New incentives for renewable electricity supply in 2020-2030
Financial stimulation through operating grants and net metering are the most effective tools to increase the production of renewable electricity from wind and solar energy by 2030 to 75 TWh, which is approximately 60 percent of the expected electricity demand. Existing policy offers an appropriate foundation for shaping sustainable energy policy in the period after the end of the Energy Agreement in 2023.
This report focuses exclusively on achieving sustainable electricity production. The point of departure is the clients’ ambition to produce 75 TWh in renewable electricity from wind and solar energy by 2030. A reduction in CO2 emissions of approximately 15 to 30 Mton can be realized, which is of great importance to reach an 80-95 percent reduction in CO2 emissions by 2050 in comparison to 1990. Moreover, in fulfilling this ambition with regard to wind and solar energy, the share of renewable energy will increase from 16 percent in 2023 to 22 percent in 2030, assuming energy savings and renewable energy in other sectors would remain equal. The report assesses a number of factors that are important for achieving 75 TWh in 2030, which is twice as high as what has been agreed upon in the Energy Agreement.
Even after 2023, promotion of sustainable energy remains necessary because the cost prices of wind and solar energy are higher than the price of electricity. Based on current insights, an additional stimulation (on top of the Energy Agreement) in the order of 935 million euros per year is expected to be necessary.
This report concludes that existing policies offer an appropriate foundation for intensification of the incentives. In general, financial stimulation is preferable to indirect financial stimulation or non-financial regulation. Specifically, operating grants and the expansion of net metering possibilities have been judged to be the most effective. Other measures, such as a role for the government as a launching customer, can be additions to this.
With 37 TWh, renewable electricity from offshore wind contributes the most to the target of 75 TWh by 2030. This is an increase of 25 TWh compared to the offshore wind energy production in 2023. Realizing sufficient scale is important to achieve a drop in unprofitability for offshore wind. This would lower the stimulation requirements. Operating grants are an effective incentive for offshore wind. If funding would turn out to be an obstacle in the future, it may be advantageous to consider government participation in the loan capital or equity of offshore wind farms.
In the scenario of this report, onshore wind energy contributes 23 TWh to the final target of 75 TWh. This is an increase of 4 TWh compared to the onshore wind energy production in 2023. In this study the growth in onshore wind energy is estimated to be limited in view of the required local support. For onshore wind energy production, operating grants are an effective incentive as well.
The development of solar panels is characterized by strong cost reductions. By 2030, this technology will contribute 15 TWh to the final target. This is an increase of 8 TWh compared to the solar energy production in 2023. When used by households and businesses, solar panels have a much smaller scale than offshore wind. Net metering is the best option to meet the needs of households and businesses as investors in solar panels. This report recommends to gradually adjust the net metering scheme to avoid overstimulation. It is also desirable to expand the basis for net metering, so that the installation of solar panels can be cost-effective at more locations.
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