The European Commission has authorised, under EC Treaty state aid rules, a Dutch aid scheme called SDE ('stimulering duurzame energie') which stimulates the production of renewable energy and Combined Heat and Power (CHP). The extra available budget for the SDE is estimated at €2,144 million. The measure concerns a modification and a prolongation of two previously approved aid schemes known as 'MEP'.
In March 2003, the Commission authorised for 10 years the existing schemes (MEP), under which aid is provided to stimulate the production of renewable and CHP electricity in The Netherlands . The MEP scheme grants subsidies to renewable and CHP producers for a fixed period of maximum 10 years. The subsidies for renewable and CHP electricity serve to compensate for the difference between the production costs of renewable and CHP electricity and the market price of conventional energy. The level of subsidy varies for the different forms of renewable electricity generation based on the difference of the production costs of the specific form of renewable energy (wind, solar, etc) and the electricity market price of conventional electricity. The amount of subsidy that is awarded for renewable and CHP electricity is related to the number of kWh produced. This level is determined annually by the Minister of Economic Affairs.
On 18 August 2006, the Dutch authorities decided to stop granting aid for new projects on the basis of the MEP subsidy scheme. The same day the subsidy rate for new renewable energy production projects was set at zero. The reason for this decision was that studies showed that the national target of 9% renewable energy sources in 2010 would be met with the current subsidised projects.
In February 2007, the Dutch Government decided on a new target for the reduction of CO2 emissions; 30% CO2 reduction in 2020. One of the instruments to reach this target is the modification and prolongation of the existing schemes for renewable energy and for CHP and the transformation of the two schemes into a new scheme called "SDE" (stimulering duurzame energie). On the basis of the MEP there are already subsidies paid which brings the total expenditure of the scheme at €8,259 million. [21 December 2007]