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Supportive legislation in Netherlands

Home Communities For Future Forums Nederlands COMETS Supportive legislation in Netherlands

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    Joan Segura
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    In the Netherlands, there is currently quite some policy support for CAIs. At the national level, a few facilitative financial and non-financial measures exist, and at the provincial and municipal level the kinds and degree of support varies. Here, we give a quick introduction to the most important supportive policies at the national level: the postal code rose scheme, the Stimulation sustainable energy production and climate transition scheme, and the 50% local ownership goal.

     

    1.      The Post code rose scheme

    The post code rose scheme (PCR) has been in place since 2014 and has been revised a couple of times. The latest variant entered into force on the 1st of April of this year. Before introducing this scheme, we will shortly discuss the old version as many of the same principles still do apply to the newer one.

    The “old” PCR (official name was regulation lowered tariff) was an energy tax restitution scheme to support small-scale joint generation. It was introduced to offer an incentive to invest in renewable energy to consumers who cannot use the net metering incentive for home owners with a suitable roof for solar (small-scale wind can also be placed under the scheme, but it was mostly solar).

    The PCR guaranteed a restitution of the energy tax for 15 years. The exact restitution was based on the investment in the PCR scheme. People can buy certificates representing a certain % of their domestic energy use, and get the energy tax paid refunded from the tax service for that part of their consumption.

    The most important precondition to take part in a PCR collective was that the joint owners of a technology had to live in a certain postal code area. It is called a “rose” because of how the size of the area was determined. Postal codes in NL have four numbers for an area the size of a neighborhood/ small village (and streets within that area have this four-number code plus two letters). Thus, a city/region is a patchwork of areas with 4-number codes. Initiators of a PCR project can choose a particular 4-number area as the centre and can recruit participants from that area and all the 4-number areas that border the chosen centre (see figuur 1). The centre is the heart of the rose and the bordering areas are the petals in the metaphor. As the generative technology (e.g. solar roof) does not need to be located in the centre of the rose but can also be located in a petal, the initiators of a PCR project can play around a bit with how they place their rose on the map to maximize the number of potential participants (in some postal code areas live more people than in others).

    Figure 1: A post code rose area (in green). Source: https://www.lokaleenergievoorwaarts.nl/friksbeheer/wp-content/uploads/2016/07/2017-Handboek-Postcoderoosprojecten-in-de-Groningse-praktijk.pdf

    On the first of April, the “old” PCR was replaced by the “new” one: officially named subsidy scheme cooperative energy generation (SCE). Many people still call the new scheme PCR or “new” PCR as the area where cooperatives or home-owners associations can recruit for their projects hasn’t changed and is still post code rose based.

    The biggest change in the scheme is that it changed from a system based on tax restitution to a feed-in tariff. For this year,  “new” PCR  is capped at  92 million euros. The tariff per kWh that can be received as feed-in tariff is updated annually and represents a basic amount that will be received for the energy generated. Hence, the subsidy per kWh is the difference between the basic amount and the correction amount. The correction amount is the market price for energy. If the energy price rises, projects will receive less subsidy and if the energy price falls, they will receive more subsidy. The projects that are granted the FIT in a certain year are guaranteed to get that basic price for 15 years.

    An important advantage of this new scheme is that the business model of the projects is not dependent on the development of the energy tax. After a period in which the energy tax increased, it is now decreasing due to the political choice to tax electricity less and gas more. Another advantage is that the administrative procedure has gotten simpler. Cooperatives or HOAs do not need to inform energy companies of participants of the yearly generation of each member anymore. They can now directly distribute the feed-in tariff to their participants, and can also decide on which percentage of the FiT is for participants and for investors (in case not all funds are provided by participants). A third advantage is that participation is not coupled to domestic use anymore, so people who already have solar panels can now also take part. last advantage is that the new legislation offers more opportunity for businesses to participate.

    Source with extra information (in Dutch): https://www.rvo.nl/subsidie-en-financieringswijzer/sce

     

    2.      Stimulation sustainable energy production and climate transition scheme

    The Stimulation sustainable energy production and climate transition scheme (SDE++) is an exploitation subsidy for larger renewable energy projects that varies in maximum tariff height per technology. Project developers can normally apply bi-yearly for this subsidy, but in 2021 there has only been one application round. Unlike with the PCR scheme, the SDE++ does work with one fixed tariff level that is guaranteed. Project developers have bid on the compensation they would like to receive. The projects with the lowest subsidy request per kWh are granted subsidy first. The SDE++ subsidy is generally heavily oversubscribed and very competitive.

    As with the PCR, the maximum tariff per kWh that can be received as feed-in tariff is updated annually and represents a basic amount that will be received for the energy generated. Hence, the subsidy per kWh is the difference between the basic amount and the correction amount. The correction amount is the market price for energy. If the energy price rises, projects will receive less subsidy and if the energy price falls, they will receive more subsidy. The projects that are granted the SDE++ in a certain year are guaranteed to get the basic amount per kWh they applied for the next 12-15 years, depending on the technology.

    Source with extra information (in Dutch): https://www.rvo.nl/subsidie-en-financieringswijzer/sde

     

    3.      The 50% local ownership goal from the climate agreement

    The local energy movement successfully lobbied for a target of 50% local ownership of renewables for 2030 to be taken up in the 2019 Climate Agreement. However, the success of this goal and the varies per region. Some project developers are resisting financial participation of local stakeholders and even go as far as to send letters to municipalities that  50% local ownership is only a goal and they cannot be legally bound to it.

     

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