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THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

Netherlands Power Risk/Reward Index

Key View: The Netherlands remains one of the more attractive markets reviewed on the Power Risk/Reward Index and this quarter has climbed three places to rank 9th out of 19 North America and Western Europe markets (rising to 21st on a global basis). The Netherlands' strong political and economic risk profile and its well-developed power industry mean the country's scores are highest on the Risks side of the Index. The maturity of the existing power market means there is limited growth potential on offer, resulting in weaker scores on the Rewards side, but we note that the Netherlands will be a strong market for non-hydropower renewables growth to compensate for the loss of thermal capacity, a process which is likely to be accelerated given regional efforts to divest of Russian energy imports.

Risk/Reward Snapshot

Netherlands & NAWE Region - Power Risk/Reward Index

Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

Global And Regional Ranks

Regional rank (out of 19): 9th
Global rank (out of 117): 21st

Key Features And Latest Updates

Despite the large size of the domestic power market, the Netherlands continues to rank slightly below the regional average for Industry Rewards given the relatively limited growth projections for power capacity over the next decade. However, this is skewed somewhat given the fact that thermal power projects are being decommissioned while the country is focusing on growth in its non-hydropower renewables sector, resulting in net capacity growth being lower than actual growth in new capacity.
High levels of electricity import dependence in the Netherlands points to strong investment opportunities for new power capacity in order to improve supply security, an issue which will be heightened by the Russia-Ukraine conflict. The Netherlands does offer a strong Labour Market Risk score as it is above that of the global and regional averages; however, this is still dragged down somewhat due to low population and economic growth rates which are characteristic of developed markets.
A dynamic competitive landscape which is open to foreign investment, the well developed legal system and low financial barriers all contribute to a strong Industry Risks ranking for the Netherlands, slightly ahead of the regional average (and far ahead of the global average).
The Netherlands is one of the best performing markets for Country Risks globally and regionally, with strong scores for political and economic stability over the short and long-term. However, there are some key risks due the threats of polarisation while the rise in the size of the welfare state also risks being a drag on growth.

RRI Matrix Breakdown

Netherlands & NAWE Region - Power Risk/Reward Index By Component

Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.