Energy prices in the Netherlands were low for years, but that changed more than a year ago. All because of a shortage of gas. But why has the price of electricity from wind and solar also risen so sharply? Of all the questions that de Volkskrant received from readers in recent months, this is the most frequently asked. Especially when Greenchoice, the most famous green energy supplier in the Netherlands, suddenly became the most expensive energy supplier in the Netherlands. Nowhere else did regular customers with a variable rate pay such high amounts.
The telephone has not stopped at Greenchoice itself in recent months, says director Coen de Ruiter (53). ‘Sometimes by people who praise these unfortunately unable to pay. But often also by people who do not understand it.’
That’s strange too, isn’t it? Electricity from wind or solar has not become more expensive.
‘That’s right, but we have to buy that green electricity on the European electricity market. In that market, supply and demand must always be in balance, and prices vary per quarter of an hour. The problem with electricity from sun and wind is that you cannot easily supply more when there is a lot of demand. We also make sure that just as much green energy comes into the grid as is used by our customers.
‘Sometimes there are times when more green energy is generated than there is demand, for example on a sunny afternoon at the weekend. Then prices are very low or even negative. But if there is not enough green energy to meet all demand, gas-fired power stations have to be added. The price of electricity at those times is therefore determined by the price that a gas-fired power station must receive in order not to make a loss. Due to the high gas price, that price is now very high. And we can’t say to customers at those moments: we’ll disconnect you for a while.’
But Greenchoice also generates its own electricity, right?
‘That is only 10 percent of the amount we supply to customers. We have eight wind turbines and are involved in a number of solar parks. We purchase the rest from other suppliers of green electricity. This happens partly on the free market and sometimes at the sky-high prices that prevail there. We have to pass that on to customers.’
Pretty sour for anyone who has been buying green electricity from you for years.
‘In the Netherlands, one third of all electricity is now generated sustainably. That electricity is cheaper and that reduces the total price that we all pay. If this crisis had happened ten or twenty years ago, when there was hardly any electricity from wind and sun, the price would have been much higher.’
Meanwhile, producers of green electricity are making record profits. The gross cost price of a kilowatt hour of wind is 8 cents. Then there is still a few cents of subsidy that must first be recouped, but above 15 cents everything is profit. So does Greenchoice make good money from this energy crisis?
‘Producers earn well indeed. We are only a small producer and above all a supplier. We particularly benefit from customers who have bought a small part of the proceeds from our wind turbines in the past with a long-term contract. Incidentally, more than half of our customers still have a permanent contract. So they don’t have to deal with very high prices yet.’
But another group of your customers now pays the highest rates in the Netherlands. How can they be sure that you are not secretly profiting from this crisis?
“These are customers with a variable contract that is reviewed every three months. From 20 October they have new rates, which are very high. But it is not the case that Greenchoice is more expensive by default. We cannot secretly raise the price extra, because the regulator ACM continuously monitors whether we and other suppliers are charging a reasonable fee for our energy.’
Greenchoice says many of its customers have solar panels. In the summer, these often supply large amounts of solar power at times when the demand for electricity is low. Greenchoice has to sell this power at very low or even negative prices, while the private owners of solar panels are allowed to deduct their supplied power from the amount they have consumed the rest of the year. This so-called netting is therefore very lucrative for private individuals with solar panels, especially with the current high prices. The scheme is less favorable for energy suppliers.
Is this form of netting sustainable?
‘Agreements have been made in the past on the basis of which citizens have made an investment. You should not tamper with this legal arrangement. We believe that a reliable government is important, so we are not in favor of an accelerated phasing out of net metering.’
Customers without solar panels are essentially subsidizing customers who do have them. That feels unfair.
‘Customers who generate themselves are very valuable to us. People who have previously invested in solar panels have partly ensured that the price has fallen enormously. They make the entire energy system more sustainable, and ultimately cheaper for everyone…’
This answer goes in an interesting direction…
‘But indeed: at the moment there is a subsidization of people who generate and feed back themselves when the electricity price is very low, because we compensate them more through the netting arrangement. So they take advantage of that.’
Customers without solar panels are therefore more financially interesting for you than customers with?
‘Yes, but we make no distinction between them. We are not trying to discourage customers from getting solar panels. We just want to have them with us. Also because they are ambassadors who try to get their neighbors on board with the generation of green electricity. It also touches on our company’s mission: to accelerate the energy transition. So customers with solar panels are dear to us.’
What year will this be for Greenchoice?
‘It is going well financially. But we do look closely at the risks, which are increasing. These are very exciting years. If November or December gets cold, it makes a huge difference.’
What is the biggest risk?
‘That customers need much more gas than we normally count on. We then have to buy that gas at much higher prices. That is the main risk for us.’
Conversely, says De Ruiter, there is also a risk that the winter will be very mild and that customers will also save much more than Greenchoice estimated. Then the company is left with a stock of gas that has been purchased for a lot of money and is not being purchased. This gas may then have to be sold at a loss.
You talked about reliability earlier. This is precisely why your company has been under fire in recent months. Supervisor ACM tapped you on the fingers about greenwashing. Furthermore, Greenchoice was the very last to postpone the previously announced increase in its prices, as ACM wanted. The once sympathetic Greenchoice did not make a good impression.
‘ACM does not dispute that what we do is green, but says that we had not properly substantiated a number of things on the website. We called ourselves the greenest energy movement in the Netherlands. We couldn’t prove that. And we named ourselves the most sustainable company, without reporting that consumers thought it was, based on the sustainable brand index. We also reported that we supplied green energy and forest-compensated gas. ACM felt that we should change ‘energy’ into ‘electricity’.
‘We were not fined for this, we made a proposal to adjust the text and said that we would make a donation of 450 thousand euros to Natuurmonumenten. That happened.
‘ACM has announced that it will monitor green claims more closely and has highlighted two companies for this. In this case also us. It is not pleasant when it turned out that we also had a few things wrong on the website. I do expect that others in the sector will also be looked at. But we welcome stricter supervision.
‘About our resistance to adjusting electricity prices at a later date: we have been making such announcements ten days in advance for years. ACM wants a month. I still dispute that view, but we have postponed the increase. That only happened a few hours later than the others, so what are we talking about. It was not an easy decision: the implementation of that change is very complex and the financial impact is great for us.’
How big?
‘I can’t say that. But it is a lot of money, because we had already bought energy that we now have to sell at a lower price.’
You are a sympathetic company, that is also in the name. Then the smell of greenwashing and that hassle with the price increase must not be pleasant.
‘These are negative outliers. Fortunately, we also get a lot of reactions from customers who say that we guide them well in the current market. But the negative lingers. It is important to us that the majority of customers believe that we provide them with good information and that we work towards sustainability. And don’t forget, we have now purchased 1.1 million hectares of forest since our inception, which we protect. We are committed to nature restoration worldwide, which benefits local populations. This is where we really distinguish ourselves. I’m proud of that.’