The Netherlands: PV’s Iron Throne

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From pv magazine, April edition

It may seem unlikely, but on the basis of its solid foundations, the Netherlands’ solar market has much in common with the Iron Throne from the massively popular HBO series Game of Thrones. And as the fabled Throne attracts the ambitious from beyond the Narrow Sea, the Dutch solar market is attracting solar industry suppliers from far and wide.

The Netherlands, a country of over 17 million people, will install an estimated 2 GW of solar PV in 2019 (Dutch Solar Quarterly estimate for Q1 2019). That not only makes the Netherlands a global top 10 player, but per capita it is in the running to play host to the PV sector’s Iron Throne.

What is the role for politics?

The importance of politics in the Netherlands’ solar growth is twofold, and not what you may expect. Although politicians like to bathe in the glory of successful industries, they can only dip their toe in when it comes to solar.

The Dutch solar PV market can be roughly divided into two segments: residential and large-scale commercial (≥15 kWp). Not to say that small-scale commercial is to be neglected, since this segment is gaining traction, but the market up until 2018 consisted mostly of residential and large-scale commercial projects.

Net metering is behind the stable continuous growth of the residential sector. Net metering has been a feature of Dutch energy regulations since well before even the most optimistic of observers tipped the market to take off.

Since 2013, the residential sector has grown annually at a double-digit rate, and comprised about 80% of all installed capacity until about 2016. The future of the residential market looks bright – very bright. The government is planning to build one million new homes, with stark green ambitions, and also has the goal of ‘greening’ all existing homes, not just by phasing away from gas heating towards heat pumps and district heating, but also towards green energy production.

Large scale success

The large-scale segment is also currently taking off. The SDE+ is the relevant policy for larger projects, which comes in the form of a grant, set by reverse auction, that finances any unprofitable project component with a set price per kWh. This year alone there is €10 billion available under SDE+, divided into two rounds of €5 billion. Not all of this budget goes to PV, but in the last few years solar has taken an increasing percentage.

The SDE+ will morph into the SDE++ in the coming years, meaning a wider array of renewable sources will have access to the grant. The SDE++ has been guaranteed by the relevant Dutch minister until 2025, after which all energy sources should compete without support with fossil fuels. Likely before 2025, large-scale commercial solar roofs and parks can be profitable without subsidy, as is already being demonstrated in Spain in 2018 and in Germany this year.

The SDE+ itself and the large budgets allocated to it are mostly due to pressure from the EU. The Dutch do tend to claim that we punch above our weight as a country when abroad. But, reality shows that we are second last, above only Luxembourg, when it comes to renewable energy production among its EU neighbors. And that is without mentioning that the Netherlands has some of the most polluted air, soil and surface water in Europe.

No more net metering?

However, with current net metering regulations and the SDE+ policy in place, the Dutch solar market continues to grow rapidly. But, of course, there are plenty of challenges. For the last eight years, solar enthusiasts and critics alike have foreshadowed an end to the net metering system.

The current regulation is set to continue until 2021, and the plan is for it then to transition into a feed-in system, with a payback time of no more than seven years.For many reasons, I still believe the net metering should and actually might continue even after 2021.

As far as the SDE+ system, there are many hurdles to be cleared, and it would be good for solar companies to become more active on the wholesale energy market. Lowering costs is not always a feasible and long-term option, but finding new forms of revenue is. Those can be found on the energy trading market and energy storage market. I see some players on the Dutch market acquiring expertise in these markets.

Before the summer of 2019, the final Dutch Climate Agreement is set to be signed by the government, and it will lay the groundwork for the years to come. The first drafts look positive, with many cross-sector opportunities and threats. Only those companies with sufficient perseverance, stamina, and knowledge of the Dutch market can be in it for the long term.

The Dutch solar market is changing fast, and the energy transition has only really just begun. Perceptions and opinions of end users change rapidly, quickly shifting market shares, sizes, and distribution. Further, savage competition on price, volatile and unrealistic forecasts, and various finessing of policy will all decide the fate of the champions of tomorrow. The transition has only just begun. Who will claim the Iron Throne next?

By Rolf Heynen, director of Good! New Energy. Good! is known for the annual Dutch Solar Trend Report (also published in English), the upcoming Solar Quarterly, the Solar Solutions international trade fair, and the Solar Business Day conference. Good! is also active in renewable heating, smart lighting/buildings, energy storage, consulting, energy modeling, and market research. Heynen holds degrees in both electrical engineering and political science.