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The New Dutch Climate Proposal Unpacked

The Binnenhof Complex in the Hague, where both houses of the States General of the Netherlands are based, as well as the office of the Prime Minister.

Image: Rudy and Peter Skitterians

The Climate Act aims to reduce COlevels by at least 49% in 2030 and 95% in 2050 compared to 1990 levels. The Paris Climate Agreement, also signed by the Netherlands, is the basis for these targets. The U.K. in 2008, Sweden, Norway, Denmark, Finland, France, and Mexico all signed climate agreements meant to realize the Paris Agreement targets.

The key target formulated in the Climate Agreement towards 2050 is to have practically all electricity produced from solar, wind, and organic compounds. For solar energy, there is no distinction made in the act between photovoltaic and thermal, although it is expected is that the bulk will be generated by solar PV.

Solar energy in the Climate Agreement

Within the Climate Agreement, which was presented on July 10, solar energy is mentioned 14 times. From the agreement itself three milestones are relevant for solar companies.

84 TWh of renewables in 2030

First is the percentage of energy production expected from renewable energy sources. Currently the Netherlands uses (and produces) approximately 110 TWh of electricity – still mostly supplied by natural gas. Currently, over 2% is produced by solar. In 2030, the target is that 35 TWh will be produced by solar and onshore wind. Offshore wind is expected to produce 49 TWh.

Currently the Netherlands has over 3 GW of cumulative solar capacity, and a further 1.5 GW is expected to be installed in 2018. With delays in the expansion of onshore wind capacity, the potential for solar is incredible.

3 cents per kWh?

The second milestone has to do with price expectations. The ambition is to reduce the costs of electricity generation from solar PV from the current level of €0.107/kWh towards (less than) €0.056/kWh in 2024, and down to €0.03-€0.06/kWh in 2030. Companies able to meet this expectation are likely to play an important role in the Dutch market.

Local participation

Third, the Climate Agreement formulates the ambition that 50% of local production from onshore wind and solar is to be owned by local stakeholders. Therefore, players that manage to incorporate local participation into their business model will have much stronger chances of establishing themselves in the Dutch energy market.

Remarkable

By far the most striking feature about the agreement is not so much its content, but the fact that the Dutch right-wing liberal party, the VVD – currently the largest party in government, and of which the Prime Minister and most ministers are members – has committed to this agreement.

This signals a stable investment climate in both the short and long term, since currently about a two thirds majority in parliament believes in, and is in favor of, climate action.

Criticism

Although responses from the renewable energy sector are largely positive, there is always room for criticism. The main point of criticism on this first draft is the fact that most measures cannot be enforced. Furthermore, it is unclear how progress will be monitored and by whom. For example, the U.K. has an external independent commission that evaluates the country’s progress every five years and has the power to adjust goals and policies. It is expected that the final Climate Agreement will address these points of critique.

Concluding remarks

The future looks bright for the Dutch PV market. The Netherlands is one of the key European markets and will remain so in coming years, as a result of the Climate Agreement. Also, the net metering system will be replaced by a feed-in system that provides continued support for end users with solar. With the Climate Agreement, significant investments will continue in large-scale projects until 2025, after which the SDE+ system is likely to end.

From September onwards, the Dutch government and parliament will debate the current Climate Agreement proposal, and a final version is expected to be signed before the end of the year. While minor changes might be implemented to the final draft, paramount is that the largest and most influential right-wing party is committed to this agreement. This means that the Netherlands has passed the point of no return, in spite of our backlog and historic dependence on fossil energy.