Netherlands

NL-6a:Improved Incentive Scheme for Sustainable Energy Production (SDE+)

Policy Description

The Improved Incentive Scheme for Sustainable Energy Production (Stimulering Duurzame Energieproductie, SDE+) aims to subsidise renewable energy production. Industrial companies and organisations can apply for subsidies for the production of renewable energy (e.g. geothermal, biomass CHP) via this scheme.

Description

The Improved Incentive Scheme for Sustainable Energy Production (Stimulering Duurzame Energieproductie, SDE+) aims to subsidise renewable energy productionand prioritizes the most cost-effective projects. Industrial companies and organisations can apply for subsidies for the production of renewable energy (e.g. geothermal, biomass CHP) through this scheme [1].

The SDE scheme compensates companies and non-profit organisations that produce energy from renewable sources and deliver it to the grid. The subsidy level is equivalent to the difference between the production costs from conventional sources and the higher production costs from renewables. CHP units fuelled with renewable source can be eligible for a subsidy on both the renewable heat produced and renewable electricity produced.

The scheme covers electricity, gas and heat, and has an annual maximum budget. Each year parties can apply for the grant and once the maximum budget is exhausted, the scheme closes for the remainder of the year. For CHP, a minimum percentage of electrical production capacity of total energy production is required. This minimum percentage depends on the technology used, e.g. 6% for biomass and 30% for biomass fermentation. . All projects subsidised by the SDE+ scheme are required to obtain guarantees of origin (GoO) for the renewable electricity or heat produced. These GoO are managed by CertiQ (*1) and VertoGas (*2).

The annual determined budget is integral, i.e. there is no separate budget for each technology, and applications can be made during one of the five phases over a year. The maximum grant rate that can be allocated differs for each phase. The grant rate is lowest in the first phase and highest in de fifth phase, i.e. the maximum subsidy per kWh produced increases with the start of a new application phase.. This ensures the most cost-effective technologies, not requiring a high grant rate, have a higher chance of a successful application. Awarded grant rates are subtracted from the integral budget, reducing the budget available for later phases with higher grant rates. Once an application has been approved, the price differential is paid for a period of 5, 12 or 15 years or up to a maximum amount of full-load-hours (depending on production technology used). 

Higher energy prices lead to a decrease in the levels of subsidies. The grant rate level is adjusted annually according to the relevant energy price on the market and has a maximum of 15€ct/kWh for electricity, 103,5€ct/Nm3 for renewable gas and 41,67 €/GJ for renewable heat in 2012.

The SDE scheme was first introduced in 2008 and renewed every year to financially support renewable energy generation. Evaluation of the scheme and the applications to the scheme lead to yearly adjustments in e.g. eligible technologies and available budget. New technologies can be added to the scheme or the budget can be adjusted, based on e.g. the actual growth of renewable energy generation capacity or technical advances.

In 2011 the SDE+ replaced the SDE. Major differences between de SDE and SDE+ are the phased application periods and size of the integral budget. This was introduced to ensure most cost effective projects have the most chances in the application process. 

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 2008

Policy Linkages

Supports Long-term Agreement on Energy Efficiency for EU ETS enterprises (LEE) Effort Defining
Supports Long-Term Agreements on Energy Efficiency Effort Defining
Supports EU Emissions Trading System (EU ETS) Effort Defining
Replaces Incentive Scheme for Sustainable Energy Production (SDE) Supporting Measure

Agencies Responsible

Ministry of Economic Affairs
AgentschapNL

Primary Objective: Energy

Objective

­Improving the competitiveness of sustainable energy sources

Target Group

All renewable energy suppliers, including industrial companies that have CHP units fuelled with biomass (renewable resource).

Driver of energy consumption or emissions affected by policy: Fuel mix (for renewable sources) Efficiency of production processes (for CHP technology)

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? no

Requirements on the Target Group

  • Supply the subsidised energy to the grid. Final payment is based on production and delivery figures through Guarantees of Origin (GoOs) and registration with CertiQ, a supplier of GoOs (*1)
  • Companies receiving SDE funds as well as other subsidies will be tested against the Community Guidelines on State Aid for Environmental Protection (2008/C 82/01).

Support by Government

The use of Guarantees of origin as a monitoring instrument facilitates monitoring efforts by participants.

Implementation Toolbox

The following tools are provided to support implementation of this policy:

  • Technology eligibility list [1]
  • Guarantees of origin for monitoring [2]

Complexity of Implementation

Government

NLAgency must assess tenders, track price differentials and maintaing delivery of GoOs.

Target Group

The policy only requires the monitoring of the produced energy, its supply to the grid and the fuel source used to produce it. These parameters are already monitored in normal business practices.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions N/A Low
Estimated costs/benefits for industry N/A Participation reduces costs.
Estimated cost for government N/A N/A

References & Footnotes

References

[1] AgentschapNL (NLAgency, 2012). Official website of the SDE+ https://www.agentschapnl.nl/programmas-regelingen/stimulering-duurzame-energieproductie-sde

[2] CertiQ (2012). Guarantees of Origin. Available at: http://www.certiq.nl/en/pages/commercial/biomass/biomass

Footnotes

(*1) CertiQ is a fully owned by Tennet, the national grid operator, which is in turn is fully owned by the state

(*2) Vertogas is fully-owned by Gasunie, the national natural gas transport operator, which is in turn is fully owned by the state.