Due to high energy prices, many producers of sustainable electricity and biogas are no longer dependent on government subsidies. This will result in a significant windfall for the government, the Ministry of Economic Affairs and Climate expects. The producers themselves also benefit.
“Wind and sun do not currently require a euro of subsidy,” says Olof van der Gaag, chairman of the Dutch Sustainable Energy Association (NVDE). “At the moment it is sustainable energy that keeps the energy bill within limits. Fossil is now unreliable and expensive, while sustainable is affordable and reliable.”
And so wind farm director Anne de Groot is one of the few people who is happy with the high electricity prices. “The last windmills from Windpark Fryslân were completed in December. Prices were already high then.” So high that subsidy is no longer necessary.
Since then, the electricity price has been well above the subsidy limit of 110 euros per MWh almost all the time, with peaks of more than 400 euros per MWh. “Our mills can now operate there without subsidies,” says De Groot. “And if I look at the longer-term expectations, we will not need a subsidy for the whole of 2022 and even in 2023.”
If the electricity price remains this high, hundreds of millions of euros may well amount to hundreds of millions of euros that do not have to be paid out in subsidies in 2022, says a spokesperson for the Ministry of Economic Affairs and Climate. Everything saved goes back into the subsidy pot. “If we can get more projects done with less subsidy and have money left over, it will remain available for climate projects in the future,” says Minister for Energy and Climate Jetten.
Peak prices
Gas has also had peak prices for months. “The direct substitutes for natural gas such as biogas and geothermal energy are competitive at current prices,” says NVDE chairman Van der Gaag.
Although this does not mean that Van der Gaag expects that new projects will be set up en masse that can be done without subsidies. “The investments span decades. I don't expect gas prices to remain high for that long. At the beginning of the corona crisis, gas was almost free.”
Moreover, biogas entrepreneurs are already producing less at the high prices that wind or solar power producers receive. “The rates are high enough to do without a subsidy,” says Ids Schaap, from biogas company Agradu. But unlike De Groot's wind farms, Schaap does not sell its energy at daily prices, but on the basis of long-term contracts. “As a result, we have only secured part of our gas at really high rates.” The rest of the production is still tied to older contracts with lower prices.
In addition, entrepreneurs with fermentation installations are faced with higher raw material prices. They use not only manure, but also residual flows from the (animal) food industry in their digesters. Due to the high raw material prices, the industry is using raw materials more economically. And so there is less waste left for biogas. Purchasing extra fertilizer is difficult because of the required permits.
How does the so-called SDE++ subsidy work?
Producers of sustainable energy can receive subsidies to cover the difference between costs and revenues on the market. The amount of the subsidy therefore depends on energy prices.
The companies receive an advance every month. If it later turned out that the market prices were lower, they would receive an additional subsidy. If the prices were higher, they must repay (part of) the advance.
For wind energy, for example, the subsidy limit was 110 euros per MWh. If the market price is higher, a company can do without a subsidy and the amount to be repaid will be offset against the advances in the following months.
Source: nu.nl
