Netherlands

NL-6b:Incentive Scheme for Sustainable Energy Production (SDE)

Policy Description

The Sustainable Energy Production Incentive (Stimulering Duurzame Energieproductie, SDE) subsidy scheme pays parties that deliver energy produced by renewable sources (or CHP) to the grid the difference between the production costs from conventional sources and the higher production costs from renewables (or CHP). 

Description

The Sustainable Energy Production Incentive (Stimulering Duurzame Energieproductie, SDE) subsidy scheme pays parties that deliver energy produced by renewable sources (or CHP) to the grid the difference between the production costs from conventional sources and the higher production costs from renewables (or CHP). The grant rate level is adjusted annually according to the relevant energy price on the market. High energy prices lead to a decrease in the levels of subsidies. The scheme covers electricity, gas and heat, and has an annual maximum budget for different sources. For renewables, each year parties can apply for the grant and once the maximum budget for a specific source is exhausted, the scheme closes for the remainder of the year. Once an application has been approved, the price differential is paid for a period of 12-15yrs (depending on production technology used). [1]

For CHP, the scheme works differently. The maximum subsidy available under the scheme in 2010 is 0.0097 Euro/kWh, and applicants must tender, indicating how much 'discount' they are willing to provide on this maximum subsidy level. The higher the discount (i.e. the lower the subsidy acceptable to the applicant), the higher the ranking of the tender. Awarding of the subsidy (based on the discounted rebate) is done in the order of the ranking, until the budget runs out. Total budget available for 2010 is 168 Million Euro+E43 (*1).

 

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

Supported By Benchmarking  Covenant on Energy Efficiency Effort Defining
Supported By Long-Term Agreements on Energy Efficiency Effort Defining
Supported By EU Emissions Trading System (EU ETS) Effort Defining
Replaced By Improved 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

-

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

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 based on production and delivery figures through Guarantees of Origin - GoOs) and registration with CertiQ (supplier of GoOs). [2]
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 eases monitoring efforts by participants

Implementation Toolbox

The following tools are provided to support implementation of this policy: Technology eligibility list [1] and Guarantees of origin for monitoring [2]

Complexity of Implementation

Government

Tenders must be assessed, price differential tracked, GoO organisation maintained

Target Group

Policy only requires the monitoring of the produced energy, its supply to the grid and fuel used to produce it, parameters that are already monitored in normal business practice

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 Not available Low
Estimated costs/benefits for industry Not applicable. Participation reduces costs -
Estimated cost for government Not available Low-medium
Other Benefits
General Benefits Reduced GHG emissions as well as of other energy-related pollutants, less reliance on imported fossil fuels
Specific Benefits Improve competitiveness of sustainable energy production Increase penetration of sustainable energy production technologies

References & Footnotes

References

[1] Official website of the CHP tranche of the Incentive Scheme for Sustainable Energy production http://www.senternovem.nl/sde/wkk/index.asp

[2] CertiQ's role in the SDE incentive scheme: http://www.certiq.nl/english/subsidies/SDE/default.asp#0

[3] Algemene Rekenkamer, 2010, Subsidieregelingen duurzame energieproductie (MEP en SDE) Terugblik 2010 op Subsidieregeling ‘Milieukwaliteit Elektriciteitsproductie’ (MEP), http://www.rekenkamer.nl/Actueel/Onderzoeksrapporten/Introducties/2010/03/Subsidieregelingen_duurzame_energieproductie_MEP_en_SDE_Terugblik_2010

Footnotes

(*1) Currently subsidies come from the budget of the Ministry of Economic Affairs. This is scheduled to be changed in 2011 or 2012, when funding is to come from an energy surcharge, paid by the consumers. Note that no single application was received for this round as the rebate level was considered insufficient.

(*2) CertiQ is a 100% daughter of Tennet, the national grid operator, which is in turn fully owned by the state

(*3) The Dutch Court of Audit (Rekenkamer, oversight entity of the parliament) published an evaluation of the SDE and the MEP (SDEs predecessor policy, limited to renewable electricity), however, CHP is not mentioned in the report, as it covers 2009 when CHP was not yet subsidised in SDE (or MEP)