On Tuesday, the Senate voted to abolish the netting scheme in 2027. This means that the (too) successful scheme, which made the Netherlands a real solar panel paradise, will finally come to an end.
With the netting scheme, owners of solar panels could offset electricity generated by them that they did not use themselves and feed back into the grid at the end of the year against the electricity they had purchased from the energy company at times when the sun was not shining. This should make solar panels more attractive due to the shorter payback period. And it worked: the scheme provided a huge boost in solar energy. There are now solar panels on almost three million homes.
But the scheme was a victim of its own success. There are now so many solar panels on Dutch roofs that the grid becomes overloaded during peak hours. In addition, owners often return their excess solar energy to the grid at times when rates are low. The energy that companies must return to their customers at a later time according to the scheme is often purchased at a higher price. The additional costs that energy companies incur as a result are (partly) reimbursed through feed-in costs: costs that consumers pay for the return of electricity.
Some experts and politicians have been calling for years that the netting scheme should be abolished, but the policy continued to flounder for a long time. It has now been decided to abolish it.
1. What does the abolition mean for consumers?
From 2027, solar panel owners will no longer be allowed to charge for their own electricity. They do receive compensation of at least 50 percent of the basic market price for electricity (without taxes) charged by their energy supplier. In two years’ time it will therefore pay off considerably to use your own electricity as much as possible. The government hopes that by abolishing the netting scheme, it will alleviate the overload on the power grid (‘grid congestion’).
By abolishing the netting scheme, solar panels become less profitable. While the payback period used to be about eight years, a solar panel owner who uses 30 percent of his own electricity now needs twelve to seventeen years to recoup his investment, research agencies CE Delft and TNO calculate. The state spent around 600 million euros annually on the scheme.
According to a calculation from comparison site Independer From 2027 onwards, an average household with solar panels will spend around 200 euros more per year on electricity than now. But that still means solar panels are a good investment.
2. What are the consequences for solar panel companies?
Due to inconsistent government policy and the resulting lack of clarity about the payback period, the demand for solar panels has been declining sharply for a long time. Trade association calculated last summer Technology Netherlands that the number of orders granted in the solar panel market had fallen by 95 percent in ten months.
They also felt this at solar panel companies BY Projects and Solarbox. They eventually even had to stop due to “sharply declining orders”. “I understand that it is necessary to abolish the netting scheme,” says Wouter van den Heuvel, director of Solarbox. “But it is problematic that customers do not know where they stand for a long time.”
Even now that it is clear that the netting scheme will disappear, there are still many questions, according to the director. “For example, what will replace the netting scheme. Sophie Hermans talked about a reasonable compensation for returned solar powereven after 2027. What a reasonable compensation is, and for whom it will be reasonable, is completely unclear.”
The concept of ‘reasonable feed-in compensation’ is not further defined in the abolition bill. The Netherlands Authority for Consumers and Markets (ACM) must monitor this. The fact that there is no general ban on calculating feed-in costs also creates uncertainty about the yields of solar panels. Whether demand for panels will pick up again remains to be seen.
3. Is this a blow to the energy transition?
When it comes to the number of solar panels per inhabitant, the Netherlands has long been the world champion thanks to the netting scheme. In that respect, the scheme has been a resounding success – and you would think you would be crazy to abolish it. The more panels, the better. Right?
Remarkably, even the strongest proponents of solar energy think differently. They warned that continuing any longer (the subsidy scheme has been in place for twenty years) would be counterproductive for the energy transition. The trade association for the solar energy sector said Tuesday “pleased” that the scheme will disappear.
Because all those solar panels often generate energy at times when there is little demand for power – namely during the day – and that power is then supplied back, the power grid regularly becomes overloaded. The blockage of the grid is hindering further sustainability initiatives: there is no longer room for new connections to the grid.
According to proponents of abolition, the focus from now on should be on encouraging more personal consumption. Most solar panel owners only use 30 percent of their flow itself. By using more solar power yourself, there is more space on the grid and therefore for further sustainability.
Although the payback period for solar panels is becoming longer due to their abolition, they remain a good investment. This is partly because solar panels are becoming increasingly cheaper. And some people use panels not only for their wallet, but mainly for the climate.