Key View: The Netherlands boasts a well-managed utilities network offering a reliable supply of electricity, fuel and water, as well as widespread access to fast internet services. Fuel costs are high by regional standards, though the country is expected to invest heavily in green-mobility infrastructure and businesses can obtain subsidies for electric vehicle usage. Electricity costs and water availability risks are low. Moreover, broadband coverage is very strong which will provide a boost to e-commerce and connected infrastructure initiatives. That said, energy costs are rising sharply on the back of global commodity price rises, driven by geopolitical risks and rising demand. Overall, the Netherlands scores 65.1 out of 100 for Utilities Network, ranking 31st out of 201 markets globally. This ranking reflects the high cost of utilities, despite widespread availability and reliability.
Latest Utilities Network Analysis
- Coal-fired power is the first to be removed from the power mix. Our Power team expects a 12.3% contraction in coal-fired generation and a 2.8% decrease in natural gas-fired generation in 2022.
- The Netherlands has approximately 2GW offshore wind capacity, which is an initial outlay of the country’s plan to fill large swathes of its North Sea waters with wind towers, creating 21GW of offshore wind power by 2030. About half of this is currently tendered. Shell is taking the lead with plans for its 200MW Hydrogen Holland I project, now subject to investment decision later this year. It will supply green hydrogen to Shell’s Energy and Chemicals Park which operates some 30km further east of the port. The Rotterdam Port Authority anticipates to eventually expand to 20GW capacity, making it by far the largest electrolysis production site in Europe. New locations within the port will be made available, with a ramp up of tendering anticipated after 2026.
- The green hydrogen sector is attracting investor interest. Royal Dutch Shell has awarded a contract for the construction of a 200MW green hydrogen plant in the Port of Rotterdam which will receive electricity from the 759MW Hollandse Kust offshore wind farm. Construction work is expected to start in Q222, with production expected to start in 2024.
- Crude prices have risen steeply over the course 2021 and going into 2022. At the time of writing in late May 2022, Brent was trading at just under USD100/bbl, a sharp increase from the USD43.2/bbl averaged in 2020.
The utilities sector is well developed and able to cater to the demands of industry and households. Fuel, water and electricity are widely available and the internet services are world-class. The Dutch telecoms market is gradually migrating to upgraded platforms and operators repurposing their spectrum and physical assets for LTE and 5G. This makes the country an attractive location for manufacturing and services sectors. The Netherlands scores a high 84.2 out of 100 for Availability of Utilities, ranking sixth out of 201 markets globally.
Although utilities are widely available, they are costly. Energy costs will remain elevated in the near term, as the country seeks to spearhead its long-term renewable energy goals. Overall, the Netherlands scores 46.0 out of 100 for Cost of Utilities, ranking 113th out of 201 markets globally.
Thermal power in the Netherlands is dominated by gas-fired capacity and thermal power dominates the domestic power mix in the Netherlands. This will create challenges over the next decade as the country has committed to fully phasing out coal-fired capacity and over the long term is looking to divest fossil fuels entirely. Following the closure of more than 1.5GW of gas-fired capacity between 2016 and 2018, gas generation increased again over 2019 and 2020 to compensate for the removal of coal-fired capacity.