Without intervention, the growth of solar, wind and storage will be seriously jeopardized KPMG: business case for sustainable energy projects is under pressure

The business case for solar, wind and co-located batteries has deteriorated significantly in recent years. This is evident from new research by KPMG commissioned by Holland Solar, NedZero and Energy Storage NL. The three industry associations are sounding the alarm: without rapid policy adjustments, the expansion of sustainable energy and storage is in danger of stalling. This not only puts pressure on climate goals, but also on the affordability of energy and the strategic independence of the Netherlands.

Three causes of a deteriorating business case

KPMG points to three main factors: 1. Negative electricity prices, profile and imbalance costs 2. Macroeconomic pressures (such as inflation and interest rates)

3. Rising development costs due to long lead times and grid congestion

Market revenues from solar and wind projects are mainly decreasing due to the increase in negative electricity prices. Co-located batteries can help, but their development is lagging behind due to unclear regulations, high transport costs and permitting issues.

Financing under pressure

Higher risks lead to higher return requirements and make financing more difficult. More projects fail, the pace of sustainability slows down and local ownership comes under pressure. The investment climate deteriorates – and that is bad news for both the energy transition and the energy bills of citizens and companies.

Call to the Cabinet

The sector is calling for targeted measures to restore the business case:

• Allow delayed battery feed-in to count towards SDE++ full load hours
• Equalize battery transportation costs with those in other EU countries
• Help municipalities and provinces with uniform and accelerated permitting
• Do not introduce a feed-in tariff, but encourage smart use of generated electricity
• Stimulate green investments with interest rate reductions via the ECB
• Accelerate appeal procedures through expert pools
• Provide clarity on preferred solar locations and distance standards for wind

The business case is under pressure, time is running out. The government must act now to keep new solar, wind and battery projects possible and attractive. Only then will the energy transition stay on track.

The full KPMG report is here to be found.