The price of gas has fallen sharply. Yet energy companies warn of high costs for households. Hundreds of thousands are already struggling financially. Anyone who does not have the money to insulate their home will pay around 800 euros more until 2035, according to market leader Essent. Many households can no longer save. Energy companies are again asking to permanently open the Temporary Energy Emergency Fund to avoid financial misery. Five questions.
1. How big is the problem?
Considerable. TNO previously conducted research: in 2022 it turned out that more than 600,000 households – in 2020 there were still 510,000 – were living in structural ‘energy poverty’. This means high monthly energy costs, a house that is usually not well insulated and an income that is too low to catch up on the energy bill. That problem became more acute in 2021, when Moscow had Gazprom send less gas to Europe for gas storage in the Netherlands, among others. The price rose steadily.
In February 2022, the invasion of gas supplier Russia in Ukraine and sanctions and boycotts by Europe caused gas to reach its highest price ever, around 350 euros per megawatt hour, compared to 15 to 20 euros decades earlier. The government supported households with the price ceiling and series of additional measures. Since January 1, the price ceiling has been removed and energy taxes have increased. At the same time, the government wants households to consume less gas and electricity and to insulate, but this appears to be a problem for 2.8 million households. There is a Temporary Energy Emergency Fund for the most dire cases.
2. Why the new cry for help?
Research agency Berenschot looked ahead, paid for by Essent. Essent notes a worrying development from the report ‘The energy bill compared in 2023 and 2035’. The best way to save on your energy bill is always to consume less. But that is not for everyone equally, according to the market leader with two million customers. Over the next ten years, there will be major differences between energy bills, because not everyone can reduce their consumption.
Much depends on how a home is insulated and heated: with a central heating boiler, heat pump or district heating. In short, those who have more money can save more. Essent’s own research shows that once again the low-income group that lives in an apartment, old terraced house or rental home is in further financial trouble. Moreover, looking at market prices, Berenschot states that energy bills will remain high until at least 2035. This is mainly due to rising gas taxes, grid management costs and energy prices.
As a result, the differences between household energy bills will increase in the coming years. About 2.8 million Dutch people are experiencing the negative consequences, which will also affect other household spending, according to Berenschot.
3. How much difference does it make?
Hundreds of euros per year. Berenschot calculates that richer Dutch people can invest more, such as in better insulation or a more efficient boiler. While energy costs can be high, these households can save more. Houses with a central heating boiler in particular will have to pay more energy costs, compared to people who are able to become more sustainable.
In 2035, Berenschot calculates that the energy bill will be around 3,000 euros. For households that do not have money to insulate or purchase an energy-efficient heat pump, their bill will be 800 euros higher.
4. Why is the energy bill increasing so much?
The gas price will remain relatively high, experts think. Energy companies that purchase on the world trade market pay much less than at the peak of around 350 euros, but still twice as much as before 2021. The government also plays a role through taxes and its climate goals. The Netherlands must ‘get rid of gas’, according to the cabinet, because CO2 emissions are too high.
At the same time, the government is closing the Groningen gas field. Without importing gas from Russia, the Netherlands imports liquefied gas, sometimes at high market prices. Ultimately, the Netherlands wants electricity to replace gas. To encourage companies and consumers to do so, The Hague is increasing the gas tax and keeping the electricity tax low. In addition, billions are invested in a new power grid, for which consumers help pay. That is painful, but seems logical if emissions need to be reduced.
5. What are the plans to keep the energy bill affordable?
For a large group of households, their energy, a basic provision, is in danger of becoming unaffordable. Essent boss Resi Becker therefore advocates lowering the gas tax, as well as grid management costs. Essent seems to think the best solution is to make the Temporary Energy Emergency Fund permanent for people who can no longer pay their energy bills.
Berenschot not only sees that people on benefits have a problem. Lower middle incomes also often cannot survive at the end of the month. The government requires Dutch people to purchase a hybrid heat pump from 2026 when replacing their central heating boiler.
Because insulation saves so much, Essent is once again calling for the subsidies to be maintained. Just like that for a heat pump. And even then it is not a luxury, the energy company warns, for many people it will be financially difficult in the coming years.