Léone Klapwijk

The connection to and transport of heat and CO2 over the designated networks is not regulated.[1] Connecting companies to the grid and supplying the ‘commodities’ is therefore a matter of negotiating and contracting. In this situation (where there is no supply within the meaning of the Heat Act) also the extent to which supply is guaranteed is determined solely by the agreement. This can create problems for customers: in the event only one producer is connected to the grid, the supply is entirely dependent on this producer. A number of horticulturist in Zeeuws-Vlaanderen were confronted with this situation when they were no longer supplied with sufficient heat and CO2 as a result of a shutdown of production by Yara Sluiskil.  On 18 October 2022, the Rotterdam court in preliminary relief proceedings ruled on the preliminary relief proceedings regarding this matter, initiated by the horticulturist against WarmCO2, Yara Sluiskil and North Sea Port Netherlands.[2] The claim for performance of the supply agreement was dismissed, given that in the court’s view the explosive rise in gas prices presented an unforeseen circumstance for WarmCO2. The court ruling shows, however, that these kinds of claims are very much intertwined with the facts of the case and may just as well turn out differently, for example in proceedings on the merits or in the event the agreement has been worded in a slightly different manner. Indeed, the court in preliminary relief proceedings is very critical of WarmCO2, Yara and NSP, so it was certainly not a done deal.

In the letter to Parliament dated 21 October 2022 (the Letter), the Minister of Climate and Energy (the Minister) announced his intention to include in the legislative proposal on the Collective Heat Supply Act (Wet Collectieve Warmtevoorziening or Wcw), which has not yet been submitted to the House of Representatives, that heat companies operating collective heat infrastructure must be in public hands for at least 51% (the Intention). In this respect ‘in public hands’ means that the shares are directly or indirectly held by a government authority (een overheid), such as the provincial authority or municipal authority, and ‘collective heat infrastructure’ means networks with more than 1500 connections. The Minister justifies his Intention with the argument that such would strengthen public control of the heat transition and that the public interests could be better safeguarded, also in the long run. The question is whether this reasoning is convincing, whether the Intention is necessary to achieve the outlined goals and, above all, whether the Intention does not delay rather than advance the energy transition.  The 51% requirement applies (contrary to what the Letter seems to suggest on some points) to heat companies as a whole and not only to heat networks. The Minister indicates in the Letter that ‘he does not advocate an unbundled (gesplitst) model of supply and production on the one hand and network management on the other hand’. The Minister thus takes a controversial market organization decision by (in my opinion unnecessarily) ‘regulating’ the market operation of heat companies at the frond end, while the methodology of the Wcw (without the Intention) already provides for public control through the authority of government authorities to designate a heat company. I will discuss the Intention in more detail below and I will provide a number of critical comments on the Intention.

Geothermal energy, also known as geothermal heat, is extracted from hot water (called formation water) pumped up from deep underground (at least 500 metres) through a well. The heat from the hot water is transferred to a heat network via a heat exchanger and can then be used to heat homes and other buildings. Being a source of renewable energy, geothermal energy can play a prominent role in accelerating the energy and heat transition in the Netherlands. This is because geothermal energy is CO2-free, virtually inexhaustible and independent of weather and seasonal conditions. It also can be used as an alternative to natural gas for heating spaces and for hot tap water. In the Netherlands, geothermal energy currently plays a relatively minor role as a source of heat, but the government is increasingly encouraging the extraction of this renewable energy source with a view to accelerating the energy transition. One way of doing so is by allowing initiators of geothermal energy extraction to apply for a subsidy for geothermal energy projects under the Renewable Energy Production and Climate Transition Incentive Scheme (SDE++). In addition, the legislator recently decided to amend the current Mining Act – which contains the legal framework for the exploration and extraction of minerals and geothermal energy in deep underground – by making it more ‘geothermal energy friendly’. Accordingly, on 11 October of this year, the Senate passed a bill amending the Mining Act (the Legislative Amendment). The Legislative Amendment introduces a new licence system that will apply specifically to geothermal energy. It also aims to make geothermal energy exploration and extraction safer for surrounding areas. In a letter dated 20 October, the State Secretary for the Extractive Industries informed the House of Representatives regarding the key points of the policy for the safe and responsible handling of physical risks and uncertainties related to geothermal energy, such as preventing damage and protecting ground water and drinking water supplies.  In this contribution, we will discuss the reasons for the Legislative Amendment and the new licence system it contains. We will conclude with some final remarks.

Key take aways: The Subsidy Scheme regulates subsidies for the development and production of green hydrogen plants of 0.5 – 5 MW; EUR 250 million is available on the basis of ranking by amount per MW. A number of aspects complicate the business case for companies (license and capacity statement requirements and dependence on draft regulations). Although the Subsidy Scheme is in draft, it pays to prepare for the application now (in view of the high requirements for the application).

Dutch government gives an update on hydrogen policyOn 29 June 2022, the Minister for Climate and Energy ('the Minister') published two letters to Parliament, informing the House of Representatives on the progress of regulation and development of hydrogen and on the development of a transmission system for hydrogen. In these letters, the Minister sets out his views and plans regarding the hydrogen market in the Netherlands, based on – amongst others – the outcomes of the online market consultation on the regulation of the hydrogen market. We highlight some of the key points mentioned in these letters.

On 30 June 2021, the legislative proposal for the Security Review Investment, Mergers and Acquisition Act (hereinafter referred to as the Bill) was presented to the House of Representatives. The Bill provides for a safety test for investments, mergers and acquisitions in a vital provider or a company in the field of sensitive technology that may pose a risk to national security (Vital Services). The Act applies to companies where a sector-specific test has not yet been included in applicable sectoral legislation and where changes in control may pose a risk of affecting the continuity of vital processes, affecting the integrity and exclusivity of knowledge and information and creating undesirable strategic dependencies. 

Read and download the Dutch chapter of the latest Renewable Energy guide of Lexology GTDT, as updated by Léone Klapwijk and Loes Pustjens. The guide provides an overview of the various factors affecting this topic. You can access the chapter by clicking on the link below.