Rapid growth in solar and wind power in the Netherlands is driving the country’s efforts to reduce emissions and achieve its long-term energy and climate goals, raising the need to address emerging challenges for the next phase of its clean energy transition, according to the IEA’s new Netherlands 2024: Energy Policy Review.
Since 2018, the Netherlands has cut its power sector emissions by half as a result of the deployment of renewable energy, which has been complemented by progress on electrification in end-use sectors such as heating and transport.
However, the report identifies several areas where the Netherlands can focus efforts to further the transformation of its energy sector in line with its goals, notably in expanding and upgrading electricity grids and reducing reliance on natural gas through a range of other low-emissions technologies.
Today, fossil fuels remain an important part of the Netherlands’ energy system for power generation, heating and industrial production. Close to half of electricity generation still comes from natural gas and coal while heating in buildings remains highly dependent on natural gas and the transport sector relies mostly on oil products. A timely and well-targeted transition to low-emissions technologies such as nuclear, renewables, heat pumps and district heating can help reduce fossil fuel imports in key sectors and improve long-term energy security, according to the report.
The Netherlands’ National Energy System Plan aims for electricity supply to grow four-fold by 2050. This means greater deployment of renewables will be required, building on the country’s leadership in solar PV and wind power. For offshore wind, the Netherlands has set ambitious targets to increase installed capacity from around 5 gigawatts (GW) today to 70 GW by 2050. This requires a stable framework for long-term offshore wind development in coordination with the building out of hydrogen production, which is expected to account for a large share of new electricity demand.
In order to meet its targets, the Netherlands will need to address grid constraints to unlock projects awaiting grid connection and attract further investment. The government is already making encouraging efforts to work with industry stakeholders through its National Grid Congestion Action Programme, which aims to address existing bottlenecks faced by new projects. Moreover, energy storage and flexibility will become increasingly important in an electricity system in which variable renewables account for a higher share of supply.
The IEA report highlights that further policy clarity is needed on the role of clean hydrogen in serving the Netherlands’ industrial base. Policies to stimulate demand would also have positive knock-on effects for both renewable energy deployment and emissions reductions. While demand for low-emissions hydrogen is potentially large, not only to meet domestic needs but also to export to other markets, more certainty is required to deliver final investment decisions for electrolyser projects.
Alongside renewables, the Netherlands is looking closely at how nuclear power can complement existing technologies in the energy mix, with plans to expand the current fleet by adding four new reactors. Assessing the contribution that nuclear can make to meeting energy and climate targets will be essential, according to the IEA report, in particular its role in providing flexibility and baseload security for the electricity system in the future.
The IEA regularly conducts reviews of the energy and climate related policies of its member countries and provides recommendations – a process that supports energy policy development and encourages the exchange of international best practices and experiences.
Overall, the IEA report concludes that the Netherlands needs a holistic, system-wide approach to address the interwoven challenges its energy transition is facing. The transition requires a comprehensive strategy with coordination across government and sectors to link ambitions to the realities on the ground and a more equitable distribution of costs and benefits.
