The energy transition pathway in the Netherlands has seen rapid developments since 2019, thanks to government support policies for renewable energy projects. However, a recent periodic review report—obtained by the Energy Research Unit (based in Washington)—highlighted a series of challenges that the Netherlands still faces in its pursuit of transitioning to clean energy sources.
The dominance of fossil fuels in the electricity and energy mix remains a top challenge for the Netherlands' energy transition, despite the country's progress in electrifying the heating and transportation sectors. The Netherlands relies on natural gas and coal for half of its electricity needs. Additionally, home heating still heavily depends on natural gas, while the majority of the transportation sector relies on petroleum products.
Goals of the Energy Transition in the Netherlands
The Netherlands has witnessed accelerated developments in the renewable energy sector over the past five years, driven by supportive policies based on the 2019 National Climate Agreement, which set binding climate targets for 2030 and 2050. This agreement has facilitated the widespread deployment of solar and wind energy, positioning the Netherlands as a leader in clean electricity adoption within the European Union.
The Netherlands places significant emphasis on offshore wind energy, aiming to increase its capacity from the current 5 gigawatts (GW) to 35 GW by 2035 and 70 GW by 2050. These goals are part of a national plan to quadruple electricity production by 2050, according to a recent periodic review report by the International Energy Agency (IEA).
Grid Congestion Challenges
The ambitions of the Netherlands' energy transition face challenges due to weak grid infrastructure and the need for substantial investments to meet the interconnection requirements of intermittent renewable energy sources, which depend on weather conditions. Dutch electricity system operators have been complaining for years about the worsening grid congestion issue, as transmission lines are often unable to handle the surplus of renewable electricity.
The IEA report attributed the grid congestion problem to the accelerated energy transition initiatives in the Netherlands since 2019, without adequately preparing the electricity transmission infrastructure to keep pace with these changes. The report emphasized the need for policymakers to address grid congestion as one of the main challenges threatening not only the clean energy transition but also comprehensive economic development in the Netherlands.
The agency recommended the launch of a national collaborative program involving the government, renewable energy producers, consumer associations, and other stakeholders. Some proposed solutions for decision-makers include expanding the adoption of battery storage systems to balance grids during intermittent renewable energy generation, increasing investments in grid expansion, adjusting electricity transmission tariffs to make battery investments more attractive, and locating facilities that manage grid congestion near supply or demand centers.
Recommendations on Gas, Hydrogen, and Nuclear Energy
The IEA recommended a gradual phase-out of natural gas from the Dutch electricity mix over the next decade by promoting heat pumps and alternative heating systems. In contrast, the agency encouraged policymakers to support programs for low-emission hydrogen production, leveraging the country's abundant offshore wind resources.
The IEA believes that the Netherlands is well-positioned to become a leading producer of low-emission hydrogen and a hub for exporting it to neighboring markets. However, investments in this sector still face challenges due to uncertainties surrounding policies, particularly in securing future demand, which has delayed final investment decisions for electrolysis projects.
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