture technology (CO2 capture for combustion) and for developing oxyfuel technology (the burning of fuels with pure oxygen). These now play a major role in European projects and illustrate the importance of CATO-1 to the Dutch research infrastructure. In successor CATO-2, in which we focus on the pre-combustion and oxyfuel technology, ECN will use the same test setups to develop secondgeneration pre-combustion capture technology. The unit is also involved in Nuon’s ‘CO2 Catch-up’ initiative for small-scale “There are many initiatives focusing on using technologies for CO 2 capture, hydrogen and fuel cells. Thy Hydrogen & Clean Fossil Fuels unit is keen to join these initiatives, as time is running out. We must abandon the linear innovation model in which the technology is first optimized completely in the lab and only then go into the field for trials with the knowledge we have acquired. By letting these phases partially overlap, we can adapt the development of new technology at an early stage to practical conditions and also save time. A very serious option is undoubtedly the capture and underground storage of CO2. This makes it possible to use fossil fuels in the longer term as well, while simultaneously reducing CO2 emissions into the atmosphere. Numerous recent energy scenarios, of parties like the International Energy Agency, show that we cannot do without this option. For its research into usable hydrogen technology and CO2 capture, Hydrogen & Clean Fossil Fuels is keen to set up cooperation with other research institutions and with companies. The trend is clear: industry, government and knowledge institutions are joining forces to tackle the complex transitions jointly. I am convinced that this approach will yield results.” demonstration projects for CO2 capture in the Integrated Gasification Combined Cycle (IGCC) station at Buggenum, and is active in other initiatives for pre-combustion capture technology. Something worth mentioning is that the eight oil companies that are cooperating in the CCS field have invited the unit to submit proposals for research, technology development and trial plants for pre-combustion capture technology. Additionally a first step was taken towards establishing the Dutch Hydrogen Coalition DutchHy in 2008. On 20 November, twelve parties, including ECN, signed a letter of intent for this purpose. Besides the cities of Amsterdam, Rotterdam and Arnhem, the participants include companies like Air Products, Linde, Shell, Nedstack, Plugpower, Hygear, VDL APTS and HyTruck. The objective is to bring about acceleration of the introduction of hydrogen in the Dutch energy system. The coalition advocates setting up a national hydrogen programme with an envisaged budget of € 80-90 million.” Top five of 2008 1. First experiments with SEWGS plant (hydrogen production and CO2 capture); 2. Establishment of N.ERGHY/JTI, bundling research, technology development and demonstrations in the field of hydrogen and fuel cells; 3. World record performance Solid Oxide Fuel Cell at 600 °C; 4. Reduction of platinum use in PEMFC by half without compromising performance; 5. Development of pre-combustion capture technology in CATO-2. ‘ Wind energy is going to make a big contribution to the objective of getting about 20% of energy consumption from sustainable sources in 2020’ Wind Energy Theo de Lange, unit manager ‘For us the benefit of cooperating with ECN lies mainly in the independent way that ECN looks at new technologies’ “At Nuon we deal with the Hydrogen and Clean Fossil Fuels unit mainly for 26 The unit was not subsequently involved in the trials that we set up, but later we did make very grateful use of their knowledge when evaluating the trials. Our research into CO2 capture and storage (CCS) took place in a similar way. Initially, Hydrogen & Clean Fossil Fuels acted as a sounding board for us: in this phase we opted for pre-combustion removal of CO2 and the unit supported us in selecting the best technologies. Now that we are far advanced with our trials in the CO2 Catch-up project in Buggenum, Hydrogen & Clean Fossil Fuels is again a valued sounding board in their evaluation. The same holds for the incorporation of the results of the trials in the design of our Magnum station. We are now going to build a trial plant for the real-life capture of CO2 and ECN is involved in the work. We have become smarter and so has ECN: together we can benefit from the hands-on knowledge that this trial will yield. We have a very good understanding with ECN. It is a pleasant organisation to cooperate with. Very good technologists work there and in the market ECN is a much sought-after knowledge institution, among other things in the role of sounding board. Ideally we would like to work with the same person in a project from start to finish, although we do recognise that with a large organisation this is not always possible.” Robert de Kler (Head of Technology and Engineering Services of Nuon) “In the short to medium term, wind energy remains one of the key options for cheap, large-scale and sustainable production of electricity. Wind energy is going to make a big contribution to the objective of the Dutch government to get about 20% of energy consumption from sustainable sources as early as in 2020. But in the longer term, too, wind energy will play a big role. In the Netherlands we have a favourable combination of a lot of wind, the proximity of the relatively shallow North Sea and considerable knowledge and experience of maritime technologies and wind energy. What’s more, there has been a revival of the wind industry in the Netherlands. Various onshore and offshore turbines are being developed in our country and large wind energy companies have intensified their activities. This offers great opportunities for the Wind Energy unit to build up a strong position. The effect of the current economic crisis on the wind energy sector is difficult to predict. But I am confident that precisely this sector - as part of a new economic course - will emerge stronger from the crisis. The Wind Energy unit can make a major contribution.” 27 the development of fuel cells and the capture and storage of CO2. We also work with other units in fields like torrefaction and the production of synthetic gas from biomass. For us the benefit of cooperating lies mainly in the independent way that ECN looks at new technologies. At ECN we get a good expert judgement plus excellent access to technological knowledge. For fuel cells our first contacts date from the premature phase, when we were checking out possibilities in this field, and Hydrogen & Clean Fossil Fuels gave us excellent feedback about the choice of development routes. “Our research activities increased again in 2008 and we are increasingly working together with both universities and industrial parties. Our wind test field and the rotor and materials test facility of WMC have shown to be of great value. To put more structure into our market-related activities, we have established an Industrial Support Group. The group will work specifically on transferring to industry the knowledge and technology obtained from the unit’s long-term research.” “In 2008, research at the Wind Energy unit focused on subjects such as calculations for the design of wind turbines. Enormous cost and time savings are achievable in the design phase, the path from idea to product. You need in-depth knowledge of the aerodynamics and constructional dynamics of wind turbines. It is important to be able to predict properly the interaction between wind, waves and turbine to enable us to design efficient turbines that are well controllable under all operational conditions. Something else that is obviously important is for the turbine to produce as much energy as possible over its full service life of about twenty years. Condition monitoring systems and optimum strategies for maintenance and operation are indispensable. This is another field in 28 A research field gaining in importance is farm aerodynamics. The objective is to optimise the energy yield of a complete wind farm instead of doing so for each individual wind turbine. ECN holds various patents on control strategies for wind farms and wants to test them in practice. This is being done in Wieringermeer on our own test farm. The official opening of the ‘scaled wind farm’ took place there on 5 September. The scaled wind farm consists of ten wind turbines, ten small test masts and four large test masts. This experimental wind farm, visited in December by Maria van der Hoeven, Minister of Economic Affairs, is unique in that information about the performance of the turbines located at the upwind side of the farm is used to adjust the other turbines and vice versa. It is possible to change the pitch-angle of the rotor blades, the yaw angle and the rotational speed of these turbines. By identifying the air flow through the wind farm we can develop control strategies and test them so as to increase the electricity production of an entire wind farm. It is an essential addition to the development of computational models that the unit has been doing for many years. So the scaled wind farm enables ECN to strengthen considerably its position among the world’s top in wind energy research. Although the start-up of the scaled wind farm was delayed due to technical problems, we have made important steps forwards in our research into wind farm aerodynamics. The importance of the activities of the Wind Energy unit is evident from the big participation in the second Dutch Wind R&D Workshops that the unit organised in cooperation with the Delft University of Technology, WMC and SenterNovem. The number of published scientific articles, which received greater attention in 2008, came to four. A special activity in 2008 was the Aeolus Wind Race. In the race near Den Helder the ECN wind racerpowered by a wind turbine rotor-achieved an average speed of almost 25 km per hour and came second in a race straight into the wind. Technology transfer “A number of R&D activities in the field of aeroelasticity are now in the final phase. They include research into a new aerodynamics module that can be connected to existing commercial design software, and the integral wind turbine design package called Focus, which is a co-development with WMC, for which a new version has been issued. The unit decided in 2008 to develop new rotor aerodynamics activities. Together with a number of Dutch universities and the Center for Mathematics and Computer Science, we have embarked on a highly promising long-term R&D path, in which Computational Fluid Dynamics is being used to design better wind turbine rotors. An important success was the sale of licences for the Control Design Tool and the delivery of wind turbine control algorithms to various wind turbine manufacturers in the Netherlands and other countries. The industry has a lot of interest for the possibility of using this tool to control the wind turbine in a way that increases its energy yield and makes it better suited to extreme situations, like emergency stops. There is also considerable interest in our work on system identification, which in simple terms involves giving the turbine controller a self-learning capability.” 29 which Wind Energy occupied a prominent position internationally in 2008. The slowdown that occurred in 2007 in research into blade monitoring has largely been made up and the proposed research into the flight leader concept is now underway. This concept will enable us, using the extensive monitoring of a small number of turbines in an offshore wind farm, to predict the mechanical and fatigue loads on all turbines in the farm. In cooperation with some industrial partners and as part of a major European project, we set up a new R&D activity in 2008, aimed at finding solutions to problems that frequently occur in gearboxes and other drive train components. The research includes a very extensive measurement programme so as to determine the loads that occur in practice. Top five of 2008 1. Opening of ECN scaled wind farm for validation of new control strategies for wind farms; 2. New R&D activity: measurement programme on wind turbine drive train components (including gearboxes); 3. Record sale of licences for design software and O&M software; 4. Successful Dutch Wind R&D Workshops; 5. Establishment of Industrial Support Group. ‘Our work basically consists of simultaneously solving puzzles in various specialised fields’ “AE-Rotor is part of Suzlon and designs rotors. Production takes place in India, China and the United States, while most product development occurs in the Netherlands and Germany. In Baroda (Vadodera) in India the company makes moulds in the designed aerodynamic shape. By means of the moulds it is possible to produce rotor blades anywhere in the world. The design of rotor blades requires close cooperation between the disciplines of aerodynamics, glass fibre reinforced construction, materials, production processes and production tools. The Wind Energy unit is very strong in aerodynamics, and our cooperation with them is based on this specialisation. When we sought aerodynamics support in 2007, we looked around carefully to see where the best knowledge was available. You don’t need to go far, 30 The development philosophy of our Asian company played a role in opting for this cooperation. The fear of sharing knowledge is far less in Asia than in Europe, so mutual openness is rewarded. The motto is: hedge your bets. So we are keeping open an option for a development line outside our company. If your favourite design does not succeed, you always have another one in reserve, according to this philosophy - Europeans sometimes have to get used to this approach. We greatly appreciated Wind Energy’s willingness to participate in our activities in this way. Our work basically consists of simultaneously solving puzzles in several specialised fields. That is after all the context in which aerodynamic knowledge is used, and participation in that process offers a good counterweight to scientific navel-gazing... the danger to which all knowledge institutions and companies are exposed. Through our cooperation with Wind Energy, we are able to use the best available knowledge for this technological puzzling. We benefit from the open exchange of knowledge and have noticed that this model is increasingly being used, for example in high-tech campuses around large companies.” Klaas Schuring (Vice-President of AE-Rotor Techniek PLC) ‘Around 2015 solar energy will be able to compete with the consumer price for grey electricity’ 31 because the best wind turbine knowledge in the world can be found within a radius of 800 km, in Denmark, northern Germany and the Netherlands. At the start of 2008 we entered into a partnership with the Wind Energy unit with the aim of obtaining mutual insights. What’s important for us is that we get access to the specialised knowledge of Wind Energy; for ECN it is important to be able to take part in a real development instead of, as often happens, fulfilling a sideline role as an adviser. One of the ECN employees works on-site at our organisation two days a week. Solar Energy Paul Wyers, unit manager “Since April 2008 the government has been stimulating the use of solar energy by means of a long-term compensation per kilowatt-hour of produced solar electricity. This SDE scheme (Sustainable Energy Production Stimulation) is still small in terms of scale and system output. Nevertheless it is pleasing to see that after five years there finally is another subsidy scheme for the use of photovoltaic systems. The conditions of SDE are likely to be relaxed in the coming years. If the reduction of costs develops as we expect, the costs of generating solar electricity around 2015 will have dropped so far that solar electricity will be able to compete with the consumer price for grey electricity. At that time it will be worthwhile for consumers to use this technology even without a subsidy. PV panels made of crystalline silicon currently account for approximately 85% of the market for solar cells. Developments at the Solar Energy unit continue to focus on cost reduction through cheaper production techniques and higher panel efficiency. For the more distant future the unit is focusing on developing thin-film silicon on foil and on research into organic solar cells. The big challenge is to improve the efficiency and stability of these solar cells. This will enable us to make another important step towards inexpensive and reliable solar electricity.” “The development of technology as well as the scaling up of production is necessary for cheaper solar electricity. This must be done in cooperation with producers and knowledge institutions. Roughly 85% of the solar electricity systems produced in 2008 consists of silicon panels. Therefore, two-thirds of the researchers at the Solar Energy unit are working on silicon PV technology. The solar panels are constructed of solar cells made of silicon wafers interconnected electrically and sandwiched between glass and plastic films. In 2008 the unit increased the conversion efficiencies of different cell types and modules manufactured by production methods usable in industry. For very thin (120 µm) multi-crystalline p-type silicon back contact cells (‘PUM cells’) we got an efficiency of 16.8%. On n-type multi-crystalline silicon cells (200 µm thick) we achieved an efficiency of 16.7%, the highest published efficiency for such cells produced entirely by means of industrial production methods. A pilot line was installed in January 2008 to produce modules with silicon back contact cells at ECN. The series connection is established by using conducting adhesive to connect the contact points on the back of the cells to contact points on a kind of PCB. So far approximately 100 fully 32 Another important activity of the unit is research into the effects of contaminants in silicon wafers on the performance of solar cells. By performing tests on wafers deliberately contaminated with certain metals, we have identified the tolerance of solar cells to such contaminants. The unit is working on a specification of a so-called ‘solar grade silicon’ that states which contaminants are permissible in solar cell wafers. A workshop that we organised on this subject in Amsterdam in November 2008 was attended by many international experts. The market share of thin-film modules has grown strongly over the past two years. We are conducting research into two of these ‘technology families’: thin-film silicone PV and organic PV. On a polymer solar cell made entirely of commercially available materials, we achieved a conversion efficiency of 5%. We also experimented with the ‘reverse’ structuring of such polymer cells. This may allow us to achieve better stability because it makes the cells less sensitive to oxidation by water vapour or oxygen. With this structuring we have achieved an efficiency of 4%. Technology transfer Cooperation agreements were signed in 2008 with two large companies in the solar cell industry for the module technology for PUM back contact cells. With one of these companies we additionally concluded a licensing agreement for use of the results of this cooperation. Also in 2008 we signed a license agreement with a company for the production of patterned films to which PUM cells are glued. Under the agreement this company has committed to marketing the technology, an effort likely to involve several million euros. Since April, ECN and the Holst Centre in Eindhoven have been working intensively on roll-to-roll processing of polymer solar cells. Konarka, an American manufacturer of polymer solar cells, selected ECN as its partner for testing its products. Together with Konarka and other players, ECN is endeavouring to raise the characterisation of organic solar cells to a higher level worldwide, particularly by developing test procedures. Together with LIOF and Solland Solar B.V., ECN established the Solar Top five of 2008 1. Installation of a pilot line for producing modules with silicon back contact cells; 2. Establishment of the Solar Academy; 3. Research into the effect of contaminants in silicon wafers on the performance of solar cells; 4. Konarka’s selection of ECN as its partner for testing polymer solar cells; 5. Fundamental research into the use of nanotechnology to improve the efficiency of solar cells. Internally, the Solar Energy unit directed its attention more towards fundamental research focused on substantially higher efficiency. Together with universities and other research institutions, we are looking for ways of using nanotechnology to increase efficiency, for example. This is possible by making the cell sensitive to a larger spectrum of offered light. Academy B.V. in 2008. The academy is a training and education centre for employees working in the solar cell industry, focused principally on the production of silicon solar cells. Over the past years ECN has established a good curriculum and trained more than 100 people. These activities have now been bundled and embedded at the Solar Academy. The training centre responds to one of the major obstacles standing in the way of further growth of the solar cell industry: the shortage of sufficiently qualified personnel. The Solar Academy is located in Limburg (Avantis industry park).” 33 functional modules have been made on this line. This includes the modules made of PUM cells of 160 µm. The efficiency of these full-size modules is 15.4%, just 0.1% below the world record for modules with multi-crystalline silicon solar cells. In 2009 this world record for module efficiency is likely to be broken. This development in module technology is being supported by research at the Delft University of Technology, where a research assistant is conducting research for ECN into the mechanical load of solar cells in relation to, among other things, this module technology. ‘ The PV industry is now moving fast enough to lift off and the credit crisis will cause no more than a temporary weakening of growth’ “In our field everybody knows ECN. There are three leading institutions in the world in the solar cell technology and ECN is one of them. The Solar Energy unit is very active at conferences and everybody knows what they do and wants to cooperate with them. An important result of the cooperation between the Solar Energy unit and Tempress, a fast-growing company that now has 100 employees, is the technology for boron diffusion on n-type silicon wafers. Tempress will shortly market the technology. We are too small to maintain our own development laboratories, but ECN has a complete line that allows you to see whether a proposed innovation is truly an improvement. ECN operates closer to industry than to universities, so together with the research centre you can develop a new technology to industrial level. 34 The Netherlands does more than you think in the solar energy world. To start with the country has a big indirect influence on solar energy, with ECN as the pivot. So it’s a pity that there is hardly any domestic market for which Tempress can produce products. The Germans have approached PV on big scale and systematically, creating an industry with 100,000 workers. Much of the technology developed by ECN is used in Germany. The development of the plasma nitride anti-reflection coating by the Solar Energy unit formed the basis of an industry with sales of more than € 200 million at one of our German counterparts. We still have loads of plans to develop things together with Solar Energy, but we can see that the unit is barely big enough. Perhaps they are just a little too small to maintain their leading position. It is ridiculous not to direct more money from the gas revenues towards the development of solar energy. The amount of influence that this group of ECN has in the solar world is seriously underestimated.” Fokko Pentinga and Frans Derks (Respectively Managing Director and Production Manager of Tempress Engineering & Services) ‘E&S provides the infrastructure for energy research at ECN and for technology at other innovative companies’ Engineering & Services Jaco Saurwalt, unit manager 35 The solar energy market is growing incredibly. In 2005 the annual fair in Barcelona was modest, but the one in Valencia in 2008 was enormous, with 4 ha of floor space. In China, where we do a lot of business, industrial sites of thousands of hectares are being set up especially for the manufacture of solar cells. They are crammed with buildings. The PV industry is now moving fast enough to lift off and the credit crisis will cause no more than a temporary weakening of growth. “The raison d’etre of Engineering & Services (E&S) lies in its support for developing energy technology. E&S provides the infrastructure for energy research and for technology at other innovative companies. This challenges the unit to look proactively for new developments, which means that intensive contacts with other innovative companies are vitally important. That is why E&S opened an office at the Philips high-tech campus in Eindhoven towards the end of 2008. This office has a double function. On the one hand, we focus on the scouting of new developments, technology intelligence and the use of the Eindhoven region’s facilities for energy research. On the other, we direct our expertise towards local clients, among other things with laser operations for PV cells.” “The broadly-based profile of process engineering all the way through to construction and chemical or material characterisation, proves unique time and again. Besides work for the ECN research units, we are increasingly developing test setups and/or prototypes for small and large companies. In this respect 2008 was an absolute top year, with major projects like the Malachite radiation setup in Moscow (together with the Joint Research Centre, JRC) and the development of an efficient and switchable LED lighting fixture for the Alenco company. The substantive development of Engineering & Service has moved ahead too. It is necessary to estimate product and process costs at an ever-earlier stage for the deliberations on whether to develop or expand processes. An entire range of model-based tools have been developed for this purpose. The importance of laser technology is increasing and it is becoming cheaper all the time. Laser technologies are usable to fix microstructures to large surface areas, for example. The use of fibre lasers now costs not more than one-quarter of the cost of traditional lasers. Technically, too, the fibre lasers provide extra possibilities. With the beam quality you can direct fibre lasers far better and get the heat exactly where you want it. 36 Four laser systems have been added to our facilities in Eindhoven and we have acquired a great deal of process and application knowledge. In Eindhoven we are focusing on the further development and manufacture of prototypes, mostly for local customers. The expectation is that we will quickly become one of the largest players in the Netherlands in the field of innovative laser processes. That does, however, not mean that other techniques for fixing microstructures to large surfaces will receive no further attention. The importance of these technologies is increasing, particularly in energy research. Engineering & Services is one of the initiators and is now developing a roadmap for precision operations. Setting up new industrial activities requires a specific kind of support. The transfer of knowledge and provision of advice to SMEs is solidly supported in the Netherlands by means of innovation vouchers of the Ministry of Economic affairs. The vouchers enable companies to obtain a subsidy for research and have it performed by Engineering & Services. Various companies again used this facility in the past year. As far as Engineering & Services is concerned, SMEs may call on us even more frequently in 2009.” ‘Extraordinary skill is needed for the very tight tolerances that this work requires’ “From the Joint Research Centre (JRC) at Petten I have been working with ECN for many years and in particular with their Engineering & Services unit, where the workshop is located. We benefit from their good skills and the direct lines with the people who do the work. Quality is always perfect. At JRC I handle quality control prior to radiation experiments in the High Flux Reactor (HFR). This involves checking matters like dimensions, electrical wiring and similar. If it is necessary to modify the test setup the work is performed by E&S. We strive for the highest possible quality and the unit fulfils that goal excellently. JRC performs many such quality controls in other countries, like Germany. Two years ago we were asked whether we could use our expertise to make a radiation setup for the IR8 reactor of the Kurchatov Institute in Moscow. Twelve years ago we made a radiation setup for radiating metal samples for our HFR and it works excellently. Now they want to start radiating their own samples in one of the positions in their reactor core, as part of the entire upgrading of the reactor. Our capsule will be placed in one of the positions in the reactor core, with dimensions of 70 x 70 mm. It has double containment and between both walls rinsing occurs with a mixed gas of helium and neon. A special cover protects the material to be radiated against gamma radiation, because the intention is that only neutron radiation will reach the test material. The purpose of these radiations is to age materials artificially to discover whether they are suitable for prolonged use in very aggressive environments, such as the core of a high-temperature reactor. Extraordinary skill is needed for the very tight tolerances that this work requires. We have found during our many years of cooperation with Engineering & Services that they amply possess this skill in many fields.” Gerard Berg (Joint Research Centre) 37 Top five of 2008 1. Malachite, a large radiation setup in Moscow; 2. Success of innovation vouchers; 3. Opening of Eindhoven office on the High Tech Campus; 4. Production of affordable and switchable LED lighting fixture; 5. Use of laser technologies. On the strength of our know-how and the technical concept of Engineering & Services, we won this terrific project. After the initial contacts in early 2007, the actual work got under way in early 2008. A project of this complexity usually takes 2,5 years, but by early 2009 everything was ready to be shipped to Moscow. ECN profile: facts and figures Ambition and mission ECN (Energy Research Centre of the Netherlands) occupies a unique position in Europe with its wide-ranging knowledge of energy technology. ECN aims to carry out groundbreaking research that will have a major influence on energy transition and to bring technologies to every stage of development and market them. The strenghth of a research organisation like ECN lies in this portfolio, which enables ECN to develop the new generation of technologies needed to meet the government’s sustainable 38 energy targets. Many technologies developed at ECN have reached maturity in recent years, increasingly resulting in third-party economic activity. In this way ECN is actively counteracting the innovation paradox identified by the Wijffels Committee. ECN’s mission: ECN develops high-quality knowledge and technology for a sustainable energy system and transfers these to the market.. 39 Personnel and organisation ECN is well aware that the organisation’s capital lies in its people. Top research requires top personnel. Therefore, this is the guiding principle in the strategic plan and for the new People Management introduced by ECN in 2007. All projects started in this framework are focused on the employee’s development and career opportunities, on creating greater clarity between employer and employee and on offering tailor-made facilities. ECN has a great need for employees who stand out because of their knowledge and competences. The following diagrams provide a good picture of developments in ECN’s workforce. Note that the number of foreign employees has increased steadily since 2005, culminating in 10% in 2008. Job families/numbers of employees Family Number of employees as of 12.31.2008 56 244 114 107 37 65 28 23 6 680 8,24% 35,89% 16,77% 15,74% 5,44% 9,56% 4,12% 3,38% 0,89% fte Turnover 2000-2008 in millions of euro plotted against number of FTEs 900 800 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 90 80 70 60 50 40 30 mln euro 20 10 0 Turnover fte’s 40 Management Research Research Support & Technological Development Technical Realisation & Maintenance Consulting Administration Facility Services Fire Department Unclassified Total Productivity 2000-2008 (turnover/FTE ratio) 140 120 100 80 60 41 Number of foreign employees 60 50 40 30 Number 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Ratio Female Male 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Turnover, operating result and productivity The figures on page 41 unambiguously show that ECN’s turnover has risen sharply since 2000, to a total of more than € 80 million. It is pleasing to note that productivity continues to increase slightly; the graph ‘productivity 2000-2008’ shows that ECN has managed to maintain the upward line in its turnover/FTE ratio since 2000. Compared to 2007 the operating result has stabilised. Technology transfer From its position as a large technological institution, ECN develops highquality knowledge and technology for a sustainable energy system and brings the knowledge and technology to the market. The focus on bringing technology to the market is a pivotal part of the mission contained in the current strategy plan for 2007-2011. ECN’s patenting and licensing policy was aligned to this focus in 2008. Patents play an important role when bringing knowledge and technologies to the market. Patent rights protect the path from development of trials to application in products sold in the market. Particularly in the final phase, the development costs can be substantial and the risks for businesses increase accordingly. Patent rights prevent other parties from obtaining commercial advantage from the use of an invention without having contributed to the development costs. ECN manages and operates its own patent portfolio. Two goals are pursued: on the one hand, the social goal of maximising the reach or application of the technology, and on the other the optimisation of royal42 Under these agreements the industrial parties have committed to providing between €30-35 million of new investment volume for the marketing of technologies developed by ECN (2007: €26 million). A high percentage of these investments are likely to be made in the Netherlands by Dutch companies. In due course ECN will also be able to receive a significant revenue stream in the form of royalties from product sales, technology rights and emission certificates for the investments. A salient point is that revenues from existing licensing contracts topped €1 million in 2008 (2007: €0.7 million). Special mention should be made of the good progress towards establishing the Solar Academy, an initiative of ECN, LIOF and Solland Solar. The academy is a commercial training and education centre dedicated to the solar cell industry. It uses a curriculum that has been developed by ECN in recent years and that has been used to train more than one hundred people. This training centre tackles one of the biggest obstacles standing in the way of further growth of the solar cell industry, namely the availability of sufficiently qualified personnel. Patents A substantial quantity of intellectual property was generated through the research activities undertaken in 2008. The number of current patents in the portfolio rose to 83, and additionally 18 new patent applications were filed. Patents year 2002 2003 2004 2005 2006 2007 2008 Internal applications 18 10 11 13 11 10 18 Filed in the Netherlands 16 5 7 6 5 6 14 Current patents in portfolio 89 86 91 83 77 70 83 ties or other revenues (for example from follow-up research). For the transfer of technology, the Corporate Development department contributed to 30 projects in 2008 by providing strategic advice on the commercialisation of technologies, initiating and structuring commercialisation processes, supporting and conducting negotiations with commercial parties and preparing agreements needed in the commercialisation process. Among other things this resulted in nine agreements being concluded, including four licensing contracts for use of ECN technology. Scientific publications ECN’s commercial activities stem from a continuous process of deepening its knowledge. Quality must be visible not only at the end of the research path, in the market, but also at the start, in the research. ECN attaches great importance to its scientific prowess. Wherever possible the institution seeks cooperation with universities and recruits talented young researchers. The €30 million for the ADEM programme has given this strategy a strong boost. For a period of four years, ECN may recruit and train 30 young scientists (doctoral candidates – ed.). Five will work at Petten on their theses, the other 25 at the technological universities on research relevant to energy. This adds up to new people and new knowledge plus structural cooperation with research departments at the universities. ECN encourages the writing of articles for publication in scientific journals and specialist periodicals. 43 Publications in 2008 PS ECN reports Peer-reviewed articles in scientific journals Peer-reviewed articles in specialist periodicals Submissions for conferences Books and book chapters 33 6 11 15 13 E&I 37 13 22 17 2 BCE 34 38 5 27 8 H2SFF 15 10 1 24 2 WIND SOLAR 45 4 2 7 0 17 14 1 39 0 E&S 6 0 1 2 2 TOTAL 187 85 43 131 27 2007 206 41 17 90 9 2006 201 64 35 213 19 2005 212 99 25 275 n.a. 2004 272 90 n.a. 165 n.a. Safety, health & environment The application submitted in 2007 for a licence to widen the field of research – so as to conduct research into hazardous waste (including biomass waste) - resulted in 2008 in the scope of the existing licence being broadened. The North Holland provincial government now issues the licences instead of the municipality of Zijpe. At the same time, virtually all nuclear activities within ECN were ended at the start of 2008. In 2009 the nuclear energy licence granted under the Nuclear Energy Act will be replaced by a new licence with very limited scope (e.g. for small radioactive sources in analysis tools and instruments). Working with numerous hazardous chemicals requires elaborate risk control. This is necessary not only because of the legal requirements, but also because many clients impose risk control as a precondition and because it is a spearhead of ECN policy on safety, health & the environment (SHE). Use of our long-standing inspection system was continued in 2008: see the results in the graph. In 2008 it again proved possible to satisfy on average the very stringent ECN standard of one non-conformance per 20 employees per inspection (0.05). This inspection will be widened in 2009, however: the indicator will include not only hazardous substances but also many other SHE subjects, such as the actual usability of the emergency exits or the wearing of prescribed personal protection equipment. ECN’s pursuit of improved control of SHE risks received an extra boost in 2008 by obtaining the OHSAS 18001 certificate, the international management system for safety & health. Besides a quality certificate (ISO 9001), ECN now holds certificates for SHE: ISO 14001 and OHSAS 18001. The audits made clear that ECN deserves the certificates. On the other hand, it was also evident that there is still room for improvement (the upward spiral). Improvement is generally reflected by a reduction in the lost time injury frequency or LTIF (number of incidents of lost time injury per million hours worked). There were no injuries in 2008 that resulted in lost time, bringing the five-year average closer to the provisional target of 0.8. Further reduction of this figure by increasing SHE awareness and addressing associated behaviour will remain the core of ECN’s SHE policy in the coming years. It is satisfying (although paradoxical) to note that the number of near-accident reports continues to increase. Spatial quality and accommodation It took a large part of 2008 to refurbish the general laboratories (building 31). Delivery took place in February 2009, after which furnishing started and the internal relocation got under way to accommodate all employees at the right place. There was an exchange of ideas with the buildings aesthetics committee. This resulted in a decision to give certain facilities the same look and feel, now and in the future, which will allow the premises to convey a calm image. There was a far-reaching renovation of the roads on the ECN site, making allowance for visual requirements. Preventive and corrective maintenance was completed on schedule. The network of pipes for extinguishing water was modified, increasing its capacity and reducing sensitivity to faults. The building management system was replaced and now acts as planned as the ‘eyes and ears’ of the buildings and measures their use. 44 Ratio of non-conformances to FTEs at unit Inspection of hazardous substances 2007/2008 0,120 0,100 0,080 0,060 0,040 0,020 0,000 HCFF WIND SOLAR EBEG EEI GTS Reports of near-accidents 200 150 100 Number 50 0 E&S 2008/2 inspection 2008/4 inspection 2007/2 inspection 2007/4 inspection ECN standard 45 BCE Actual number Target value ECN: LTIF, LTIF 5-year average 4 3 2 LTIF 1 0 LTIF LTIF 5- year average Target figure LTIF 5- year average 00 02 00 02 04 06 04 06 08 20 10 08 20 In the course of 2008 the EGON and EEI units have merged to the new E&I unit. 20 10 20 20 20 20 20 20 20 20 20 Nuclear Research and consultancy Group Stol: “For NRG 2008 was an eventful year. It was one in which we fleshed out our strategy for the future, but also one in which the High Flux Reactor could not start up unplanned.” During the maintenance shutdown in August an irregularity was discovered in the HFR’s primary cooling water system. This was reason for NRG not to start up the reactor. “The decision not to start up obviously had a big impact,” says Stol. “The High Flux Reactor meets 30% of the world’s demand for medical isotopes and 60% of European demand. Millions of patients worldwide are dependent upon these isotopes for diagnosis, treatment and pain relief. Additionally, the reactor makes an international contribution to research on sustaining nuclear energy.” Stol: “Even though this important role brings with it a lot of pressure, safety is always the number one consideration for NRG. We had this in mind when we took the decision not to start up and when we examined possibilities for putting the reactor back into service. In the second half of 2008, all employees and external experts worked hard to be able to restart the reactor.” Closing down the reactor had considerable impact on the entire operations of NRG. “However, the changing public debate about nuclear energy also meant that NRG has very good prospects in various fields.” Examples are research into recycling and final storage of radioactive waste. The consultancy arm of NRG developed excellently. “With our knowledge, we are able to serve the nuclear and non-nuclear markets well.” Cooperation Together with the Energy Research Centre of the Netherlands (ECN) and the Joint Research Centre of the European Commission (Institute for Energy, IE), NRG decided in 2008 to intensify the strategic cooperation in Petten. Stol: “Together, we want Petten to become the capital of energy research in Europe. Strengthening these ties will enable the three institutions to fulfil their mission in Europe even better.” The mission is to support national and European government policy through research and technology development and to expedite the transition to a sustainable energy system. The Petten initiative is well aligned to the European Commission’s wish to establish greater structure and harmonisation between research institutions in Europe. Nuclear applications for sustainable energy and medicine “Nuclear energy again attracted considerable attention in the Netherlands in 2008,” says Rob Stol, General director of NRG. In the first half of the year three reports were published on the energy issue and the role of nuclear energy. A report entitled ‘Brandstofmix in beweging’ (‘Fuel mix in motion’) was published in January by the Energy Council, while in March the Social and Economic Council published a report called ‘Nuclear Energy and 46 NRG’s ten-year milestone NRG celebrated its tenth anniversary in 2008. This milestone was celebrated with an open day and an information newsletter delivered to 75,000 addresses in Petten and the surrounding area. Stol: “We literally opened our doors and showed what NRG does.” Attracting the maximum number of 500 visitors, the open day was a great success. In the anniversary year the intention was to reshape the organisational structure of ECN and NRG. However, this operation was deferred for the time being because of the unscheduled shutdown of the HFR. Medicine Attention focused in the second half of 2008 on the shutdown of the HFR and the subsequent shortage of medical isotopes. To deal with the shortages as effectively as possible, there were regular consultations with numerous parties involved in radiopharmacy. Stol: “AIPES (Association of Imaging Producers & Equipment Suppliers), which includes representatives of reactors that produce isotopes, played an important coordinating role. The Belgians (BR2 reactor) and French (Osiris reactor) displayed great flexibility in adapting their reactor schedules to safeguard the security of supply of isotopes as far as possible.” 47 Sustainable Energy Provision,’ which was followed by publication of the ‘Energy Report’ of the Ministry of Economic Affairs. The government is using these reports to work out several scenarios for the possible use of nuclear energy. The scenarios will be submitted to the Lower House of Parliament in spring 2010, enabling the Cabinet to reach a decision in a responsible way about the role of nuclear energy in the fuel mix. Infrastructure The shutdown of the High Flux Reactor unintentionally focused extra attention on the need for a replacement around 2015: the PALLAS reactor. NRG held talks in 2008 with the three consortiums vying for the construction of PALLAS. This consultation phase was an important step towards draft plans for PALLAS, which will be ready mid 2009. With the construction of PALLAS in Petten, all NRG’s knowledge and infrastructure can continue to be used in the future for energy research and the production of medical isotopes. ‘ The changing debate on nuclear energy offers new perspectives for NRG’ Developments in nuclear medicine are constantly moving forward. NRG constantly cooperates with hospitals and the radiopharmaceutical industry on the development of ‘new’ radioisotopes usable in nuclear medicine. There is also a ceaseless pursuit of optimisation of the production of lutetium at NRG. The High Flux Reactor and laboratories like the Jaap Goedkoop Laboratory in Petten play an indispensable role in this setting. Energy NRG is helping to enlarge the share of nuclear energy in the Dutch energy mix. Stol: “We shifted the activities in 2008 from the maintenance of knowledge to the construction of new nuclear power stations.” NRG is cooperating in the building of a new nuclear power station in Finland and a fusion reactor in France and in the lengthening of operating times of nuclear power stations in the United Kingdom. Stol: “We believe that the construction of new nuclear power stations is an essential step towards sustaining energy systems in our country. This is another field where we should keep in step with developments in the rest of Europe.” Nuclear Research and consultancy Group (NRG) is dedicated to the development and use of sustainable nuclear technology for energy, environment and health. NRG was established in 1998 out of merger of the nuclear activities of ECN and KEMA. In 2005 KEMA’s interest was sold to ECN, which now owns all shares. In the near future the legal form of NRG will change from a commercial partnership to a foundation, and a holding company with two foundations (NRG and ECN) will be established as planned. With applied international research, production and consultancy, NRG’s service-provisioning is focused on the nuclear and medical sectors and also on the chemical, oil and gas industries. NRG is Europe’s largest producer of isotopes for nuclear medicine and meets more than 30% of global demand for these products. Lutetium from Jaap Goedkoop Laboratory Early 2008 patients were treated with the radioisotope lutetium that NRG produced for the first time in the new Jaap Goedkoop Laboratory. The chemical is used to treat notably stomach cancer, intestinal cancer and pancreatic cancer. Stol: “I am proud that early 2008, after a period of trialling and testing, the first lutetium was produced in our specially equipped medical production laboratory.” New-builds “The rapidly growing global demand for electricity and the realisation that as a clean, reliable and affordable option nuclear energy is indispensable mean that research into a new generation of nuclear power stations is gathering speed all the time,” says Stol. NRG’s development of innovative reactor fuels, which extract more energy from uranium and produce less waste, has attracted worldwide interest. The safety of new reactor fuels obviously has high priority. For the High Temperature Reactor (HTR), a highly promising innovative nuclear powered combined heat-and-power concept, NRG has started a unique research experiment with research partners from Japan, South Korea and France to examine the optimum composition of the reactor fuel. The world’s top graphite specialists met in the Netherlands at the start of 2008 at the invitation of NRG. Stol: “The group of more than seventy specialists from countries including Japan, China, the United Kingdom, the United States, South Africa and France concluded that the new HTR reactors can start being built before 2012.” Environment Important conditions for sustaining nuclear energy are the availability of sufficient raw materials and a solution for nuclear waste. 48 Recycling of waste NRG completed a research experiment in 2008 demonstrating that plutonium can be recycled more effectively. Not only can energy be recovered from the plutonium, the life of the waste can be reduced by a factor of ten. “By doing so NRG has developed a process that can make an important contribution to sustaining nuclear energy and decomposing global plutonium stocks,” says Stol. 49 Cooperation in final storage of nuclear waste Dutch research into the final storage of nuclear waste concentrates mainly on the scientific and technical aspects of safety and the feasibility of final storage. The relatively small quantity of Dutch waste and the complex and long preparations for final storage make a purely national research programme less attractive. That is why this research is carried out in an international context. Stol: “Our neighbouring country Belgium is a suitable and attractive partner. Belgium is studying the final storage of waste in deep underground Boom clay, a formation that occurs both in the Netherlands and in Belgium. NRG, COVRA and Belgian research institutions took the first steps in 2008 towards joint research into final storage.” Energy Advisory Committee (EAC) External Review Committees Consultative groups Efficiency & Infrastructure, Energy Efficiency in Industry Programme Dr. ir. W.J.W. Bakker, Dutch Separation Technology Institute Mr. drs. G. Brouwer, Rotterdam Climate Initiative M. Clement, SenterNovem Dr. T. Graafland, Shell Nederland BV Ir. H. Keuken, Process Design Centre Prof. dr. ir J.T.F. Keurentjes, Akzo Nobel Ir. G.J. Koopman, Royal Association of Dutch Paper Hydrogen & Clean Fossil Fuels Ir. E.H. Lysen, University of Utrecht Ir. F. Denys, SenterNovem Dr. I.S. Williamson, Air Products Drs. J.J.P. Huijsmans, Shell Global Solutions Dr. M. Steen, JRC-IE Ir. R.C.F. de Kler, MBA, NUON Dr. E.K. Erdle, Efceco Wind Energy Ir. G.F. Bakema, Essent Ir. van de Brug, Ballast Nedam Prof. ir. W.L. Kling, TenneT Prof. dr. ir. G.A.M. van Kuik, Delft University of Technology J.T. Olesen, VESTAS Wind Systems A/S, Danmark Dr. D. Quarton, Garrad Hassen & Partners, UK M. Sc. F. Rasmussen, Risø National Laboratory, Danmark Ir. H.P.G.M. den Rooijen, Shell Wind Energy B.V. Ir. dipl. V. Schellings, GE Wind Energy, Germany D.P. Molenaar, Siemens Nederland B.V. 51 Prof. dr. E.M. Meijer, Unilever Prof. dr. F.G.H. Berkhout, VU University Amsterdam Ir. T.P. Bokhoven, ConSolair B.V. Dr. ir. T. van Herwijnen, ETC Energy Technology Mw. dr. ir. R. Janssen-van Rosmalen, Energy Plus Prof. dr. G.J. Kramer, Shell Global Solutions Prof. dr. dipl. ing. M. Kühn, University of Stuttgart Mr. dr. P.W. Kwant 50 Policy Studies Ir. E.C.R.H. Eijkelberg, Ministry of Economic Affairs Ir. F.J. de Groot, VNO-NCW Ir. E.J. Postmus, Gas Transport Services B.V. Ir. E. Luken, SenterNovem Drs. P.J. Aubert, Energy Council Dr. L.A. Meyer, Netherlands Environmental Assessment Agency Drs. T.E.M. van Leeuwen, Netherlands Environmental Assessment Agency M.J. Smit, Ministry of Traffic, Public Works and Water Management Biomass, Coal & Environmental Research Ir. M. van Berlo, Afval Energie Bedrijf E. Goudappel, Jacobs Nederland B.V. Ir. H. Klein Teeselink, HoSt R. de Kler, Nuon H. Kursten, Eneco Ir. G.R. Küpers, KandT Management B.V. Ir. K.W. Kwant, SenterNovem W. Schonewille, Havenbedrijf Rotterdam N.V. (Port of Rotterdam Authority) and Cardboard Manufacturers (VNP) Dr. ir. G.J. Kwant, DSM Ir. A.M.G. Pennartz, KWA Bedrijfsadviseurs Efficiency & Infrastructure, Energy in the Built Environment Programme W. van den Bogerd, Ihto-Van der Beijl B.V. Dr. L. van Bree, National Institute of Public Health and the Environment Ir. H.M. Croes, Government Buildings Agency/Ministry of Housing, Spatial Planning and the Environment Ir. C.J.G. Hamans, Rockwool Ir. P. Hameetman, BAM Vastgoed Ir. J.J. Overdiep, Gasunie T.H. Reijenga, BEAR Architecten R. van der Meer, UNETO-VNI J. Verlinden, Ministry of Housing, Spatial Planning and the Environment H. Westra, Delft University of Technology, Faculty of Architecture G.J. Zijlstra, Zijlstra Management & Advies Prof. dr. ir. R. van Zolingen, Shell Solar Energy Systems B.V. P. Heijnen, SenterNovem Ir. G.J.M. Prieckaerts Prof. dr. J.H.W. de Wit, Delft University of Technology NRG Ir. P.J. Buijs, DELTA Technologie & Innovatie Ir. J.C.L. van Cappelle, EPZ Dr. H.D.K. Codée, COVRA Prof. dr. ir. T.H.J.J. van der Hagen, RID Ir. P.G.T. de Jong, Urenco Nederland B.V. Ir. G.R. Küpers, Kandt Management Mw. mr. A. van Limborgh, Ministry of Housing, Spatial Planning and Environment Dr. P.J.W.M. Müskens, Ministry of Housing, Spatial Planning and Environment Ir. G.C. van Uitert, Ministry of Economic Affairs Prof. dr. ir. A.H.M. Verkooijen, RID E. van Seventer, Agrotechnology & Food Innovations Dr. ir. W. Willeboer, Essent Energie Productie Solar Energy Prof. dr. C. Balliff, University of Neuchatel Prof. dr. P. Blom, University of Groningen Dr. M. Fleuster, Solland Solar Energy BV Dr. O. Hartley, Q-Cells Mr. F. van den Heuvel, Scheuten Solar Dr. L. Podlowski, Solon AG Prof. dr. R. van Zolingen, Shell Solar and University of Eindhoven Dr. F. Witte, SenterNovem Efficiency & Infastructure, Intelligent Grids Programme H. Slootweg, Exendis R. Schaacke, Betronic M. van der Meiden, TenneT Ir. J. Hodemaekers, Stedin F. Verheij, KEMA Ir. E. Raaijen, Exendis J. Thomassen, Nedap M. Eijgelaar, Essent New Energy Ir. M. Bongaerts, Alliander W. Altena, Logica Supervisory Board • Member of Supervisory Board of Gelder Groep • Chairman of Supervisory Board of Rabobank IJsseldelta Term of appointment First appointed in April 1996. Term of appointment ended on 1 June 2008. Dr. ir. C.P.Jongenburger (49, male, Dutch) • Member of Board of Directors of Wuppermann AG • Board member of the Netherlands Study Centre for Technology Trends (STT) • Member of Netherlands Academy of Technology and Innovation • Member of Industry & Science Advisory Board of Icos Capital • Member of the SCEF committee (Special Committee on Energy Physics) of the Foundation for Fundamental Research on Matter (FOM) • Member of the TE (Future Energy Supplies) committee of the Social and Economic Council of the Netherlands (SER) • Member of the Organising Committee of the 10th International Conference on Greenhouse Gas Control Technologies (GHGT-10), Amsterdam, September 2010. • Associate Editor of Energy for Sustainable Development, IEI and Elsvier • Lead Author of IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation Term of appointment • First appointed in September 2001. Current appointment runs until September 2009 Dr. ir. A.W. Veenman (62, male, Dutch) • Former Chairman of Board of Directors of NV Nederlandse Spoorwegen (Netherlands Railways) • Former Chairman of Board of Directors of Stork N.V. • Member of Supervisory Board of Rabobank Nederland • Member of Supervisory Board of TenneT BV • Member of Supervisory Board of Gemeentelijk Vervoerbedrijf Amsterdam (GVB) NV • Member of Supervisory Board of SPF Beheer BV • Chairman of Supervisory Board of ICTRegie • Chairman of Advisory Board of National Aerospace Laboratory (NLR) • Chairman of Museum Committee of Centraal Museum Utrecht • Chairman of Science, Technology and Society Council, KIVI NIRIA • Chairman of Rootliep Committee (rail forum) • Chairman of Talent to the Top Monitoring Committee (diversity) • Member of Board of the Next Generation Infrastructures Foundation (NGInfra, BSIK) • Member of Board of the Samas Foundation (continuity) • Member of Advisory Board of Arthur D.Little Nederland • Member of Advisory Board of Erasmus School of Accounting & Assurance • Member of Supervisory Board of Foundation Rural Energy Assurance Services (FRES) Term of appointment First appointed in June 2008. Current Appointment runs until June 2012. Ir. A. van der Velden (68, male, Dutch) • Chairman of Supervisory Board of Vitens N.V. • Chairman of Supervisory Board of Nedap N.V. • Deputy Chairman of Supervisory Board of Stork N.V • Member of Supervisory Board of TKH Group N.V. • Deputy Chairman of Netherlands Environmental Impact Assessment Committee • Member of the Committee on Development Cooperation for the Advisory Council on International Affairs Term of appointment First appointed in February 1996. Appointment term ended on 1 February 2008. Drs. G.H.B. Verberg (66, male, Dutch) • President Energy Delta Institute • Chairman Supervisory Board Berenschot Holding • Chairman Supervisory Board UCN N.V. • Vice-chairman Board URENCO Ltd. • Member Supervisory Board Essent N.V. • Member of General Energy Council • Member of Advisory Board E.ON Ruhrgas AG • Member of Supervisory Board International Institute for Social Studies (Den Haag) • Chairman of the Board Clingendael international Energy Program • Member of the Supervisory Board Winterschall Nederland b.v. • Member of the Supervisory Board of the Groninger Museum Foundation • Member of Advisory Board Advanced Power a.g. • Member of Advisory Committee Waddenfonds Term of appointment First appointed in June 2005. Current appointment runs until June 2013. Board of Directors Dr. C.A.M. (Kees) van der Klein (Director) • Meeting of Shareholders of Enatec b.v. (development of Stirling engines) • Meeting of Shareholders of RGS b.v. (development of solar cell components) • Member of Advisory Council of Fuel Cells and Hydrogen Competence Network of the federal state of North Rhine-Westphalia, Germany • Chairman of the Programme Committee of Energie Forschungszentrum Jülich (energy research centre) • Member of Scientific and Technical Committee (WTA) of Forschungszentrum Jülich Prof. dr. R.F.M. Lubbers (69, male, Dutch, Chairman from June 2005) • Minister of State • Chairman of Universitair Asiel Fonds (UAF) • Chairman of Board of Governors of University of Tilburg • Chairman of Board of Governors of Confederation of Netherlands Industry and Employers VNO-NCW • Coordinator of Rotterdam Climate Initiative 52 • Earth Charter • Worldconnectors • Managing Board of Breesaap B.V.. Term of appointment First appointed in June 2005. Current appointment runs until June 2013 H.A.D. van den Boogaard (69, male, Dutch) • Chairman of Supervisory Board of Grimaflor B.V. • Committee member of Achmea Association • Ex-officio Chairman of Fortis Fonds Barneveld Term of appointment First appointed in May 1996. Current appointment runs until June 2009. Ir. L.M.J. van Halderen (62, male, Dutch) • Former Chairman of Board of Directors of NUON • Member of Supervisory Board of Draka Holding • Chairman of Supervisory Board of Isala clinics (Zwolle hospitals) • Member of Advisory Board of Advies ReSteel BV Term of appointment First appointed in February 2008. Current appointment runs until February 2012. Prof. dr. W.C. Turkenburg (62, male, Dutch) • Professor of Science, Technology and Society, Faculty of Science, Utrecht University • Head of the Department of Science, Technology and Society, Faculty of Science, Utrecht University • Scientific Director of the Copernicus Institute for Sustainable Development and Innovation, Utrecht University • Member of the Board of the International Institute for Industrial Environmental Economics (IIIEE), Lund University, Sweden • Member of the Board of Directors of the International Energy Initiative (IEI), with regional offices in Bangalore (India) and Sao Paulo (Brazil) • Member of the Board of the SENSE Research School • Member of the Board of Directors of Advies Eiffel Utilities • Deputy Chairman of the steering group of the BSIK research programme CATO (CO2 capture, transport and storage) • Member of the Programme Committee for Energy Reseach at Universities of the Netherlands Organisation for Scientific Research NWO and SenterNovem • Chairman of the Netherlands Platform for Communication on Climate Change (PCCC) • Member of the Executive Committee of Global Energy Assessment (GEA), IIASA, Laxenburg, Austria Dr. A.B.M. (Ton) Hoff (Chairman of the Board of Directors) • Chairman of the European Research Alliance • Chairman Advisory Board of the Competence Center for Energy and Mobility (CCEM)/Swiss • Vice chairman of Advisory Group on Energy for 7th Framework Programme, European Commission • Member of EMVT (Electro Magnetic Power Technology) • Member of Confederation of Netherlands Industry and Employers VNO-NCW Energy Committee • Member of Advisory Board of Syntens West-Nederland • Member of Netherlands Academy of Technology and Innovation • Member of Supervisory Board of Energy Valley Foundation • Member of Advisory Board of Equens (formerly Interpay) • Member of Supervisory Board FOM (Fundamental Research of Matter • Board Member of ATO (Association Technology Conveyance) • Board Member of WEC (World Energy Council) Netherlands • Member of Sustainable Electricity System Transition Platform • Member of Energy Research Programme Committee of the Netherlands Organisation for Scientific Research NWO/SenterNovem • Member of Executive Board of ACTC/NWO • Vice-Chairman of BSIK programme CATO • Member of Board of Gas Research and Sustainability Program (GrASp) • Member of Advisory Board for Master of Business in Energy Systems Delft TopTech (Delft University of Technology) Drs. G.H.L. (Gerald) Santing (Director) • Treasurer of De Lichtenberg/Nijenstede Foundation (support fund) 53 Corporate Governance Report The Supervisory Board comprises six members. Its tasks are to supervise the management of the organisation by the Board of Directors and the general running of the organisation and its affiliated companies. The Supervisory Board advises the Board of Directors. The members of the Supervisory Board are appointed by the Minister of Economic Affairs on the recommendation of the Supervisory Board. The Supervisory Board consults with the Board of Directors and with the Works Council when making these recommendations. Candidates must fit the profile laid down by the Supervisory Board. The Supervisory Board draws up the profile taking account of the nature of ECN, its activities and Report Supervisory Board NRG, the funding of the HFR and the shutdown and repair of the HFR. An additional Audit Committee meeting held on 18 November 2008 in the presence of Prof. dr. R.F.M. Lubbers and dr. ir. A. Veenman was devoted entirely to the repair of the HFR. Remuneration and Appointments Committee This committee, comprising Dr. ir. A. Veenman (Chairman), Prof. dr. R.F.M. Lubbers and Dr. ir. C.P. Jongenburger, met twice in 2008. Subjects dealt with included new conditions of employment at ECN/NRG, the composition of the Supervisory Board and recommendations to fill vacancies occurring in 2009, personnel policy, remuneration, targets of the Director, succession The Supervisory Board held four regular meetings and one additional meeting in the year under review. The Board of Directors attended each meeting. Due to illness Mr H.A. D. van den Boogaard was able to attend only the meeting on 18 March 2008. A total of four members were absent from a meeting at least once. Subjects dealt with at the regular meetings included: • financial affairs of ECN and NRG, including the annual accounts, the regular financial reports, the investment plan, the operational plan and associated companies; • the strategic plan for 2007-2011 and the recommendations of the External Review Committees and the Energy Advisory Committee; • the restructuring of ECN and NRG; • the shutdown and repair of the High Flux Reactor (HFR); • other matters: the report from the internal ECN Scientific Advisory Council, the new PALLAS reactor, the new ECN top management structure. Two of the four consultative meetings of the Works Council with the management representative were attended by a member of the Supervisory Board. The Supervisory Board has two committees, the Audit Committee and the Remuneration and Appointments Committee, which each prepare special subjects for the Supervisory Board. Regulations for both committees were drawn up and approved by the Supervisory Board in 2005 as part of Corporate Governance. The Supervisory Board thanks the Board of Directors and staff for their planning for the ECN Board of Directors and the naming of a Works Council representative on the Supervisory Board. The Board of Directors and the Supervisory Board subscribe to the general principles and criteria set out in the Tabaksblat Code, i.e. integrity and transparency, with proper supervision and reporting. Although the Code is directed at Dutch companies quoted on the stock exchange, the Board of Directors and the Supervisory Board decided in 2004 to implement those parts of it that are relevant to ECN, and regulations containing these relevant parts were drawn up in 2006. These were not amended in 2008. 54 the expertise, experience and independence required of its members. The Supervisory Board evaluates the profile annually. Members of the Supervisory Board are appointed for a period of four years and may be reappointed twice at most. The Board of Directors and the Supervisory Board are responsible for ECN’s corporate governance structure, reporting to the Minister of Economic Affairs. The Supervisory Board provides the Minister of Economic Affairs with any information he or she may require. Conflict of interest Under the regulations, any conflicting interests of a member of the Supervisory Board, the Board of Directors or the external auditor of material importance to ECN or the person in question must be reported immediately to the Chairman of the Supervisory Board. No such reports were received in 2008. There was compliance with the relevant provisions of the regulations. 55 The ECN Board of Directors consists of a Statutory Director and two directors. The former is the Chairman of the Board. He or she bears ultimate responsibility for the organisation as a whole, reporting to the Supervisory Board. The Statutory Director is appointed, suspended and dismissed by the Supervisory Board. The current Director has been appointed for an indefinite period. The Director’s remuneration is set by the Supervisory Board. Independence In the opinion of the Supervisory Board, there was compliance with requirement that each of its members must be independent, with the exception of a maximum of one. The Supervisory Board regards all its members as independent. Changes The composition of the Supervisory Board changed in 2008. Mr ir. A. van der Velden stepped down on 1 February 2008 and Mr dr. ir. C.P. Jongenburger was appointed a member of the Supervisory Board. Mr ir. L.M.J. van Halderen stepped down on 1 June 2008 and Dr. ir. A. Veenman was appointed a member of the Supervisory Board. Audit Committee This committee, comprising Mr H.A.D. van den Boogaard (Chairman), Prof. dr. W.C. Turkenburg and Drs. G.H. Verberg, met three times in 2008. Matters dealt with at the meetings included the annual accounts and management letter, the auditor’s report, the restructuring of ECN and efforts and achievements in 2008, which made the past year a successful one for ECN. Rotterdam, 18 March 2009 Directors’ Report In recent years, a number of technologies developed at ECN have reached maturity. In 2008, fourteen new patents were registered and royalties for the first time exceeded € 1 million. ECN’s research activities focus in particular on multi-annual, demand-driven programmes formulated in close consultation with the Ministry of Economic Affairs, and SenterNovem. The aim is to increase the substantive synergy between the EZS research programme and the Energy Research Strategy contracts. The quality of current ECN research is high across the board, in some cases even trend-setting in Europe. The nuclear technology research activities were hived off to the Nuclear Research and consultancy Situation as at the balance sheet date. The solvency ratio (equity divided by total assets) remained stable at 6.5%, and liquidity rose slightly to € 71,3 million. Part of these resources (€ 32 million) is not at the free disposal of ECN and will be used to meet liabilities. There has been a delay in the proposed setting-up of a Joint Undertaking to regulate the role of the Supplementary Programme in the running of the HFR from 2008. However, in 2008 conditional funding was obtained from the Ministry of Economic Affairs totalling € 4 million (for the period 2008-2011) and € 8 million (for 2008). The amounts to be received from the Ministry in 2009 are not yet known. Intensive consultations between Euratom and the Ministry are under way, which are expected to produce effect at some time in 2009. The ECN workforce as of 31 December 2008 increased by 60 persons compared with 31 December 2007, from 958 (NRG 325) to 1,021 (NRG A summons was issued against ECN and NRG in July 2007 by the Association of Former Employees of ECN & NRG (OMEN). OMEN has applied for a declaratory judgment that ECN et al. did not have the power to change the indexation provisions in the pension schemes for former ECN employees. In 2008, the court pronounced an interlocutory judgement against which OMEN has appealed. No provision has been formed for any financial consequences resulting from these proceedings. In August, the HFR was not started up as a trace of gas bubble in the primary cooling water system was identified during major maintenance and inspections. This necessitated a reanalysis of the safety of the system. Based on an examination program and safety studies, seals and a detection system have now been installed and the reactor restarted in February 2009. An action plan for the final repair work to be carried out in the spring of 2010 is being drafted. In 2008, investments totalled € 11.9 million. The major investment was made in one of the buildings, which will be commissioned early in 2009 to replace several outdated buildings that will be demolished over time. Investments were made, too, in an upgrade of a number of pilot lines and various items of laboratory equipment. 57 Introduction The consolidated annual accounts of Stichting Energieonderzoek Nederland (ECN) comprise the annual accounts of ECN and the group companies: • VOF Nuclear Research and Consultancy Group • (including NRG Personeel v.o.f.) • NRG Nuclear Services BV • ECN Nucleair BV 56 Group (NRG) in 1998. NRG has gained a good position for itself in its particular area of the international scientific world as a centre of expertise, focusing on developing knowledge, products and processes for the safe use of nuclear technology in energy, the environment and health. ECN holds a 70% capital share in NRG; the remaining 30% is held by ECN Nucleair BV, a company wholly owned by Stichting ECN. This structure is a left-over from the former situation (until 2006) in which the 30% stake was held by KEMA. A more appropriate structure was examined in 2008. Due to the temporary shutdown of the High Flux Reactor (HFR) operated by NRG, this restructuring has been postponed. 341). The number of full-time equivalents (FTEs) rose to 934 (NRG 312) up from 852 (NRG 286). • ECN Wind Energy Facilities BV (WEF) • SunLab BV ECN’s mission can be described as follows: ‘ECN develops high-level knowledge and technology for a sustainable energy system and transfers it to the market.’ ECN, a private-law organisation, is a task-driven organisation that occupies a unique position in Europe due to the knowledge it is able to provide in the field of sustainable energy. Its high-quality research infrastructure enables it to develop, further develop and utilise knowledge and innovative technology. ECN aims to carry out groundbreaking research that will have a major influence on energy transition, applying knowledge and technological development in practice. Developments during the financial year ECN is well aware that the organisation’s capital lies in its people. In 2008, a new remuneration and benefits package was developed after a benchmark study had been carried out. The major conclusion from the benchmark study was that ECN & NRG pays above-average compensation and benefits to the lower salary groups but applies a below-average remuneration package for the higher salary groups. The remuneration package was based on the following principles: • aligns with the strategy and market position; • attracts competent employees and binds them to the organisation; • is competitive; • is encouraging and inspiring; • is affordable. The remuneration package was developed in close consultation with delegations of the trade unions and the Works Council. We hope to complete this project in 2009 and implement the new compensation and benefits system as soon as possible (phased, if required). The activities of ECN Wind Energy Facilities BV relate to the operation of a trial wind farm for multi-megawatt wind turbines. They comprise research into the “wake effects” among wind turbines erected on the farm, supplying the power they generate back to the grid, and renting out testing space to third parties wishing to erect their own prototype turbines. The turbines were sold to NIB Capital in a sale and leaseback transaction at the end of 2003. In September 2008, a proprietary ‘scale farm’ was added to the farm, in which it is investigated how wind turbines in large wind farms respond to each other. SunLab BV markets a measuring instrument for solar cells. This instrument enables manufacturers to optimise the production of solar panels. Financial results Net operating income increased slightly to € 132.0 million. In 2007, this figure was positively affected by a non-recurring gain of almost € 2.0 million. The shutdown and repair costs of the HFR put significant pressure on both turnover and result of NRG. The HFR was inoperative between August 2008 and February 2009. Wage costs increased by 5.5%, particularly due to the increase of 60 FTE, the 1.75% general pay rise as at 1 January 2008 and the increase in the year-end bonus to 4.4% up from 2.9%. Financial expenses were € 1.0 million higher than last year due to a € 1.8 million write-down of the securities portfolio. The scope of the item ‘securities’ further decreased following repayments (€ 3.9 million) and a reclassification (€ 7.2 million) to current assets. Just like last year, the income from participating interests was negative as 58 Expectations for 2009 The second half of 2008 witnessed a dramatic slow-down of the economy. This trend continued into the first few months of 2009. Luckily, ECN is not in the eye of the financial crisis but expectations are that the current circumstances will not leave ECN or its business relations unaffected. Several assignments have already been delayed or cancelled. On the other hand, a vigorous plea is made from various sides (including the Innovatieplatform) to accelerate innovation through intensified research, particularly in the field of sustainable energy. Amidst this uncertainty, ECN will pursue a frugal financial policy and a prudent recruitment policy. In February 2009, it was announced that the Ministries of Economic Affairs and Housing, Spatial Planning and the Environment will make available € 30 million to enhance testing of materials at four national energy research institutes. The funds will be divided among ECN and the three Universities of Technology for their ‘Advanced Dutch Energy Materials Innovation Lab’, briefly called ADEM. Half of the money is destined for the education of young top talent (doctoral students), the other half for the acquisition of new research equipment. This multi-annual program will start in 2009. In addition, no efforts will be spared to provide clarity on the Supplementary Program for management of the HFR. The action plan for final repair of the HFR will be elaborated in greater detail as well. The level of investments is expected to be lower in 2009 than in 2008, due to the special investment in a building made in the latter year. ECN is well-positioned to capitalise on any opportunities that may arise in the current market circumstances. Petten, 28 april 2009. Dr. A.B.M. Hoff Financial Report a result of start-up losses due to development activities still in progress in the 30% holding RGS Development BV. In 2008, agreement was reached with the other shareholders that ECN will no longer contribute to future financing of RGS. As a result, the ECN interest will decrease. The scope of this decrease will depend on a business valuation yet to be performed. In 2008, € 3.1 million was added to the provision for radioactive waste. This was primarily caused by higher engineering costs incurred for the design of a facility in which high and low radioactive waste can be separated and packaged in order to prepare for transportation to COVRA. Also, an amount of € 1 million was provided to defray the decontamination costs of a building of NRG. On top of the fixed amount of € 2,0 million pledged for index-linking, a performance-related amount of € 0.4 million was made available during the financial year for index-linking of the pensions administered by Centraal Beheer Achmea. The net profit after tax was € 0 (2007: € 2.5 million). 59 Consolidated balance sheet (x € 1.000) (before appropriation of profit) Clarification ASSETS Fixed assets Intangible fixed assets Tangible fixed assets Financial fixed assets: • Participations in knowledge-based companies • Other participations • Securities • Other receivables Total financial fixed assets Total fixed assets Current assets Work in progress Receivables and prepaid expenses Inventories 31-12-08 31-12-07 Consolidated statement of income (x € 1.000) (before appropriation of profit) Operating income Income • Financing by the State of the Netherlands 2008 2007 Consolidated cash flow statement (x € 1.000) 2008 2007 17 18 18 1 2 3 3 3 3 44.943 75.646 -773 74.873 4.239 7.986 132.041 42.141 74.743 2.947 77.690 2.351 9.801 131.983 1.626 37.768 44 12 12.453 4.860 17.369 56.763 1.523 31.021 592 23 25.190 5.544 31.349 63.893 • Assignments and other funds • Increase / decrease in work in progress Operating result Amortisation of intangible fixed assets Depreciation of tangible fixed assets Movement in provisions Capitalised corporate production Movements in working capital • Work in progress • Inventories • Receivables and prepayments • Current liabilities Cash-flow from business operations 4.232 155 5.160 -1.116 -4.239 6.044 0 4.382 7.236 -2.351 Capitalised corporate production Other operating income Total operating income Operating expenses Wages and salaries Social security charges Pensions Amortisation of intangible fixed assets Impairment of intangible fixed assets Depreciation of tangible fixed assets Other operating expenses Total operating expenses Operating result 19 20 773 -1.732 6.272 -3.983 1.330 5.522 -2.947 674 -2.386 6.718 2.059 17.370 4 5 16.332 25.262 5.907 47.501 71.339 175.603 17.105 23.268 4.175 44.548 69.884 178.325 21 21 21 22 Cash and cash equivalents TOTAL 60 6 23 58.250 3.305 7.294 155 0 5.160 53.645 127.809 4.232 55.201 2.061 11.316 0 0 4.382 52.979 125.939 6.044 -1.983 4.061 -619 Financial income: - interest received Paid tax on profits Cash flow from operating activities 2.626 -661 1.965 7.487 3.080 -619 2.461 19.831 EQUITY AND LIABILITIES Group equity Equity Minority interest Provisions Provisions Current liabilities Prepayments third parties Accounts payable Taxes and social security contributions Debts relating to other personnel costs Debts relating to pensions Other liabilities and accrued expenses 7 Financial income and expenses Result on ordinary operations before taxation 11.326 41 11.367 8 - 15 24 -3.012 1.220 11.326 41 11.367 90.617 Taxation on result from ordinary operations Result on ordinary operations after taxation 25 Investments in intangible fixed assets Investments in tangible fixed assets Disposal of tangible fixed assets Acquisition of non-consolidated participations Investments in other financial fixed assets Disposal of other financial fixed assets Cash flow from investment activities -258 -9.446 0 18 -127 3.839 -5.974 1.513 -58 -58 1.455 -47 -12.439 1.888 -714 0 93 -11.219 8.612 -5.063 -5.063 3.549 61 -661 559 -559 0 3.442 -928 2.514 Financial expenses: - interest paid Cash flow from financing activities Movement in cash and cash equivalents 89.799 Share in income from participations 16 16 16 16 16 16 39.536 12.613 3.013 8.543 4.905 5.827 74.437 175.603 32.216 10.081 2.972 8.527 16.973 5.572 76.341 178.325 Net result Opening balance cash and cash equivalents Closing balance cash and cash equivalents 69.884 71.339 1.455 66.335 69.884 3.549 TOTAL Movement in cash and cash equivalents Notes to the consolidated financial statements General Unless indicated otherwise, all amounts stated in the annual report are x EUR 1.000. Stichting Energieonderzoek Centrum Nederland [Energy research Centre of the Netherlands] (ECN) has its registered office in Petten, municipality of Zijpe, the Netherlands. The object of the Stichting is to gain knowledge and experience in the field of energy and to ensure that it is effectively made instrumental to the public interest and the various sub-interests to be distinguished therein. Activities The activities of Stichting Energieonderzoek Centrum Nederland, with its registered office in Petten, the Netherlands, and its group companies consist primarily of: a. conducting and commissioning fundamental, strategic, and applied research and related studies in fields determined by the Stichting itself, or as instructed by the national government, lower government authorities, companies, including electricity companies, other organizations and individuals. b. making accessible and sharing the results of research and studies as referred to under a., and supervising and providing support in the application of those results. c. collaborating with companies, included energy companies, and other research institutions in research and studies as referred to under a. d. contributing to coordinating research and studies in the Netherlands, and collaboration internationally. 62 Group structure Stichting ECN heads a group of companies. An overview of the information required under Sections 379 and 214 Book 2, of the Netherlands Civil Code is included below: Consolidated participations: Name Registered office Share in issued capital NRG v.o.f. Petten, municipality of Zijpe 70% NRG Personeel v.o.f. Petten, municipality of Zijpe 70% NRG Nuclear Services B.V. Arnhem 100% (formerly DNC Nucleair Technology B.V.) ECN Nuclear B.V. Petten, municipality of Zijpe 100% (ECN Nucleair B.V. holds the other 30% of the shares in NRG v.o.f. and NRG Personeel v.o.f.) Wind Energy Facilities B.V. Petten, municipality of Zijpe 100% SunLab B.V. Petten, municipality of Zijpe 100% Non-consolidated participations For a specification of the non-consolidated participations, reference is made to the note on the participations in the balance sheet. Consolidation principles The consolidated financial statements of Stichting ECN include the financial statements of the group companies, and other legal entities over which Stichting ECN has management control, or that are managed centrally. If these entities are immaterial to the view presented by the consolidated financial statements, they are not included in the consolidation. The consolidated financial statements are prepared in accordance with the accounting policies of Stichting ECN. The financial statements of the group companies, and other legal entities and companies included in the consolidation, have been fully included in the consolidated financial statements. All intercompany balances and transactions have been eliminated. Minority interests in Stichting ECN’s equity and the results of group companies are reported separately in the consolidated financial statements. The results of newly acquired group companies and the other legal entities and companies included in the consolidation are consolidated as from the date of acquisition. On that date, the assets, provisions, and liabilities are valued at fair value. The paid goodwill is charged fully to the result in the year of acquisition of the entity. The results of divested participations are included in the consolidation until the date the group affiliation is terminated. Financial instruments Financial instruments include primary financial instruments, such as receivables and debts, and derivative financial instruments. For the accounting principles relating to the primary financial instruments, we refer to the note on this specific balance sheet item. The Stichting has not hedged the currency and interest rate risks incurred on derivative financial instruments during the financial year 2008. Changes in presentation To facilitate comparison, the figures for the financial year 2007 have been modified where necessary to be in line with the presentation used for the financial year 2008.. Translation of foreign currencies Receivables, debts, and liabilities in foreign currencies are translated at the exchange rates prevailing at the balance sheet date. Transactions in foreign currencies during the year under review are recognized in the financial statements at the exchange rates prevailing at the transaction date. The exchange differences resulting from the translation as at the balance sheet date are included in the statement of income, taking into account any hedge transactions. Participations with a negative net asset value are valued at nil. If the Stichting fully or partly guarantees the debts of the relevant participation, a provision is formed for an amount equal to the share in the participation’s losses or the sum of the expected payments by the Stichting to the respective participation. Participations on whose business and financial policies the Stichting has no significant influence are valued at cost net of impairments, if any. The receivables from and loans to participations as well as other receivables are included at market value on their first-time recognition and are then valued at amortised cost, which equals face value, net of any provisions deemed necessary. The investments in equity instruments included under financial fixed assets are listed shares that do not belong to a trading portfolio. These investments are valued at market value (per fund) and any changes in value are directly taken to the statement of income. The bonds stated under financial fixed assets, which do not belong to a trading portfolio either and are held until the end of the investment term, are valued at amortised cost. Bonds taken out before 1 January 2007 are valued at the lower of cost and market value as at the balance sheet date, with the premium or discount upon the acquisition of bonds, divided over their terms, is added or charged to the statement of income, as the case may be. Inventories and work in progress Inventories of raw and ancillary materials and trade goods are valued at the average acquisition price, determined as the lower of average purchase price and net asset value. This lower net asset value is determined based on individual assessment of the inventories. Work in progress is valued at cost incurred, less the amounts already stated on the balance sheet date and losses already foreseeable on the balance sheet date. The costs incurred include the direct use of materials, the direct wage and machinery costs and other costs that are directly attributable to the research project. The income from the financing of the research project is determined based on the costs incurred in connection with the work at the balance sheet date. Instalments invoiced relating to work in progress are deducted from the value of the work in progress. Any resulting negative balance of work in progress is accounted for under current liabilities. Receivables and prepaid expenses Receivables are included at face value on first-time recognition and are subsequently stated at amortised cost, which can be equal to the face value, less any bad debt provisions deemed necessary. These provisions are based on an assessment of individual receivables. Accounting principles - general The consolidated financial statements have been prepared in accordance with the provisions in Title 9, Book 2, of the Netherlands Civil Code. Valuation of assets and liabilities and determination of financial results are based on the historical cost convention. Assets and liabilities are recorded at face value, unless mentioned otherwise. Income and expenditures are accounted for on an accrual basis. Profits are recorded insofar as realised as at the balance sheet date. Liabilities and possible losses originating before the end of the year are recorded if they have become known before the preparation of the financial statements. Changes in accounting policies Effective 1 January 2008, the Stichting applies the accounting principles as prescribed under the Dutch Accounting Standard RJ 290 ‘Financiële Instrumenten” for financial instruments. Hence, the accounting policies which the Stichting applies for recognition, valuation and classification of financial instruments in these financial statements differ from those applied in the 2007 financial statements. RJ 290 permits the Stichting to refrain from revising the first-time valuation and classification of financial instruments that have been taken out before the date of the opening balance sheet of the comparative figures of the financial statements in which RJ 290 is applied for the first time. Based on this exemption, the Stichting: • Has refrained from revising the first-time valuation and classification of financial instruments taken out prior to 1 January 2007; • Has recognised all financial instruments taken out since 1 January 2007 in accordance with the provisions of RJ 290. For the accounting policies applied for financial instruments, reference is made to the notes on the respective balance sheet items. Partial retroactive application of RJ 290 as from 1 January 2007 did not affect the equity and result over 2007. Principles for valuation of assets and liabilities Intangible fixed assets Intangible fixed assets are stated at cost incurred, less accumulated amortisation and impairment, if any. Annual amortisation is based on the straight-line method, as explained in the notes to the balance sheet. The useful economic life and amortisation period are revised at the end of each financial year. The goodwill acquired during the year as a result of take-overs (representing the difference between the acquisition price paid and the net asset value of the participation acquired) is fully amortised in the year of acquisition. Tangible fixed assets Tangible fixed assets are stated at cost, less accumulated depreciation and impairments, if any. Depreciation is based on estimated useful life of the respective assets and is calculated as a fixed percentage of cost, taking accounting of the residual value, if any. Depreciation commences when the asset is first used. Land is not depreciated. A provision for major maintenance is formed to defray the costs of periodic maintenance. This provision is included under the item ‘other provisions’ at the liabilities side of the balance sheet. For the accounting policies applied with respect to this provision, reference is made to the note on provisions. Financial fixed assets Non-consolidated participations on whose business and financial policies significant influence is exercised are valued at net asset value, but not lower than nil. The net asset value is determined in accordance with the accounting policies of ECN. 63 Provisions Provisions for employee benefits In 2006, the pension regulation was changed from a defined benefit regulation into a defined contribution regulation. Under this pension plan, the Stichting pays fixed amounts to the respective pension insurers and funds and has no payment obligations other than those fixed amounts. The amounts are expensed as and when they are payable. Long-term employee benefits Other long-term employee benefits concern the benefits included in the remuneration package, such as long-service awards, temporary leave and related benefits. All these benefits are long-term. The net liability relating to these benefits concerns the sum of the future benefits earned by employees in exchange for their services in the current and prior reporting periods. Actuarial gains and losses on other long-term employee benefits are directly added or charged to the income statement. Redundancy arrangements involve liabilities on account of termination of employment of workers prior to their respective pension start dates. Redundancy payments are recorded if a reasonable case can be made that there is an obligation to terminate the employment of certain workers. Payments are recorded at present value. The liabilities are recorded as such and disclosed under provisions. For bonus and profit sharing schemes based on relevant performance regulations, a liability is included under shortterm liabilities. Provision for radioactive waste This provision has been formed for the costs of future treatment and storage of radioactive waste. The provision is stated at present value, and is increased by an annual interest rate of 5% to cover future price increases. 64 Provision for major maintenance The provision for equal distribution of charges due to major maintenance on buildings is determined based on expected costs over a series of years. The provision is usually set up according to the straight-line method. The provision is based on the findings of the Temid report published in 2006 following a survey of overdue maintenance and major maintenance to be carried out over a period of 10 years. The maintenance performed is deducted from this provision. Principles for determination of financial results Operating income Operating income includes income from services and products supplied during the year under review, less the taxation of the turnover. Income from research projects is included in proportion to progress made. Costs for these research projects are recognised as incurred. Taxes Corporate income tax is determined by applying the respective rate to the result for the financial year, taking into account permanent differences between profit calculations for financial reporting and tax purposes. Deferred tax assets (if any) are accounted for only insofar as their realisation is probable. Share in income from participations The results of participations on whose business and financial policies the Stichting exercises significant influence are stated as the share in the profit of these participations to which the Stichting is entitled. This profit is determined in accordance with the principles for valuation and determination of the result applicable at Stichting ECN. Dividends from participations on whose business and financial policies the Stichting does not exercise significant influence are accounted for as income under the item ‘financial income and expenses’. Notes to the consolidated balance sheet FIxED ASSETS 1 Intangible fixed assets During 2008, SunLab B.V. continued the development of the Sherescanner. The related development costs have been accounted for as investment costs. Also a prepayment relating to the period 2009-2012 for rights to storage space for radioactive waste at COVRA NV has been added to this item. In prior years, this item was accounted for under “Inventories”. Intangible fixed assets can be specified as follows: Concession, permits and intellectual property Acquisition cost As at 1 January 1.389 Investments 257 As at 31 December 1.646 Amortisation As at 1 January Amortisation for the year As at 31 December Book value As at 1 January Investments Amortisation for the year As at 31 December Movements 134 1 135 Total 2008 1.523 258 1.781 Total 2007 1.476 47 1.523 0 -155 -155 0 0 0 0 -155 -155 0 0 0 Principles for preparation of the consolidated cash flow statements The cash flow statement is prepared according to the indirect method. The cash in the cash flow statement consists of cash and cash equivalents. Cash flows in foreign currencies are translated at an estimated average rate. Exchange differences relating to funds are shown separately in the cash flow statement. Profit taxes, interest received and dividends paid are included under the cash flow from operating activities. Interest and dividends paid are included under the cash flow from financing activities. 1.389 257 -155 1.491 134 1 0 135 1.523 258 -155 1.626 1.476 47 0 1.523 65 Both the costs of intellectual property and the development costs are amortised in 5 years. The costs of the COVRA positions (1.234) are amortised based on the positions used. 2 Tangible fixed assets Land and buildings Acquisition cost As at 1 January Investments Transfers Disposals As at 31 December Depreciation As at 1 January Depreciation for the year Disposals As at 31 December Book value Per 1 January Investments Transfers Disposals Depreciation for the year As at 31 December 48.037 1.817 343 0 50.197 Industrial Installations and fixtures 42.088 699 732 0 43.519 Instruments and machinery 51.936 2.958 78 0 54.972 Assets under construction 3.595 6.433 -1.153 0 8.875 Total 2008 Total 2007 145.656 11.907 0 0 157.563 141.562 10.657 0 -6.563 145.656 -30.988 -2.030 0 -33.018 -38.336 -863 0 -39.199 -45.311 -2.267 0 -47.578 0 0 0 0 -114.635 -5.160 0 -119.795 -116.710 -4.382 6.457 -114.635 17.049 1.817 343 0 -2.030 17.179 3.752 699 732 0 -863 4.320 6.625 2.958 78 0 -2.267 7.394 3.595 6.433 -1.153 0 0 8.875 31.021 11.907 0 0 -5.160 37.768 24.852 10.657 0 -106 -4.382 31.021 Depreciation is on a straight-line basis using the following periods. • Buildings 20 years • Temporary buildings and site facilities 10 years • Industrial fixtures and fittings 10 years • Instruments, machinery, etc. 5 years • Computer hard- and software 3 years The land was acquired from Staatsbosbeheer (the Netherlands National Forest Service) under a long-term lease in 1957. The long-term lease theoretically expires in 2031, but is expected to be renewed by 20 years in 2009. 3 Securities Movements in the portfolio were as follows: Balance as at 1 January • Less : Sales • Less : Reclassification • Add : Purchases • Less : Valuation differences Balance as at 31 December 2008 25.190 -3.857 -7.186 127 -1.821 -696 0 995 -392 2007 25.283 -12.737 12.453 -93 25.190 Financial fixed assets Movements in the knowledge-based and other participations were as follows: Balance as at 1 January • Less : Disposals • Less : Included in the consolidation*) • Add : Investments • Add : Income from participations Balance as at 31 December *) NRG Nuclear Services B.V. is included in the consolidation effective 2008 Participations in knowledge-based enterprises Business address • Enatec B.V. • RGS B.V. • Sundye B.V. • Aster intellectual properties B.V. • Solsilc development company • BO2 Energy Concepts B.V. Total as at 31 December Other participations Business address • NRG Nucleair Services B.V. *) • ToN2 B.V. • Solar Academy B.V. • Sulphcatch B.V. Total as at 31 December *) formerly DNC Nucleair Technology B.V.; included in the consolidation in 2008) Arnhem Petten Petten Petten ECN interest as at year-end % 100,0 100,0 100,0 80,0 2008 0 12 0 0 12 2007 18 5 0 0 23 Zevenaar Petten Petten Veessen Trontheim Petten 2008 615 0 -18 18 -559 0 0 714 -928 2007 829 The securities deposit has been pledged to the maximum value of the credit facility extended by ING Bank, for 15.000. The other securities are at the free disposal of ECN. The reclassification regards the book value of 2 bond loans that will be repaid during 2009. Therefore, they have now been included under the current assets. The bond portfolio has a face value of 19.250 (2007: 23.107). The commercial value amounts to 15.734 as at year-end 2008 (2007: 20.279). The commercial value of the share portfolio amounts to 3.859 as at year-end 2008 (2007: 5.594). Movements in security portfolios by type: Balance as at 1 January 2008 • Less : Sales • Add : Purchases • Less : Reclassification • Less : Valuation differences Balance as at 31 December 2008 Bonds 20.226 -3.857 0 -7.186 -580 8.603 Shares 4.964 0 127 0 -1.241 3.850 Total 25.190 -3.857 127 -7.186 -1.821 12.453 -559 56 -214 615 66 ECN interests as at year-end % 12,8 30,0 100,0 20,0 10,0 92,78 2008 15 0 16 0 1 12 44 2007 15 545 16 0 1 15 592 Other receivables This item includes the receivable from Covidien B.V. (formerly Tyco Mallinckrodt B.V.) regarding the payable lease terms for the Molybdeen building. The basis is an investment of 20.000 and a contract for 20 years. The interest was revised in 2006 under a contractual provision, based on which the lease price will be valued for the remaining terms (40 quarters).The outstanding receivable as at year-end 2008 was 5.544. In 2009, an amount of 684 will be repaid. This amount is included under current assets. Movements in ‘Other receivables’ were as follows: Balance as at 1 January • Investments 0 • Disposals 0 • Transfer to receivables and prepaid expenses -684 Balance as at 31 December Specification of receivables according to term: < 1 year • Lease contract Covidien Molybdeen building 684 2008 5.544 347 -571 -684 4.860 -652 -876 5.544 2007 6.420 67 > 1 yrs. < 5 yrs. 3.086 > 5 years 1.774 total 5.544 CURRENT ASSETS 4 6 Cash and cash equivalents Cash is freely disposable, with the exception of 31.955 (see specification below). The bonds are pledged to the maximum value of the credit facility extended by ING Bank, which is 15.000. A credit facility of 4.500 is available at ABN AMRO, for which no security has been provided. 2008 7 19.093 52.239 71.339 2007 5 21.927 47.952 69.884 9 Provision for pension indexation The (paid up) pension entitlements, accrued up to year-end 2006 by both active participants and former participants were deposited with Centraal Beheer Achmea (CBA), and will remain insured by the latter. Effectively, the pension obligation as presented has the character of “contributions to be paid to CBA”; this means it is not a self-administered pension obligation. With the exception of the pension rights based on the pension rules of 1964 (the pension rights with a fixed 3% annual increase), ECN and NRG will annually index the aforementioned pension rights. The indexation will be financed separately from the new pension regulation at ABP. The pension regulation aims at indexation at price index level, but is limited to what can be achieved in any year with the disposable financial resources. For this reason, the indexation provisions in the various pension schemes have been amended (unilaterally). This indexation method is applied to achieve a near market-level result within the limited financial means. To finance the indexation, the following financing is available, and/or ECN/NRG will make the following financing available as from 2007: • For a period of 10 years, ECN/NRG will pay a fixed amount of 2 million into the deposit each year. • For a period of 10 years, a preferential allocation of the result of 1 million will be paid into the deposit each year. This allocation is conditional to sufficient positive result. If the positive result is smaller than 1 million, the full amount of the result will be transferred to the deposit. • For a period of 10 years, 1/3 of a positive result between 1 and 4 million will be paid into to the deposit each year. This payment is conditional to the result being more than 1 million. • For a period of 10 years, a payment of half of the positive result above 4 million will be paid to into the deposit each year. This payment is conditional to the result being more than 4 million. • Result is defined as net consolidated result after taxes. Based on a discounted cash flow analysis, at 5% interest, 16,2 million was provided for at consolidated level in 2006 for the fixed annual payment of 2 million. The obligation for 2009 has been stated under current liabilities. Movements in this provision were as follows: Balance as at 1 January • Less : reclassification • Less : release • Add : addition • Add : addition of interest Balance as at 31 December 2008 12.927 -2.079 0 0 725 -2.000 0 0 712 2007 14.215 Work in progress Work in progress Provision for work in progress* Balance as at 31 December *) This provision is included in the balance sheet under ‘Other provisions’. 2008 16.332 -948 15.384 2007 17.105 -1.813 15.292 Cash ABN AMRO ING / Postbank Balance as at 31 December Not freely disposable: • ING Escrow account • ING 6th and 7th framework accounts • Sale and lease back obligation WEF BV Total 7 -1.354 11.573 -1.288 12.927 5 Receivables and prepaid expenses The receivables have been included at amortised cost, which may be equal to the face value, exclusive of provisions required. They expire within 1 year and are broken down as follows: 2008 2007 Trade debtors 11.686 17.609 Receivables from participations 569 495 Other receivables 13.007 5.164 Balance as at 31 December 25.262 23.268 25.690 3.474 2.791 31.955 24.626 3.037 1.638 29.301 The reclassification of 2.079 relates to transfer of the current portion to current liabilities at year-end 2008. Interest at 5% has been added to the provision to enable adjustment to the future price level. In 2008, 3.513 at consolidated level was transferred to Centraal Beheer Achmea for the indexation. This enabled an indexation of 1,115 per cent. This amount of 3.513 includes 2.000 in defined contributions and an advance payment on the performance-linked payment for 2007 of 1 million. An advance payment of 1.000 was already made in 2007. 10 Provision for compensation on commencement of retirement Article 24, paragraph 7 of the transitional regulation as included in the pension regulation 1999 on the compensation on commencement of retirement continues to be effective. This compensation is based on a graduated scale linked to the years 2000 up to and including 2018 and generates 3 monthly salaries in 2000 to 1,25 monthly salaries in 2018 on commencement of retirement. Under the same tax limitations applying to anniversary and redundancy disbursements, this compensation is paid to employees who retire directly after employment. 2008 2.419 -267 0 0 114 -381 0 379 115 2007 2.306 69 113 2.419 Group equity Reference is made to the notes on equity in the statutory financial statements. Provisions The provisions below mostly are long term. 2008 130 11.573 2.266 1.351 1.036 67.715 2.815 948 1.965 89.799 2007 390 12.927 2.419 2.056 1.084 64.632 3.258 1.813 2.038 90.617 68 The decrease in accounts receivable is primarily due to the inclusion in the 2007 figures of a 5.727 receivable from the European Commission regarding the operation of the HFR. The other receivables include an item of 7.186, being 2 bonds that will be repaid in 2009. Movements in the total bad debt provision were as follows: 2008 2007 Balance as at 1 January 398 220 • Add : Addition 15 297 • Less : Withdrawal -158 -15 • Less : Release -50 -104 Balance as at 31 December 205 398 Provision for redundancy costs Provision for pension indexation Provision for compensation upon commencement of retirement Provision for Job-Related Discharge Regulation (RBF) Provision for long service awards Provision for radioactive waste Other provisions: • major maintenance • WIP • Miscellaneous Total 8 8 9 10 11 12 13 14 15 15 8 - 15 Balance as at 1 January • Less : withdrawal • Less : release • Add : addition • Add : addition of interest Balance as at 31 December -153 2.266 Provision for redundancy costs This provision was formed to cover costs of staff redundancies ensuing from reorganizations. As in previous years, the annual interest addition was based on 5%. Movements in this provision were as follows: Balance as at 1 January • Less : withdrawal • Less : release • Add : addition of interest Balance as at 31 December 2008 390 -210 -61 11 -337 -44 35 2007 736 -260 130 -346 390 11 Provision for Job-Related Discharge Regulation (RBF) (formerly: FLO) Employees working in shifts were entitled to early retirement under the regulation on jobrelated discharge from service dictated by age (FLO) as from the age of 57.5. Due to changes in law, this regulation was no longer permitted as of 2006. A new regulation was agreed in consultation with the respective employees in 2006. This regulation became effective on 1 January 2007. Under the new Job-Related Discharge Regulation (Regeling Bezwarende Functies) a personal budget is granted for years of service in a strenuous job. With this budget, employees can accrue life-cycle savings under a life-cycle savings regulation, which can be withdrawn to finance life-cycle leave prior to the pensionable age. In addition, a transitional regulation has been provided for current employees. Under the transitional regulation, a personal budget is granted afterwards for years of service in a strenuous job until 2006. On top of this, the regulation provides for additional compensation in the form of extra leave entitlements per age cohort. A provision has been included in connection with this regulation. This provision is based on the assumption that the tax administration will consider parts of the transitional regulation inadmissible under tax law and impose penalties with respect to the leave entitlements granted of 26 per cent and 52 per cent, respectively. The withdrawal from this provision consists of two parts: payments to the existing group of beneficiaries under the former FLO regulation, and payments to the present employees in the form of personal budgets under the new RBF regulation. Payments relating to the personal budgets were charged to the provision. Also the costs incurred for the existing beneficiaries during the year under review under the old FLO regulation were charged to the provision. Movements in this provision were as follows: Balance as at 1 January • Less : withdrawal • Add : addition • Add : addition of interest Balance as at 31 December 2008 2.056 -728 0 23 -3.388 844 36 2007 4.564 13 Provision for radioactive waste This provision is intended for the costs of future treatment and storage of radioactive waste. Movements in this provision were as follows: Balance as at 1 January • Less : withdrawal • Add : addition • Add : third-party contributions • Add : capitalised decontamination commitment • Add : addition of interest Balance as at 31 December 2008 64.632 -2.990 1.844 0 1.000 3.229 -1.896 2.665 4.500 0 2.864 2007 56.499 15 Provision for work in progress and other provisions The provision for work in progress serves to correct the value of the Work in progress account and to cover a possible risk of budget overruns of projects in progress. The item ‘Other provisions’ includes the provisions for ‘Renovation of Lead Cells’, ‘DWT sludge storage’ and other provisions. The provision for cleaning and maintenance of lead cells was formed for the lead cells in the Hot Cell Laboratories (HCL). The provision has the character of a provision for repair costs and is based on historical figures relating to the cleaning costs per cell. No fixed date has been set for the cleaning of the lead cells. The sludge basin contains 440 barrels of sludge from the waste treatment plant. Up to and including 2003, it was expected that these barrels could be processed in the near future. However, the currently available capacity is insufficient to process sludge from prior years. The part whose processing and transport has been delayed for several years has been accounted for under long-term provisions. At the current price level, transport to the COVRA would cost 582. Other provisions: Lead cells Storage DWT sludge 545 544 -86 0 0 38 0 0 0 0 459 582 The main reason for the increase of the item “Prepayments by third parties” regards prepaid contributions of the Ministry of Economic Affairs for the High Flux Reactor (“HFR”). An amount of 3.000 has been received for an advance in respect of the addition to the Supplementary Program (“SP”). Said amount forms part of a commitment of 4.000 in the aggregate, of which 1.000 has been recognised in the 2008 result. Because an “SP” no longer existed as at year-end 2008, the Ministry of Economic Affairs, which had included the contribution to this “SP” for 2008 in the budget, has granted this contribution to NRG as a bridging finance facility. Of this 8.112 bridging finance facility 5.656 has been recognised in the 2008 result. The remainder has been included on the balance sheet as prepaid contribution. Both items of the Ministry of Economic Affairs have been granted subject to the condition that an “SP” will materialise prior to 1 May 2009. Financial instruments For the notes to the primary financial instruments reference is made to the specific item by item notes. As at balance sheet date, ECN and its subsidiaries did not own financial derivatives. Below, the risks relating to financial instruments are explained. • Currency exchange risks For most transactions with suppliers and buyers, ECN and subsidiaries apply the euro as payment currency. As a result, the currency exchange risk of ECN and its subsidiaries is limited to an insignificant number of transactions outside the eurozone. • Interest risks The main interest risk that ECN runs at a consolidated level is a difference between proceeds of investments and cash versus the required additions of interest to provisions. Through active asset management we try to mitigate this risk as much as possible. • Credit risks These are reduced as much as possible by doing business with third parties that have a good creditworthiness and an active debtor management. 3.083 67.715 8.133 64.632 In 2008, 2.990 was withdrawn from the provision. This largely regards costs incurred for the preparation of processing historic waste and the costs for decontaminating radiological laboratories. An additional 2.844 was credited to the provision. The main additions are the following: An amount of 1.063 has been added to cover higher costs of engineering for the design of a facility for splitting and packaging high and low radioactive waste in preparation of the transport to COVRA. Moreover, 1.000 has been added for the expected decontamination costs for a building at NRG. 14 Work in Progress 2008 Balance as at 1 January 1.813 • Less : withdrawal -865 • Add : addition 0 • Add : addition of interest 0 • Less : release 0 Balance as at 31 December 948 Other 949 0 344 0 -369 924 Total 2008 2.038 -86 382 0 -369 1.965 Provision for major maintenance Movements in this provision were as follows: Balance as at 1 January • Less : withdrawal • Less : release • Add : addition Balance as at 31 december 2008 3.258 -1.984 0 1.541 -1.261 0 1.200 2007 3.319 70 -705 1.351 -2.508 2.056 -443 2.815 -61 3.258 15 Other provisions The item “other provisions; miscellaneous”, includes a provision for a correction of proceeds EU (KP6) projects in the amount of 830, regarding the years 2004 - 2008. The correction is the result of a request by the European Commission to test the claims for 61 projects against conflicts with the regulations of these framework programs, detected during an audit as at year-end 2007/early 2008 and, if necessary, to revise the claims. 71 12 Provision for long service awards This provision is formed for payment of future long service awards. Movements in this provision were as follows: Balance as at 1 January • Less : withdrawal • Add : addition • Add : addition of interest Balance as at 31 December 2008 1.084 -165 62 55 -24 24 36 2007 1.048 Current liabilities Current liabilities are specified as follows: 1. Prepayments from third parties 2. Accounts payable related to deliveries and services from third parties 3. Taxes and social security contributions • Corporate income tax • VAT • Wage tax • Pension charges 4. Other social security charges and personnel costs • Other personnel costs • Reservation for holiday allowance and leave balances 5. Other liabilities and accrued expenses • Funds advanced for 6th framework accounts • Miscellaneous liabilities • Payable to co-contractors of projects Balance as at 31 December Current liabilities are settled within one financial year. 2008 34.098 12.613 245 0 2.768 4.905 1.040 7.503 3.474 2.353 5.438 74.437 2007 26.373 10.081 157 2 2.813 16.973 1.813 6.714 3.037 2.535 5.843 76.341 The provision for major maintenance serves to equalise the maintenance costs of the building over the years, based on an LT maintenance plan. In the past years, a backlog on this maintenance plan arose. Based on the findings of a report issued by DGV/TEMID in 2006 following a survey of overdue maintenance and (major) maintenance to be performed over a period of 10 years, the provision formed was revised critically. At yearend 2008, the provision was revised based on the data up to and including 2018 and this resulted in an extra addition of 1.541. -48 1.036 36 1.084 The provision was revised at year-end 2008 based on the following principles: • The payroll as at 31-12-2008 and a retention rate of 74%; • addition of interest of 5% annually; • annual inflation of 2%. Off-balance sheet commitments Obligations a) As a partner to the partnership firm NRG, Stichting ECN is jointly and severally liable for the debts of this firm. In addition, as a wholly owned subsidiary of ECN, ECN Wind Energy Facilities B.V. is jointly and severally liable for the debts in its capacity of managing partner of ECN Windturbine Testpark Wieringermeer C.V. b) In 2004, ECN received funds from the Ministry of Economic Affairs totalling over 15.800 and in 2006, it received an amount of 8.100 from the Ministry. Both payments served to defray the costs of work related to the disposal of radioactive waste. If due to circumstances, ECN is not able to perform the work itself, or commission the work to third parties under its supervision, it is obliged to repay the non-disbursed amount to the Ministry of Economic Affairs. The payments from the Escrow account that has been opened for this purpose may be solely be remitted, if the payment orders are signed by both parties (the Ministry of Economic Affairs and ECN). c) The site was acquired in 1957 under a long-term lease from Staatsbosbeheer. In 2003, an application was prepared for an extension up to 2051. This application, however, was suspended and it is now expected to be followed up in 2009. On 1 January 2006, the annual ground rent was set at 204 per year and it will be indexed again based on the development of the consumer price index, all households series. d) During the financial year 2003, ECN Windturbine Testpark Wieringermeer CV, whollyowned by Wind Energy Facilities BV, itself a wholly-owned subsidiary of ECN, entered into a sale and lease-back agreement to finance a wind turbine testing field in which large wind turbines will be tested for offshore locations. The ensuing annual lease commitment is 1.632 from 2004 to 2012 (see also under f). e) On 5 July 2007, ECN and NRG were summoned by the Association of Ex-Employees of ENC & NRG (OMEN). OMEN has applied for a declaratory judgement that ECN et. al. did not have the power to change the indexation provisions in the pension schemes relating to the former employees of ECN. In 2006, the indexation provisions were changed for both active and non-active persons and indexation was made conditional following a previous court decision in which these provisions were regarded unconditional. The court decision could result in a financial emergency for ECN/NRG, since unconditional indexation under the applicable accounting principles requires recognition of a very substantial expense. On 16 July 2008, the judge pronounced an interlocutory judgement. OMEN has lodged an appeal against this interlocutory judgement. OMEN’s main objection against this interlocutory judgement focuses on the judgement of the court that in the event of significantly changed financial circumstances ECN and NRG would have had the authority towards their former employees to unilaterally change the pension plans as at 1 January 2007. This appeal is expected to take quite some time. f) Specification of contractual commitments entered into: Description Rent for premises in Arnhem(NRG)/Amsterdam(ECN) Lease of cars NIB WEF lease commitment ECN/WEF scale park lease Repro services Cleaning services Capital expenditure commitments Building 31 Security < 1 year 657 191 1.632 180 180 370 750 741 4.701 > 1 yr < 5 yrs 539 195 4.895 720 180 370 0 1.500 8.399 > 5 year 0 0 0 0 0 0 0 0 0 Bank guarantees provided As at the balance sheet date, ECN had provided bank guarantees for an aggregate amount of 1.411 through ABN AMRO and ING. These bank guarantees have been provided primarily at the request of the EU for the KP6/KP7 projects. Transactions with affiliated parties During 2008, the possibility granted to NRG to conclude one or several subordinated loan(s) from ECN / ECN Nucleair B.V. to reinforce its equity and the cash flow positions was cancelled. ECN and NRG perform work one for the other. These transactions are eliminated in the consolidated accounts and relate to services by ECN arising from a joint use of accommodation, infrastructure (networks and telephone), security, accounting services and other services. NRG on the other hand, performs services in the area of decontamination of buildings and similar services. Fees and fixed rates are agreed per year and documented. In the financial year, the following transactions were effected between affiliated parties: Between ECN and NRG for a total amount of 10.674 (2007: 9.629) • Transactions primarily relating to the charging-on of the joint use of infrastructure (6.580 / 2007: 6.393), services from the E&S unit after directly placed orders (1.111/ 2007: 1.132), share in corporate staff services (1.094 / 2007: 911), share in project facilities (1.671 / 2007: 929), and orders placed directly by NRG (212 / 2007: 264). • Transactions between ECN and WEF BV primarily relate to the costs of engaging managers for WEF and ECN and total 935 in 2008 (2007: 832). • Transactions between ECN and SunLab relate primarily to the charging-on of the costs of joint use of infrastructure. In 2008, these costs totalled 196 (2007: 144). • No transactions are concluded between ECN and Stichting EMVT • Transactions between ECN and Stichting Kenniscentrum Windturbine Materialen en Constructies (WMC) primarily relate to supporting activities of management and the costs of seconding employees for specific projects and total 99 in 2008. • Transactions between ECN and Solar Academy B.V. relate to support services for completing the fitting out of Solar Academy B.V. and amount to 47 for 2008. Costs are charged on at the generally applicable rates for internal cost allocation within ECN. At the end of the financial year, ECN had the following receivables from affiliated parties: between ECN and NRG: a total of 8.698 (2007: 7.198) • between ECN and WEF: a total of 113 (2007: 70). • between ECN and SunLab B.V.: a total of 51 (2007: 45). • between ECN and WMC: a total of 19 (2007: 45). • between ECN and Solar Academy B.V.: a total of 171 (2007: n.a.) Notes to the consolidated statement of income Operating income 17 Financing by the State of the Netherlands • Basic, Engine and Knowledge financing • Program and Cooperation financing Total 2008 13.612 31.331 44.943 2007 13.708 28.433 42.141 The financing from the Ministry of Economic Affairs comprises subsidies from the Ministry of Economic Affairs, the Ministry of Housing, and the Ministry of Spatial Planning and the Environment granted in 2007. These subsidies are recognized in the financial year for which they were granted. The firm has to prove every year that the funds were spent lawfully. Based on the assessment of the respective ministries, part of the subsidies that have been granted may be deducted from future subsidies. The income received include the EZS funds received by NRG, totalling 9.362, the Knowledge and Program Financing received by ECN based on agreements made in 2005, totalling 33.182, and the funds received from the Ministry of Housing, Spatial Planning and the Environment (VROM) totalling 2.399 (2007: 2.578). 18 Assignments and other funds Third-party assignments Increase / decrease in work in progress Provision for WIP Total 2008 74.698 -773 948 175 74.873 2.947 1.813 4.760 77.690 73 2007 72.930 72 g) In response to an announced possible examination into to the extent in which ECN fulfils the concept of ‘entrepreneur’ within the meaning of the Turnover Tax Act, ECN is still convinced that it can fully qualify as entrepreneur. As yet no written confirmation about this assumed position has been received from the tax administration. h) ECN has entered into a joint venture agreement with DHI Water and Environment and VanderBilt University for the development of LeachXS, a software application for reviewing the lixiviation behaviour of materials, residues and waste. Since 2008, this system has been applied in a project financed by US-DOE, while other projects have been entered into with industrial parties. On top of that a more freely accessible version (LeachXS Lite) will be developed, creating options to more specifically anticipate parties’ needs. A further expansion of users and applications is expected for 2009. i) The item ‘miscellaneous’ in ‘other provisions’ includes a reserve of 830 for the financial consequences of the revised claims with the European Union (EU), including an estimate of the impact on projects in 2008. The revised claims for the period of 2004-2007 were filed with the EU in March 2009. As yet we have no certainty that the basic assumptions currently applied will be accepted by the European Commission. Third-party assignments include income from 100% third-party assignments, or the part performed by third-parties of joint assignments under partnership agreements. Third parties include the assignments commissioned by SenterNovem on behalf of the Ministry of Economic Affairs, assignments commissioned by the EU and other such assignments. Specification of third-party assignments, including increase / decrease in work in progress, by client: Domestic trade and industry sector Domestic energy sector European Commission Foreign trade and industry sector Government agencies Technological institutes SenterNovem Total 2008 25.587 1.533 19.601 15.181 3.922 1.713 7.336 74.873 2007 27.758 2.567 19.520 14.048 2.564 1.698 9.535 77.690 19 Capitalised corporate production Capitalized corporate production comprises operating expenses for work carried out by the company’s own staff and with its own operating assets, credited or debited to investments or provisions. 2008 2007 Movable assets 774 323 Immovable assets 686 212 Provision for radioactive waste 2.303 1.476 Major maintenance and other provisions 476 340 4.239 2.351 21 Operating expenses Wages and salaries, social security and pension charges 2008 1. Permanent employment contract 2. Other personnel charges 3. Social security contributions 4. Pension charges Total 46.743 11.507 58.250 3.305 7.294 68.849 44.460 10.741 55.201 2.061 11.316 68.578 2007 24 Financial income and expenses 2008 • Interest receivable and related income • Interest payable and related costs Total Interest receivable and related income Interest payments bonds Interest payments current account bank/giro Result on sale of bonds Other interest income 2008 586 2.068 0 734 3.388 Interest payable and related costs 2007 736 1.555 93 696 3.080 3.388 -6.400 -3.012 2007 3.080 -5.063 -1.983 Company balance sheet ECN – assets (x € 1.000) (before appropriation of profit) ASSETS Fixed assets Intangible fixed assets Tangible fixed assets Financial fixed assets: • Participations in group companies • Other participations • Securities • Other receivables Total financial fixed assets Total fixed assets Current assets Work in progress Receivables from group companies Receivables from other participations Trade debtors Inventories Other receivables and prepayments Clarification 31-12-08 31-12-07 257 28.180 26 0 22.588 10.603 597 25.190 5.544 41.934 64.522 20 Other operating income Other operating income includes the income from the lease of the Molybdeen facility. This item progresses parallel with the depreciation on this facility in accordance with ECN’s accounting method. The difference between the charges to Covidien B.V. based on an annuities calculation (146), and the depreciation determined according to the straight-line method (19), is reported under financial fixed assets. This item also includes the proceeds of WEF from income received from the lease of prototypes and the re-delivery of energy to the public grid of Eneco plus the MEP subsidy via Enerq. 2008 1.102 4.696 716 147 0 1.325 7.986 2007 743 5.136 614 146 1.992 1.170 9.801 23 Average number of employees (FTEs): • Permanent employment contracts • Temporary employment contracts (including doctoral students) Financial year total average 2008 747,7 155,8 903,5 2007 727,7 124,6 852,3 Interest payable current account bank / giro Addition of interest provision for redundancy costs Addition of interest provision for radioactive waste Addition of interest provision for severance pay Addition of interest provision for long service awards Addition of interest provision Job-related Discharge Regulation Additional transitional law retirement regulation Impairment of securities Other interest payable 10.430 56 12.453 4.860 27.799 56.236 74 • Royalties • Energy supply to Eneco and Enerq • Lease of prototypes • Rental income from lease contract with Covidien • Final settlement Ministry of Economic Affairs through 2005 • Other The figures reported above do not include temporary employees through staffing agencies. 22 Depreciation of tangible fixed assets This item is specified as follows: • Buildings, installations, fixtures and site facilities • Instruments and other inventory Total 2008 2.893 2.267 5.160 2007 2.570 1.812 4.382 25 2008 58 11 3.229 114 55 23 725 1.821 364 6.400 2007 212 35 2.864 115 36 36 712 368 685 5.063 12.204 7.302 569 7.571 233 12.019 39.898 33.582 129.716 10.987 6.398 495 6.683 210 4.433 29.206 42.699 136.427 75 Cash and cash equivalents TOTAL Other operating expenses This comprises: • Projects • Cost centers • Staffing agency workers and seconded employees • Movement and release bad debt provision • Addition provision for major maintenance • Movement provision for radioactive waste • Release remaining provisions 2008 28.669 18.116 4.106 -35 1.541 1.844 -596 2007 30.391 14.556 3.979 183 1.200 2.665 5 Taxes The nominal tax rate in 2008 was 20% over profits up to 275 and 25,5% over higher profits (2007: 25,5%). The effective tax rate is 27,5% (2007: 15,0%). The difference between the nominal and effective tax burden arises from the exemption of corporate income tax applicable to ECN. The reported tax burden concerns the activities of ECN Wind Energy Facilities BV and SunLab BV. 53.645 Specification audit fee: This item can be specified as follows: • Financial statement audit • Other audit engagements 2008 142 257 399 52.979 2007 236 177 413 During 2008, ECN faced an increase in audit fee due to an increase in the number of project audits (recalculation KP6 EU projects). Company balance sheet ECN – liabilities (x € 1.000) (before appropriation of profit) EQUITY AND LIABILITIES EQUITY Foundation capital Statutory reserves Other reserves Retained earnings Clarification 27 Company statement of income ECN (x € 1.000) 2008 2007 Operating income: Income • Funds from the State of the Netherlands • Assignments and other funds • Increase / decrease in work in progress • Income at group companies Notes to the company financial statements of ECN The statutory financial statements have been prepared in accordance with the provisions in Title 9, Book 2, of the Netherlands Civil Code. Accounting principles The statutory financial statements have been prepared based on the accounting principles disclosed in the notes to the consolidated financial statements. 26 31-12-08 31-12-07 45 135 11.146 0 11.326 45 561 8.206 2.514 11.326 35.581 31.862 1.217 9.387 78.047 32.805 29.655 1.667 9.008 73.135 2.350 2.975 78.460 Participations in group companies Movements in participations are as follows: Balance as at 1 January Add : Income from participations Less : Dividends / payments received Balance as at 31 December 2008 10.603 2.244 -2.417 10.430 2007 8.325 3.315 -1.037 10.603 Provisions Provision for redundancy costs Provision for radioactive waste Provision for pension indexation Provision for compensation on commencement of retirement Provision for Job-Related Discharge Regulation (RBF) Provision for long service awards Provision for major maintenance on buildings Provision for work in progress Other provisions 130 61.854 9.529 2.266 349 664 2.815 443 924 78.974 390 60.074 10.644 2.419 458 751 3.258 559 949 79.502 Capitalised corporate production Other operating income Total operating income Operating expenses: Personnel costs: 4.064 1.401 83.512 27 Wages Social security charges Pension charges Depreciation Other operating expenses Outsourcing to group companies Total operating expenses Operating result Financial income and expenses Profit on ordinary operations before taxation Taxation on result from ordinary operations 0 38.322 2.117 4.853 3.800 29.614 2.418 81.124 2.388 -4.073 -1.685 0 -1.685 1.685 0 35.913 1.240 7.718 3.555 25.942 1.597 75.965 2.495 -2.368 127 76 Current liabilities Accounts payable Debts to group companies Taxes and social security contributions Prepayments from third parties Pension liabilities Other social security charges and personnel costs Other liabilities and accrued expenses Foundation capital 45 Balance as at 1 January 2007 Allocation of 2006 result 0 Result after taxation 2007 0 Composition of statutory reserve for participations 0 Balance as at 31 December 2007 45 Allocation of 2007 result Composition of statutory reserve for participations Result after taxation 2008 Balance as at 31 December 2008 0 0 0 45 Equity Statutory reserves 779 0 0 -218 561 0 -426 0 135 Other reserves 8.933 -945 0 218 8.206 2.514 426 0 11.146 Retained earnings -945 945 2.514 0 2.514 -2.514 0 0 0 Total equity 8.812 0 2.514 0 11.326 0 0 0 11.326 6.120 1.219 1.826 15.196 3.766 5.324 3.635 37.086 2.330 129.716 4.994 1.748 1.678 15.728 11.325 5.234 3.662 44.369 1.230 77 The statutory reserve is a reserve for ‘unallocated result of participations’. Remuneration of (former) directors and Supervisory Board members Debts to credit institutions TOTAL Profit on ordinary operations after taxation 136.427 Income from participations Net result 127 2.387 2.514 Remuneration of directors, including pension charges Remuneration of Supervisory Board members 2008 321 59 2007 316 65 Signing of the financial statements 2008 Petten, 28 April 2009 Supervisory Board: Stichting Energieonderzoek Centrum Nederland Dr. A.B.M. Hoff (Chairman of the Board of Directors of ECN)) Prof. dr. R.F.M. Lubbers (Chairman of the Supervisory Board) H.A.D. van den Boogaard Dr. C.P. Jongenburger Prof. dr. W.C. Turkenburg Dr. ir. A. W. Veenman Drs. G.H.B. Verberg Other information Auditor’s report Reference is made to the auditor’s report included on the right side. Provisions in the Articles of Association regarding allocation of the result As generating a profit is not the primary aim of the Stichting Energieonderzoek Centrum Nederland, no provisions on profit appropriation have been included in the Articles of Association. The result realised in any financial year is therefore added to the other reserves of the Stichting. Allocation of the result for the financial year 2007 The 2007 financial statements were adopted by the Supervisory Board on 18 March 2008. The Supervisory Board determined the allocation of the result in accordance with the proposal. Allocation of the result for the financial year 2008 The result for the financial year 2008 is nil. Post balance sheet events No relevant material post balance sheet events have occurred. Auditor’s report Report on the financial statements We have audited the accompanying financial statements 2008 of Stichting Energieonderzoek Centrum Nederland, Petten, which comprise the consolidated and company balance sheet as at 31 December 2008, the consolidated and company profit and loss account for the year then ended and the notes. Management’s responsibility Management is responsible for the preparation and fair presentation of the financial statements and for the preparation of the Director’s report, both in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Stichting Energieonderzoek Centrum Nederland as at 31 December 2008 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Report on other legal and regulatory requirements Pursuant to the legal requirement under 2:393 sub 5 part f of the Netherlands Civil Code, we report, to the extent of our competence, that the Director’s report is consistent with the financial statements as required by 2:391 sub 4 of the Netherlands Civil Code. Utrecht, the Netherlands, 28 April 2009, Deloitte Accountants B.V. drs. A.J. Heitink RA COLOPHON Published by: Energy Research Centre of the Netherlands Text: Meno Jelgersma, Monique Tesselaar, Frans Stravers Editors: Frans Stravers, Nico Wittebrood Artwork & Graphic Design: Made in Haarlem Printed by: RICOH Portrait Photography: René Koster Pictures: Stock.xchng, iStock, ECN-archive, Annebeth Leurs, Florentine de Maar 78 79 80