Netherlands allocates Eur11.5 bil for 2024 SDE++ climate subsidies

A budget of Eur11.5 billion ($12.5 billion) is available this year to support the Netherlands' SDE++ sustainable energy and climate transition subsidy system, the Dutch government said March 1.

If fully awarded and realized, SDE++ 2024 is expected to result in 4.7 million mt of CO2 savings in 2030, the government said.

Last year, the budget shrunk to Eur8 billion, from Eur13 billion in 2022.

The 2023 auction was twice oversubscribed with some Eur16 billion of requests for subsidies received, regulator RVO said Oct. 27.

Bidding in this year's multiround competition is to open Sept. 10 and run until Oct. 7.

Last year, the start of bidding was postponed from June to September because of antitrust clearance delays in Brussels.

As in last year's auction, there will be ring-fencing of funds for longer-term carbon reduction solutions that are less cost-effective than more established technologies.

As such, Eur1 billion each has been reserved for three technology categories: low temperature heat (such as solar, geo or aqua thermal energy), high temperature heat (such as industrial heat pumps or electric boilers) and molecules (green gas and renewable fuels).

In addition to traditional categories such as solar, wind, hydrogen and carbon capture and storage, a number of new categories will be added on the advice of the Netherlands Environmental Assessment Agency (PBL), it said.

New categories are solar energy that requires a small roof adjustment, a new category heat pump for greenhouse horticulture, process-integrated heat pumps and thermal storage for high-temperature heat, it said.

As usual the competition is to run over a number of rounds, or until non-ringfenced funds are exhausted, with the most competitive projects offering sub-Eur75/mtCO2e avoidance proposals bidding first, rising to Eur400/mt CO2e in the final round (see table).

In the 2023 SDE++, bidding started at Eur90/mtCO2e.

The scheme only compensates for any difference between the cost price of the sustainable technology and the yield of the renewable energy produced or reduced CO2 emissions.

Platts, part of S&P Global Commodity Insights, last assessed EU carbon allowance prices (nearest December) at Eur56.37/mtCO2e on March 1.

Analysts at S&P Global expect 2024 average prices to plunge to Eur63.90/mtCO2e, compared with Eur85.30/mtCO2e in 2023 and Eur81.50/mtCO2e in 2022.

Windfall profits

The Dutch government also intends to offset excess profits from the production of wind and solar power as of this year.

For these categories, income above a certain level will be considered as excess profit and offset against the subsidy already paid.

This may be the case, for example, where high energy prices lead to high profits, or in a later period when energy prices are lower, there would be a subsidy.

The Council of State will issue an opinion on this.

Capture prices for German solar, a close proxy to the Netherlands, averaged Eur79.04/MWh in 2023, down 66% on the year, Platts data showed.

Netherlands: SDE++ bidding rounds 2024

Source: Dutch energy ministry