Power generation in Netherlands

Regulation of electricity utilities – power generation

What authorisations are required to construct and operate generation facilities?

In principle, a permit procedure and a spatial planning procedure should be followed prior to the construction of a generation facility. Various permits and authorisations are required to construct new projects in the Netherlands. Some examples of required permits are an environmental permit, a water permit, a permit in accordance with the Nature Conservancy Act and an authorisation based on the Flora and Fauna Act. In some cases it might be necessary for the (local) authorities to issue a new destination plan or integration plan. Whether the municipality is entitled to determine a new destination plan, or the province or Minister of Economic Affairs and Climate is entitled to set a new integration plan, depends on the expected production of the generation facility to be built.

In order to enhance the development of renewable energy production facilities and achieve the renewable targets, the government adopted the National Coordination Regulation. The National Coordination Regulation combines and simplifies the application for permits and licences. The coordination regulation streamlines the various procedures for permit applications to foresee in a parallel application procedure for permits and consents, which shortens the application periods to an absolute minimum. For smaller generation facilities, either the provinces or the municipalities are the responsible authority to grant the required permits and licences.

In addition to the above, permission from landowners or infrastructure operators can be required if someone else is the owner of the intended location of the generation facility. To apply for a contribution under the Stimulation of Sustainable Energy Production (SDE+) subsidy scheme, it is necessary to obtain a formal declaration from the land owner - at the latest at the moment of filing of the application. Any arrangements in regard to the land, such as the establishment of a right of superficies or a land lease right to secure the ownership of the generation facility, can be finalised after the application for the SDE+ subsidy.

What are the policies with respect to connection of generation to the transmission grid?

Following the provisions of the Electricity Act, TSOs and DSOs are legally obliged to provide a grid connection to each producer that applies for one. The Electricity Act prescribes that a connection should be provided based upon objective, transparent and non-discriminatory criteria and tariffs taking into account the costs and benefits of different technics for renewable energy and decentral production. Depending on the actual size of the grid connection certain costs apply. Upon the receipt of an application for a grid connection, the relevant grid operator will provide the customer with a detailed and complete overview of the works to be carried out and the related costs to establish such a connection. The grid connection should be realised within a reasonable time, which for renewable energy and connection up to a maximum of 10MVA lapses 18 weeks after the application for a grid connection is submitted, unless this can reasonably not be expected from the grid operator.

If the refusal to connect a customer relates to the production of renewable energy, the grid operator should notify the producer and the regulator of the Electricity Act, the ACM, and provide to the ACM an overview of all relevant measures that the grid operator will undertake to prevent any further refusals to connect for the future.

Alternatively, a producer may also launch a tender to establish a grid connection if the connection is larger than 10MVA. In such case, the Electricity Act does set certain criteria for third parties to establish the grid connection.

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

The transition to renewable energy in the Netherlands started with the Energy Agreement for Sustainable Growth, which was concluded in 2013 between representatives of (local) governments, nature conservation and environmental organisations, financial institutions and civil-society organisations. The Energy Agreement expresses the aim of the Dutch government to achieve a fully sustainable energy supply system in 2050. To achieve this long-term goal, the parties who have signed the Energy Agreement have committed to achieve some short-term goals, such as an increase in the proportion of energy generated from renewable energy sources to 14 per cent in 2020 and 16 per cent in 2023. For each of the sectors of the renewable energy sources, such as wind and solar, certain targets have been described in the Energy Agreement.

Last year, the Rutte III government presented its energy policy for the next four years in the Coalition Agreement. The main goal of the Dutch government is to achieve a reduction of 49 per cent in carbon dioxide emissions, compared to 1990. In addition to the previous Energy Agreement, the government wishes to conclude a Climate Act and Climate Agreement to achieve the long-term goal of a decrease of 95 per cent in carbon dioxide emissions by 2050, again compared to 1990.

The production of renewable energy is mainly supported via the SDE+ subsidy scheme. The SDE+ subsidy is a feed-in-tariff for producers of renewable energy to compensate them for the non-profitable portion of the costs of renewable energy. Each year there are two rounds of application for SDE+ subsidy divided into three phases, each subject to a maximum phase amount. The project developers who are granted a SDE+ subsidy receive the subsidy for 15 years (except for developers of biomass, biogas and sewage gas projects, who are granted a subsidy for 12 years). As soon as the SDE+ subsidy has been granted, the project developer shall be obliged to ensure that the project is operational within three years after the receipt of the grant from the Dutch Enterprise Agency.

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

Traditionally, the Netherlands relied for many years on its natural gas production. On a European level, specific targets have been set for 2020 and 2030 to reduce the carbon dioxide emissions, and to halt global warming. The Dutch government however is lagging behind achieving its renewable targets. A lot of renewable energy generation facilities are still to be built. The government supports the development of renewable energy projects through subsidy schemes and simplifying the process of requesting the required licences and authorisations for the construction of renewable energy projects. In addition, the Dutch government aims to introduce support mechanisms for project that reduce carbon dioxide emissions which currently fall outside the SDE+ subsidy scheme, such as carbon capture and storage projects. The government also proposed to close the five remaining coal plants in the Netherlands by 2030.

Does the regulatory framework support electricity storage including research and development of storage solutions?

The current Dutch regulatory framework does not contain any specific provisions relating to energy storage and therefore does not specifically support the investment in storage solutions. Under Dutch regulations, Dutch consumers have the possibility to use the net metering scheme. The consumers can offset an energy surplus of their power production, which will be fed into the grid, with the electricity that it consumes from the electricity supplier. The net metering scheme will be replaced in 2023 by a new support mechanism, the feed-in subsidy, which can be defined as compensation for the electricity which has been fed back into the grid. The consumers are exempted from the payment of the sustainable energy surcharge and energy taxes. Owing to the current format of the net metering scheme, consumers are not encouraged to invest in energy storage as the whole surplus can be set off.

Does government policy encourage or discourage development of new nuclear power plants? How?

Only 3.5 per cent of the total energy supply in the Netherlands is being produced by nuclear power. The reactor in Borssele is the only active nuclear power plant at the moment.

The rules regarding the use of nuclear materials in the Netherlands are set out in the Nuclear Energy Act 1963. There have not been any major amendments to the act since the implementation in 1963. In 2006, the government had an initiative to update the provisions of the Nuclear Energy Act. The revision would grant more control over the nuclear business to the Ministry of Economic Affairs and Climate. The licences for nuclear plants would be limited to 40 years and reprocessing agreement would be made subject to a licensing system. To date, the initiative and forthcoming proposal to amend the act, has not resulted in a definitive amendment of the act. In the meantime, the Authority for Nuclear Safety and Radiation Protection has been established, which focusses on the development of regulations, licensing systems and supervision to ensure that the highest standards of nuclear safety and radiation protection are being met.