The Netherlands agreed on Friday (19 June) to pay Denmark €100 million as part of an arrangement that will allow the Dutch government to declare at least 8 TWh of Danish surplus renewable power on its books, in an effort to meet its EU target.
According to a recent EU stocktake of clean energy deployment across Europe, the Netherlands is among the worst performers when it comes to hitting country-specific benchmarks for 2020.
The Dutch are supposed to reach 14% renewables capacity by the end of the year but Eurostat data for 2018 – the last year for which statistics are available – shows that only 7.4% of gross final energy consumption is from clean power sources.
Its government confirmed last week that biomass, hydropower, solar and wind projects in the immediate pipeline will not be enough to bridge that gap, therefore signing an agreement with Denmark that should help avoid millions of euros in penalties.
“I found that despite all additional efforts and the acceleration in the roll-out of renewable energy, the target is not expected to be achieved in 2020,” Minister for Climate Eric Wiebes said in a letter addressed to the Dutch parliament.
Countries that lag behind can resort to creative climate accountancy to hit their targets, known as statistical transfers. Included in the EU’s Renewable Energy Directive, it permits member states to exchange surplus clean energy statistics for financial compensation.
Luxembourg, which struggles to ramp up capacity due to its land-locked position and small size, was the first country to take advantage of the option in 2017.
The Grand Duchy paid Lithuania around €10m, which was shortly followed by another similarly-priced agreement with Estonia. The two deals should ensure that Luxembourg reaches its target and keep the EU on track to meet its collective goal of 20%.
Wiebes said in his letter that “the compensation of € 12.50 per MWh is lower than comparable agreements concluded by other European member states. The combination of a fixed price and flexible quantity ensures that the costs of statistical transfer remain limited.”
If the 8TWh of clean power stats is not enough to complement Dutch efforts, a further 8TWh is on the table if needed, at a similar price. The Netherlands has until mid-2021 to tell Denmark if it wants to take advantage of all or some of that allocation.
Earmarked for hydrogen
Estonia and Lithuania decided to invest their windfalls in further renewable energy research and to top up their subsidy schemes. Denmark will spend its significantly higher payment of €100m on a green hydrogen project.
“The Danish state shall use the payments to finance a tender for projects aimed at developing and upscaling Power-to-X technologies,” the agreement explains, adding there will be “a particular focus on production of green hydrogen”.
Although “the exact design of the tender, including plant capacity and grant allocation criteria, will be determined by the Danish authorities in a later phase”, the document adds that electrolysis capacity of 100MW is under consideration.
The two countries share “a mutual interest” and will also collaborate on knowledge-sharing about hydrogen technology, the agreement confirms. Denmark will retain full responsibility over the project development.
Energy firm Ørsted and Copenhagen Airport teamed up in May to produce sustainable fuels for buses and trucks by 2023 using a hydrogen electrolyser. The plan is to ramp up supply in 2027 and 2030, including aviation fuels in the mix.
According to Wiebes, the Netherlands is on track to meet its 27% target for 2030, which is not binding, and should deliver over 30% by the end of the decade. Denmark wants to reach 50%.
[Edited by Zoran Radosavljevic]