Key View

The renewables sector in the Netherlands will remain on a firm upwards trend in 2022, despite potential headwinds arising from supply chain disruption and inflationary pressures. Numerous large-scale wind and solar power projects are in active stages of construction and due to come online over the coming quarters, boosting renewables output to over a quarter of total electricity generated. A broad range of investment incentives are in place and we expect further inducements to be introduced as the Netherlands works to accelerate the phasing out of thermal power, including the removal of all Russian gas imports by the end of 2022.

Key View: The renewables sector in the Netherlands will remain on a firm upwards trend in 2022, despite potential headwinds arising from supply chain disruption and inflationary pressures. Numerous large-scale wind and solar power projects are in active stages of construction and due to come online over the coming quarters, boosting renewables output to over a quarter of total electricity generated. A broad range of investment incentives are in place and we expect further inducements to be introduced as the Netherlands works to accelerate the phasing out of thermal power, including the removal of all Russian gas imports by the end of 2022.

Renewables Headline Forecasts (Netherlands 2021-2026)

Indicator	2021e	2022f	2023f	2024f	2025f	2026f
Generation, Non-Hydropower Renewables, TWh	24.932	27.552	30.997	35.369	40.725	47.341
Generation, Non-Hydropower Renewables, % y-o-y	9.6	10.5	12.5	14.1	15.1	16.2
Capacity, Non-Hydroelectric Renewables, MW	15,749.6	16,882.4	18,178.8	18,918.0	19,656.9	20,416.6
Capacity, Non-Hydroelectric Renewables, % y-o-y	10.7	7.2	7.7	4.1	3.9	3.9

e/f = Fitch Solutions estimate/forecast. Source: EIA, IRENA, Fitch Solutions

Key Forecast And Latest Updates

Total non-hydropower renewables generation is forecast to increase by over 10% in 2022 to reach 27.6TWh. Wind power will account for just over 58% of renewables output, according to our forecasts, followed by solar power on 25% with a small biomass segment accounting for the remainder.
In March 2022, the Netherlands set out the 2022 budget for the SDE++ programme which supports the development of large-scale renewables projects. A total of EUR13bn (USD14.3bn) has been allocated for the next round of SDE++ which launches in June 2022. For the first time, green hydrogen developments have been added to the list of eligible projects.
In April 2022, a consortium of Equinor, RWE, Shell and Gasunie, announced it was partnering with Eneco and OCI for the construction of the NortH2 green hydrogen production facility in the Eemshaven area. Under the deal, Eneco will be the investment partner, while OCI intends to develop the first integrated green ammonia and methanol value chains for the facility. The facility would feature around 4GW of electrolysers and similar offshore wind capacity by 2030. It is expected to produce 1mn tonnes of green hydrogen per annum by 2040, according to a press release from Eneco.
Offshore wind is expected to lead development in the renewables sector. The government has selected three new areas and has confirmed two previously designated areas in the North Sea for the development of offshore wind projects with a combined capacity of 10.7GW. The three new wind energy areas include: Nederwiek, Lagelander, Doordewind. The other two reconfirmed areas include - the northern part of IJmuiden Ver and the southern part of Hollandse Kust (west).
SSE Renewables has formed a 50-50 strategic partnership with Brookfield to submit bids in a tender for the 1.4GW Hollandse Kust (west) offshore wind complex, which includes the construction of two 700MW offshore wind facilities within the Hollandse Kust (west) Zone located off the Dutch coast. Sweden-based Vattenfall and Germany-based BASF have also partnered to submit a joint bid for the project, which is due to generate its first power in 2026.

SWOT

Renewables SWOT

The renewables sector in the Netherlands offers healthy growth potential, supported by a clear regulatory framework and range of investment incentives as the country works to divest of thermal power. New large-scale developments are concentrated primarily in the wind power segment.

SWOT Analysis
Strengths	Clear regulatory framework and participation in the EU emissions trading scheme provide an incentive for utilities to pursue lower greenhouse gas emissions. Utilities are large and diversified, allowing them the scale and ability to expand and invest in developing new technologies. Grid infrastructure is extremely developed and efficiency is still being improved. Domestic capacity for the production of components (eg, turbines and solar panels) is substantial.
Weaknesses	Biomass' future growth is limited given the high population density and lack of unexploited arable land. Public opinion makes it difficult to find suitable onshore wind locations. Slow consumption growth will limit demand for new capacity in the power sector. Strong dependence on trade and industrial sectors leaves the construction sector exposed to cyclical trends and external economic shocks.
Opportunities	Government plans to develop 11.5GW of offshore wind by 2030. To ensure a more sustainable energy transition, the Stimulation of Sustainable Energy Production (SDE+) scheme has been expanded into the SDE++ scheme from the end of 2020. The planned coal phase-out could bring new impetus to the non-hydro renewables market. Plans to ramp up large-scale hydrogen production points to higher future electricity demand and investment opportunities for new renewable power projects.
Threats	Further economic headwinds (and supply chain disruptions) in the wake of Brexit and the Russia-Ukraine conflict could undermine regional investment climate. An already low unemployment rate, a declining labour force, record reliance on external demand and no more room for monetary stimulus all point to an economic slowdown. Further disruption from the global Covid-19 pandemic amidst emergence of more infectious variants could delay the economic recovery and impact on investment.

The non-hydropower renewables market in the Netherlands offers considerable growth potential over the course of the forecast period (2022 to 2031) and risks are increasingly leaning to the upside. The Russia-Ukraine crisis has renewed the focus on divesting of thermal power, particularly natural gas which currently dominates in the Netherlands, and this will see additional investment in alternatives over the next decade, with wind power expected to be prioritised. Our current forecasts show renewables generation rising from 27.6TWh in 2022 (25.8% of total electricity generated) to almost 118.6TWh in 2031 (making up 66.4% of the domestic power mix).

Netherlands Renewables Report

Key View

Renewables Headline Forecasts (Netherlands 2021-2026)

SWOT

Industry Forecast

Wind Power Leading Development

Netherlands - Non-Hydro Renewables Generation By Type & Share Of Total Electricity Generation (2021-2031)

Contribution From Biomass Remains Minimal

Netherlands - Non-Hydro Renewables Capacity By Type & Growth (2021-2031)

Netherlands Renewables Report

Key View

Key View

Renewables Headline Forecasts (Netherlands 2021-2026)

SWOT

Renewables SWOT

Industry Forecast

Forecast Scenario

Wind Power Leading Development

Netherlands - Non-Hydro Renewables Generation By Type & Share Of Total Electricity Generation (2021-2031)

Contribution From Biomass Remains Minimal

Netherlands - Non-Hydro Renewables Capacity By Type & Growth (2021-2031)