Dutch National Energy System Plan: The 2026 Update | Erika van der Linden & Kavish Kowlesar, Ministry EZK

My name is Erika. Yeah, my name is Kavish. Yeah, and together with a whole team, a whole host of colleagues at the Ministry of Economic Affairs, we've made this plan and I think the clicker is here. Yeah. So I'm going to get it. We're going to be talking about a couple of things today. First of all, what is this plan? Some of you may know it, but I think most of you might not. What are the main messages in the plan? And next we'll dive into some more content. So what does the overall picture of the energy system look like in 2040? And then we'll dive a little bit more into industry, hydrogen and electricity. So what is this plan for the energy system? Well, since 2023, the Dutch government has decided to make one plan that we can all, like, have as one vision for the energy transition, just so we're not all working towards other things, but we have, like, one path forward that we can work on. And we make it every five years, but we've also created the possibility that we can update it sometimes in between. And that has happened in the past years. We've created the first plan in 2023. And now we've decided, OK, there's so much happening in this world. Let's update it in between as well in 2026. And for some of you who have studied something more like politicology or public administration, policy policy, you might recognize this public policy cycle. It's just to make clear where the plan is within the policy cycle. Basically, when you're making policy, first you create the long-term vision. Then you try to translate that long-term vision into regulation. Then you execute that regulation, and then you monitor and evaluate that regulation to see whether you should change your long-term plan. So that's basically what we've been doing. We've created the first plan in 2023. Now we've already started executing it, but we've also annually monitored and evaluated the plan, and now we've updated it for the first time. So why did we update it? Well, I think most of us can agree that the geopolitical situation has changed compared to a couple years back. So that's one clear reason for updating a national plan, especially for a country such as the Netherlands that's so dependent on the geopolitical situation. For example, because of our Port of Rotterdam, which is much more influenced by geopolitics than other industries. Then we've been in discussions, of course, with the EU on the 2040 climate targets, which has now been set at 90% in 2040. We've also discussed things that, for example, in the hydrogen market, things have changed dramatically, especially our forecast concerning the price of green hydrogen has changed. We don't expect it to fall as rapidly as we thought it would before. And, of course, one major thing that we see in the Netherlands is that we see the grid congestion and other implementation bottlenecks. Yeah, the implementation bottlenecks are such that we see that there's a need to actually take them into account, also into our long-term planning, because some things simply cannot happen as soon as we hoped they would be able to happen. And lastly, there was also some intrinsic motivation from our side. We wanted to strengthen our governance, especially the link between the long-term planning and then the short-term project pipeline. And also the previous national plan was actually focused more on 2050 and the end state of the energy transition. So it was much more of a vision for the future. And now we've tried to make some more concrete steps clear, like how are we going to get to at least like to 2040, so to make more like the link between all those long-term plannings and the short-term projects that we see today. So what are our main messages then? The first is the most important. We maintain a very ambitious yet realistic course. So we do take into account all of the different implementation bottlenecks, and we take them into account much more seriously also because we focus a little bit more on the short-to-medium term. But we do remain on an ambitious course. And the main content-wise message is basically we will rely a lot more on electricity than we thought before. So there's a lot about electrification in our plan. We see that a lot more can be electrified than we thought maybe like five years ago. Also, for example, for medium to high temperature heating demand in the industry, we see that a lot more can be electrified and it's also cost-effective to electrify. And we've changed our plans adjusting to reflect that possibility for electrification way more. And then a lot of people who hear that, like who hear all the talk about electricity, they get a little scared and they say like, but wait, molecules are really important as well. So we combine the message about electrification with the message that also molecules, especially sustainable molecules, will remain important in the future. We'll get to that a bit more also in the next slides. And one thing that is very important for both electricity and sustainable molecules is that they both require demand creation. So what we've seen so far regarding electricity is that basically we've worked a lot with our policies on the supply side, for example, offshore wind. We've supported that a lot. Solar PV. There's a lot of policies in place to help people get their solar panels on their roofs. But now we see that that was all on the supply side and actually you need policies on the demand side as well. So the reasoning behind that is that if you actually push on the demand side, then the whole chain will follow. And with sustainable molecules, that's even more important. But sustainable molecules markets are more international. So we can't really do that with national policies alone. So what we do there is we talk to the European Commission and to other countries to get to decisions, for example, in acts like the Industrial Accelerator Act, Critical Chemical Alliance, to get to sustainable demand creation for molecules as well. And of course, resilience because of the whole geopolitical situation. Resilience of our energy system is increasingly important. So this is a list. I'm not going to talk about all of them, but we've focused within this plan on a couple of specific topics. One thing is also that, for example, this whole plan also functions as a national roadmap for the transition away from fossil fuels, which is, for example, in the COP, the climate conference rooms. It's also shown there. And we've also focused more on the international side, which Kavis can tell a little bit more about in a bit. But we'll focus more on the industry, electricity and hydrogen in this presentation. But there's a lot more. Then one last overview slide of the content. And I've heard that there's a laser. Yes, there's a laser. Amazing. So here on the left, you see the supply that we basically currently have. So it's primary supply. Then what we expect in 2040. So three messages that I would like to point out in this graph. One is the point about electrification, which we talked about before. Electrification is key. Then the second one is the energy demand. Also because of electrification is expected to decline quite significantly towards 2040. And the third message is that the role of fossil fuels will decline dramatically towards 2040. It's what we expect. And with that, I'm happy to give this clicker to you. Perfect. So as Erika mentioned, in 2023, we already made a national energy plan. But this year, we actualized it. And there are some differences between what we did in 2023 and what we have now. In this slide, you can see a little bit of the differences. And one of the major differences is the amount of offshore wind and also a little bit of nuclear and onshore wind that is decreasing compared to what we expected in 2023 for 2040. That's given that the demand is differently expected. And if we check the demand, then the final demand is quite the same. If you see the blocks on this slide, the blocks for 2023 and 2026 are about the same. The main difference is the amount of electrolyzers that we are expecting in the Netherlands. Given that the hydrogen price is not suitable for major development of electrolyzers in the Netherlands, we decrease the amount of expected electrolyzers in the Netherlands and therefore also the amount of supply from renewable energy that we are expecting in the Netherlands. And finally, also in the input for our hydrogen power plants, we do still expect some conventional power plants, but we don't say anything about it on which technology or which fuel they will be running on. Therefore, what we expected in 2023 was that most of our power plants will be fed with hydrogen. We decrease that down to actually about zero. Therefore, saying the amount of hydrogen that we need in the Netherlands is decreasing. And also what we see here that the hydrogen demand is therefore decreasing. And one of the major factors next to the electricity system is actually our industry demand. The major critic on our plan in 2023 was that the industry that we expected was staying the same but decarbonized. Lots of people saying we are not checking good enough how the industry will develop in the next coming years. And therefore, for this new plan, we went into those subsectors of industry and checked what is changing. And we checked the energy costs. We checked how they are comparative compared to other countries. And we also checked what are the expectations of industrial policy from, for instance, the European Commission. And those factors led to a decrease of our industry and other decarbonization pathways. Therefore, having another need for the energy system, given the industry that we are expecting in the Netherlands. And what are the major things that are changing in our industry? First of all, electrification. We are seeing much more possibilities for industry to electrify, especially also in the heating part of industry. There's more rigor role for CCS. We are expecting some of the industry to convert to CCS for their decarbonization. Most of our industry is still competitive, but they need a little bit more imports than we expected. Therefore, also decreasing our green hydrogen flow from the Netherlands itself and switching that a little bit more to imports of sustainable energy carriers. There's a smaller role, therefore, for our hydrogen of the Netherlands. And we expect a lower demand for gaseous hydrogen than previously anticipated. These all led to other numbers for our industry and therefore a different energy system to supply that. This is only for the industry. I think for the built environment and for mobility and for agriculture, those numbers quite closely stayed the same as we expected in 2023 when we first published our national energy plan. Zooming in a little bit on electricity, we have a couple of things that we did. First of all, electrification is the priority that we have in our new energy plan. Given that we want a 10 terawatt hour increase of electrification in the upcoming years, growing closer to about 220-230 terawatt hours in 2040. That's almost a doubling of what we are using on electricity right now per year. Then tackling grid congestion is our major priority. You would say that electrification can only be done if grid congestion is solved. Therefore, solving grid congestion is still the major problem. We also checked whether it's possible for some of the use cases to switch to other fuels. But actually, given that electrification has much more advantages, we are saying rather focus on solving grid congestion and then switching to other fuels for sustainable fuels. We changed our offshore strategy a little bit lower. So, where in 2023, we expected higher volumes of wind on sea or offshore wind. Nowadays, we are thinking more closely to 30 to 40 gigawatts in 2040. Given also that we do need to get that electricity to shore. And there is where the bottleneck closely lies. We said something about decarbonization of dispatchables already in 2023. But we did notice that all those decarbonization methods for our dispatchable units were quite expensive. Therefore, I'm not saying that we're not going to do that anymore. But thinking about how we can decarbonize on our cost-effective methods. And therefore, slowing that down a little bit. And finally, flexibility and batteries. We focused a little bit more on flexibility because it becomes more of an issue given grid congestion, but also the variable renewables. And we, for the first time, actually mentioned a number of batteries. 28 gigawatts of batteries in 2040. And that comes out of the need for given the variable renewables, but also grid congestion that we face in the Netherlands. And this number is not only standalone or co-located batteries. It also implies the home batteries and vehicle-to-grid that is in this 28 gigawatts. And if you look at the numbers from how that will change, we are still seeing a little bit of fossil in our energy system, given that conventional power plants are still running. But the major part will come from wind and solar growing towards CO2 neutral at some point. But the major thing that we are trying to do, and that shifted a little bit from what we previously thought, is not to decarbonize our electricity system, but to electrify. And that part, that green block, that is shoving to the right to electrify the most that we can of our energy system and the demand. And if you check the demand and supply, currently we're about 150 terawatt hours of demand and supply, give or take, in the Netherlands. Like I said, it's almost a doubling, even more, that we are expecting in 2040. That has some challenges, obviously. That means that we have to build our renewable capacity as much as possible. That means that we have to check our flexibility supply, batteries, but also demand response. And that also means that we have to face the challenges of grid congestion, because otherwise we cannot handle this. But it's an outlook that is saying that we do know what we are doing and do expect a lot of electrification. That on the electricity side. And I think Erika will show you a little bit more on hydrogen. Thanks. Yeah. So, yeah, I think I've already said a little bit about hydrogen, that we expect it to have a smaller role. And also, of course, you already discussed on it. So, I think I won't dive too deep into this. But basically, what we've seen is that the price forecast for hydrogen, we expected them to fall way more. But actually, what we found out over the past years is that you expect those prices to fall because of innovation. But then when you actually look at what parts of an electrolyzer are still being innovated on, then it's only specific parts of the electrolyzer that we expect to drop in price. And then the other parts are relatively stable in price because they're actually parts of a factory that we've been building already for quite some years. And therefore, we expect our price expectations have changed. And therefore, also the perspective role of green hydrogen has changed. So, yeah, that means that both our expectations of the amount of electrolyzers in the Netherlands have dropped. But also the role of low carbon hydrogen. We expect it to be still a bit higher, especially in those parts of the industry where actually, for example, we used to have fuel gases from the refineries or from the chemical sector. You can decarbonize those and then you can put the CO2 underground for carbon capture storage. And then you can use basically the hydrogen from that process to use again in the industrial processes. So, that's something that's changed for our hydrogen outlook. This is a slightly complicated graph, but it shows the differences in our expectations. So, one main difference is that we don't actually expect to use hydrogen in dispatchable power anymore as much as we previously did. And also for synfuel production, we expect it to use a lot of hydrogen, but also our cost projections for synfuel production. We expect that there will actually be less synfuel production in the Netherlands and more biofuel production. So, that also means that you need different inputs for your biorefinery sector. So, there's that. And then still something about CCS because in a previous plan, we didn't discuss CCS separately. We've done a deep dive now in what we expect the CCS sector to look like in the Netherlands in 2040. And here you see that it's going to already in 2040. We expect the CCS system to be a mixture of both biogenic CO2 and fossil CO2. We expect the biogenic CO2 to come up. And we expect about, yeah, it can still have quite a big range. But let's say around 10 megatons of fossil CCS happening in the Netherlands. And then the interesting thing is that most of the other things that influence the CCS market in the Netherlands are actually policy decisions. So, our decision on what we will do with BEX. So, using biomass in electricity. And how much we will actually be able to get direct air capture going in the Netherlands. So, this is, yeah, we've used this also to inform ourselves on, for example, Aramis. To what extent, like how much CO2 we expect to come from our port of Rotterdam and also from abroad. But, yeah, so there's that. That was it already. Do you still want to add something about the international cider? Yeah, so, we started out with that the geopolitical situation was changing. And that was one of the reasons that we made this energy plan. We actually read a lot of world energy outlooks. I think the European outlook of Montel was also part of this mix of world energy outlooks and European outlooks. And they've also made an international part of the national energy plan. And the major thing that we are thinking is to decrease our amount of fossil fuels and fossil fuel use. We have to think globally. So, check with other countries how we can work together on this. One of the things that you did in Santa Marta in Colombia is one of the factors that we are trying to figure out on how to collaborate a little bit with other countries on this. Second thing is European integration. One of the speakers in the beginning already mentioned that European integration of our energy systems is quite important. And we, as the Netherlands, also are facing that we are finding out that the national energy plans of those different countries are not quite aligned together. We already visited a couple of neighboring countries. And we saw that we are all working towards a strategy of our energy system. But they are not aligned that much. And for the Netherlands, given that we are building a lot of renewables on sea, but also our current role in exporting a lot of fossil fuels, we see that there is a major benefit for us to also think about cost sharing of those energy systems. Obviously, we are building a lot for our own use, but we are also building a lot for other countries. And it's quite important for us to see where the benefits are falling so we can think a little bit more European on this part. That on the international side. Thanks. Useful addition. So, if you want to read the plan, you can check the QR code out. It's still in Dutch. We're waiting for the English translation. Thank you. Perfect. Thank you very much. Thank you. Thank you very much for an excellent overview of what you expect to happen in the Netherlands over the next couple of decades, I'd say. I think we're very lucky to have both of you on stage as well. So, thank you both of us for joining us. I'd like to ask just first of all about green hydrogen. I know you went into some quite detail there, Erica. But is there a sense that the hydrogen balloon, if you were, it was kind of quite hyped up a few years ago. So, it's not quite burst, but it's severely deflated, right? Yeah. Yeah, I think you're right. And I think also in the previous plan, we already tried to make it a little bit smaller because back then, we also thought, or some people thought, oh, we're also going to use it, for example, to heat homes. We've already said on heating homes with hydrogen, it's not energy efficient at all. Also, for example, comparing hydrogen cars to electric cars, like the math just doesn't add up. So, those are some statements we already made also back in 2023. But now, we see that the role has decreased even to a smaller role. But it does definitely still have a specific role within the energy transition. With some industries in particular. Something to add. We already also talked about this with our neighboring countries. And we also see that they are facing the same struggles and also decreasing their ambition on hydrogen. So, it's not only something that we see. It's something that we share. Your neighbors to the East Germany, they talked a lot about hydrogen-ready gas plants. And that was a little bit intriguing to me anyway. But before I turn to the floor, I'd just like to ask one question. We mentioned a little bit about there was talk about the growing criticism of carbon markets, of the green transition, and the growth of far-right or far-left populist parties. What's the situation in the Netherlands? Is there any backlash at all? Or is there a sense of problem against what you outlined here? Yeah. Good question. I think there's one thing that's very interesting to me is that actually from the sector, the energy sector is very positive. And the sector has also been positive for years about the energy transition. So, for example, when the previous cabinet, which was a bit more right-wing, of course, when they did not prioritize climate and energy policies as much as the cabinet before did. But actually, the sector came up with a letter saying, like, please, please do go ahead with the energy transition because we're completely at first in it and we need the government to be in it as well. So, that was very interesting to me. And now also we're collaborating a lot with the sector. I think regarding the political landscape, it's a little bit more nuanced. But still, I think what you see, for example, also when you see the survey results of how many, like, what percentage of the population is in favor of climate and energy and also the transition. It's actually like something like 70% is strongly in favor. It's just that right now the topics that determine elections are more topics like asylum and migration. And you see that there, obviously, our right-wing parties represent the opinion of the population way more than the left-wing parties. So, yeah, it's quite nuanced. Interesting. Very interesting. Thank you. Any questions from the board, Johanna? Hello, Johanna Pandera. Thank you for the interesting presentation. I have one practical question because you mentioned a bit the process, but I'm just thinking about the governance. So, it seems to be very simple, logic, and easy, but I'm just thinking, actually, how you actually manage this energy policy. So, do you have a special, I don't know, agency which implements it, or is it ministry more? Yes. So, this is my question. Thank you. Yeah. Very good question. Maybe you can answer something about electricity, how we work together with all the different entities. Yeah. So, obviously, the energy system plan is just a broad overview, and all the specific policies are made in the next couple of years. We also do have a plan of our space for our energy system that is more located to where those major facilities should be. And that's the latest thing that we are adding is energy deals with our regional governments. So, we're trying to make deals with our regional governments on how to implement the specific aspects that we are designing in our national energy plan. To regionalize this a little bit. And that's the major part to govern it, I guess. Yeah. And one thing that we've been trying, because exactly this challenge we've been facing for many years now, like how to actually govern something that is as big as this transition. And we've also been trying to make the link more between those long-term visions that we create, and then the actual projects that are now in the pipeline. And that's a long, boring policy story, but there's all these different... Yeah. I don't know. Like, we put a lot of people into the same room to discuss with each other whether specific projects actually adhere to the long-term vision and stuff like that. Perfect. Excellent. We have a question over here, don't we, JP? Well, thank you for the interesting presentation. My name is André. I'm from Montel. So, you had this slide where you had, like, different measurements, and one of those was a concrete plan for the windcard Route op Zee. And when it was presented back in the days by Minister Jette, he said, like, okay, we will construct wind, and we expect demand to follow. So, there were no real measurements on, let's say, electricity demand. So, now, you say, okay, there's a lot possible, and also electrification is high on the agenda. Do you expect any measurements, or is it still we expect with low prices demand to follow? Is it okay? Yeah. We do. We are thinking about how to speed up electrification. Obviously, market prices with lower prices coming from wind, offshore wind, would help a little bit, but we also have the SDE. We also are thinking about flexible subsidies, and we're also thinking about demand creation in the form of data centers, for instance. So, we are expecting that demand to follow, and otherwise, we do have measures in place. But to answer your question a little bit, yeah, in the previous with Minister Jette, back in the days, we did say we are building wind on sea as much as possible, and demand will follow. Now, it's more of a balance. We are not going as fast anymore to check and monitor how the demand is following. Also, given our decreased ambition on wind on sea is based on this, together with some constriction barriers that we're still facing. Yeah. And concrete measures to actually help electrification for some, like for mobility, it's already in place. For industry, we're now looking at concrete measures, right? Yeah, definitely. Excellent. Oh, many questions here. Okay. We'll start. We have to move on fairly soon, but I'll take one here first. Thank you for the presentation. Jörg, I have a bit of a follow-up question. So, thank you for picking me first. I think there's a bit of an elephant in the room with demand, because from a market perspective, if you're going to develop an offshore wind farm, you want to have demand for that. On the other hand, that means that you're going to need, if you want to keep the price levels up, you're going to need fossil fuels, because those set the price at that moment. So, how does that compare to your climate goals of the Paris Agreement? Sorry, I did understand the first part, but the coupling to the climate goals, I didn't understand, but maybe you can do that. No, I had the same problem. Sorry. One short question, then. Yeah, as a clarification, so if you need fossil fuels, if you need gas to set the price for the offshore wind farm to be economically feasible, then you still need the fossil fuels. So, how do these two roads meet in the end? So, the merit order, you mean? Yeah, so in our merit order, in our national energy plan, in the numbers that we have, there's a big part where renewables are setting the price. Then there's a big part where hopefully demand will set the price, and there's the small end stage where the conventional centers are setting the price. I guess the conventional centers, the amount that they are active will decrease a lot, and that's also why we have struggling with our security of supply, and why we are introducing a capacity mechanism, given the letter to Parliament in June, I think, this year. So, I do agree that only basing our energy system on wind and solar would give, at some point you will face the missing money problem, I would say, but currently we don't have a real answer to that, except for hopefully the capacity mechanism that will save those conventional centrals, and they will set the price then. Another question here. Martin Dushio, Forum Energy. Two quick questions. One, I would love to see this pace and this kind of share of electricity, but for the electrification to happen, the electricity prices have to go down. And as you've shown on your slides, there's a lot of investments in the offshore, onshore, batteries, and therefore for the whole electricity system, right? So, how do you see the possibility for the electricity prices to go down, or at least for the electricity to gas, this gas spark, to make it possible for the electrification to happen on the economic basis? This is one. Do you see that? Do you see that this kind of electrification leads to, like, the whole growth of the electricity system, a lot of new lines and so on? Or, because of the flexibility, the electricity system doesn't have to be, you know, that much overscaled from today's numbers? Thank you. And we'll just take the other question here, so you can take all three at the same time. Was there a question here? Yeah. Thanks for the presentation. My name is Nick van der Ney from Statcraft. And I was wondering, I believe on slide 15, you mentioned the hydrogen storage facility of four tarot hours. I was wondering, can you share any view on an entity that is envisioned to own and operate this facility? We do the hydrogen, now we'll do the electricity. Prices, grids, and hydrogen storage. On the electricity side, we are expecting more flexibility, definitely. But it also means that we're building out our grid infrastructure. Then it also already has this target grid with a lot of IPs, so investment plans, to build out the electricity system majorly. But obviously, we are doubling the amount of terawatt hours that goes through the electricity system. And we cannot only do that by building out the grid. It also means more flexibility. Then your question about prices. Yes, we do see the prices becoming a major factor. If you check the merit order that we envisioned of our energy system, there will still be a huge part that will hopefully, the price setting will be done by demand response. So the willingness to pay for our energy electricity system. Maybe we can talk about it in the break. That would be amazing to hear your views. But obviously, that's still a major problem. And the electricity prices in the Netherlands compared to other parts of Europe are still quite high. And we know that. So we are still trying to figure out how to manage that, definitely. And the last part on hydrogen storage? Hydrogen, yeah. So up till now, it was mainly gas-unit involved. And it will be ABN also for the coming storages. That's the short answer. So yes, there are state-owned enterprises involved. And it's mainly like now the salt caverns that we're looking into. We're already, of course, realizing the first hydrogen storages now. But the next ones will also be salt caverns. And in the long run, we're also looking into reusing gas, natural gas storages for hydrogen. They are way bigger. But yeah, because of that, also, of course, way more expensive to fill with cushion gas. So for now, we're looking into salt caverns. Perfect. And I think if there are any more questions, I think there's a lot of interest in the energy plan. So we'll take them in the break and at lunchtime. Absolutely. So thank you. Once again, a warm round of applause for Kavisha and Erica. Thank you. Thank you.