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Netherlands renewables shortfall presents €24bn opportunity – Rabobank

The Netherlands will need to direct an additional €24 billion ($30 billion) towards the development of renewable energy in order to meet its 2020 renewable energy target, according to a report by Rabobank.

Renewable energy accounted for 4% of Dutch energy output in 2011, and Rabobank estimates that at current rates of investments, it will only climb to 9% in 2020, compared with a target of 14%.

“The extent of the shortfall is set to become apparent next year and will lead to a new wave of investment opportunities in solar photovoltaics [PV], offshore and onshore wind and co-firing biomass,” says the bank.

An extra €24 billion will need to be spent on top of the €12 billion forecast under a business-as-usual scenario, Rabobank analyst Clara van der Elst said.

One reason why the Netherlands will struggle to meet its 2020 target is its main renewables policy, says Rabobank. The policy rewards approved projects with a fixed eight to 15-year subsidy, covering the gap between the generation cost and the actual electricity price. But the policy results in a relatively slow building rate, says Rabobank.

The subsidies through this policy between 2008 and 2011 “only amounts to €80 million”, says the study, adding that a significant share of planned projects have already been withdrawn (see chart).

The study also claims that the Netherlands relies too heavily on biomass-sourced technologies, with those attracting almost 80% of funding in 2011 “at levels that preclude profitability, partly because the price of … feedstocks has risen”.

Of the additional investment needed to reach the Dutch renewables target, solar PV would require €13 billion, offshore wind €7 billion, and onshore wind and biomass would each account for €2 billion of investment, said van der Elst.

“Although it will be challenging, there still is a window in which the Netherlands can come close to meeting its 2020 renewable energy target” she added.

She told Environmental Finance that importing renewable energy is an option considered by the government, but it has not yet provided any details on how this would take place.

Meanwhile, a report by HVB Group, the German division of UniCredit, and the Hamburg Institute of International Economics (HWWI), says that Germany’s transition to renewable energy is “significantly behind schedule” and only half of the resources needed to reach its target of 50% renewables of the total electricity supply in 2030 might be financed.

Bank financing is limited because of Basel III regulations and uncertainties involved with investing in long-term projects, says the report.

The energy transition is “still lacking a master plan” said Michael Brauninger, lead investigator of the HWWI, who estimates that Germany’s energy transition will cost €335 billion.

By Elza Holmstedt Pell
Environmental Finance 


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