Netherlands government launches optimum network investment consultations

Brussels — The Dutch government is to launch consultations in mid-2020 on optimising investment in energy infrastructure, possibly limiting the current automatic right to grid connection irrespective of location, it said.

This potential change is one of many in a vision paper on the role of the market in the energy transition and the policy measures needed to achieve a market-based transition.

This government's roadmap covers six areas: expansion of the electricity system across all sectors (buildings, industry, mobility and agriculture); dismantling and/or conversion of the gas system to green gas and hydrogen; carbon-free heat for buildings, industry and horticulture, including through district heating; development of liquid biofuels and synthetic vehicle fuels (including for shipping and air travel); carbon capture, use and storage; and greater integration and more energy savings.

The reformed SDE++ support scheme from November is to be a fundamental element of policy, basing subsidies on CO2 savings rather than the cost of green production, and expanding the range of technologies covered.

The Dutch government wants to be able to stop subsidising renewables under the SDE++ in 2025, it said June 22.

There will also need to be a "fundamental adaptation" in the approach to heat, it said. Legislation has already been put to parliament rationalizing district heating by promoting private or public heat networks under the auspices of local authorities.

The government cites a "unique opportunity" to create a large-scale heat transport hub using the residual heat from the Rotterdam port area. The tariff system would need to be modified as the current cap linked to the gas reference price is a disincentive to investment, it said.

Contrary to increased regulation to promote heat networks, the government is not planning a regulated CO2 network, leaving this to business-to-business operations.

It does, however, envisage taking full control and responsibility for CO2 storage via its holding in state-owned climate and energy transition agency EBN.

It is already pushing the development of carbon capture and storage via its holdings in the port of Rotterdam, EBN and Gasunie, with involvement in several projects which will scale-up to a level between demonstration and commercial.

CO2 capture, transport and storage are eligible for SDE++ subsidies from the first round later this year, including in hydrogen production. CO2 capture and delivery in horticulture is like to be added next year.

Meanwhile the government acknowledged there were questions to answer on what might replace the SDE++ mechanism from 2026.

Neither did it have a mechanism yet to ensure the market could deliver short-term storage of electricity (up to 48 hours) and the associated flexibility.

Finally it was considering what optimised networks would mean for tariff structures. The topic is highly complex, involving costs of green hydrogen and what the balance between imports and domestic production will be, it said. These variables would affect system integration and tariffs, and what the relativities would be between power, green gas and hydrogen, and heat tariffs, it said.