How Will The Cancellation Of Net Metering Policy in The Netherlands Affect Household Photovoltaics?

On November 14, 2024, the Dutch House of Commons officially approved the cancellation of the net metering policy from 2027, which will have a significant impact on the country's household photovoltaic projects. However, the policy still needs to be approved by the House of Lords before it can officially take effect.

The net metering policy in the Netherlands mainly targets projects below 35KW, where consumers can transmit excess electricity generated by themselves back to the grid and receive corresponding electricity deductions or compensations based on the difference between their electricity generation and consumption.

The net measurement system was introduced in 2004 and has been repeatedly suggested for cancellation

1. The Netherlands introduced a net metering policy in the household photovoltaic market in 2004, and from the beginning of the system implementation, users can receive full price and full capacity surplus electricity grid subsidies from the government. However, the overstimulated market has greatly increased the government's financial burden. Therefore, in 2018, the Dutch Ministry of Economic Affairs and Climate Change decided to cancel the net metering model two years later and implement a new renewable energy policy.

2. In 2019-2020, due to market demand, the government changed its stance multiple times and ultimately decided to retain this policy. However, there were significant changes in the subsidy rates for users, which were reduced at a rate of 9% per year. By 2032, the subsidy rates would be reduced to zero.

3. In February 2023, due to a significant drop in component prices, Rob Jetten, the then Minister of Energy, proposed to cancel the net metering scheme starting from 2025. He believed that the net metering scheme had become an excessive form of subsidy, but the proposal was rejected by the Dutch Parliament in February 2024.

Grid congestion is becoming increasingly severe, and development and operation costs are increasing. The demand for rooftop photovoltaics in the Netherlands may face a decline

Affected by the energy crisis in H1 2023, the demand for household photovoltaic installations has significantly increased, and the congestion of the power grid is becoming increasingly severe. In October 2023, the Dutch power grid company reported that almost the entire Dutch power grid is at full capacity, and newly built household photovoltaic projects need to wait longer for grid connection.

In addition, the insufficient available roof area and additional grid costs have hindered the development of household photovoltaics in the Netherlands. According to the Dutch state-owned agency RVO, there is approximately 725km ² of available rooftop photovoltaic area in the Netherlands (accounting for 50% of the total rooftop area), but only 8% can be directly developed, and other rooftops require additional renovation costs to install rooftop photovoltaics. In addition, the Netherlands also allows large energy suppliers to charge grid fees to owners of photovoltaic systems; Depending on the size of the system, photovoltaic users currently pay fees ranging from 100 euros (equivalent to 107 US dollars) to 697 euros, which increases the cost of the photovoltaic system. Due to limited direct development space and increased development and operation costs, the demand for rooftop photovoltaics in the Netherlands may face a decline.

Spontaneous self use and distribution storage may become a new direction for the future development of household photovoltaics in the Netherlands

In order to alleviate the increasingly severe power grid congestion, the Dutch House of Commons has passed a net metering policy to cancel household photovoltaic projects starting from 2027. The two main research institutions in the country, CE Delft and the Dutch Organisation for Applied Scientific Research (TNO), studied its impact on the cost recovery cycle of photovoltaic systems and pointed out that the current cost recovery cycle of residential photovoltaic systems is 7-9 years. After the cancellation of the net metering system, it may be extended to 12 to 17 years, depending on the future rates charged by Dutch energy suppliers. However, if the proportion of self consumption exceeds 60%, the cost recovery cycle can be shortened to 8-9 years.

Holland Solar, the Dutch solar industry trade association, welcomes the cancellation of the policy and urges the government to develop fiscal incentives to support photovoltaic system owners in increasing their utilization rates. In addition, Energy Storage NL and Netbeheer Nederland have proposed that the net metering system can be gradually replaced through energy storage system subsidy programs to alleviate the grid bottleneck problem caused by the rapid growth of household photovoltaics. Therefore, self use household photovoltaic projects and distribution storage projects may be the main direction for the development of household photovoltaics in the Netherlands.

At present, the net metering plan for canceling household photovoltaic projects has not been officially released and still needs to wait for approval from the House of Lords before it can be officially implemented. We will continue to monitor its impact on the Dutch photovoltaic market.