Backing and financing of geothermal projects in the Netherlands

Westland Greenhouse, Wateringen, The Netherlands (Source: Flickr/ Jeroen van Luin, Creative Commons)
Alexander Richter 26 Sep 2017

In a recent background document, Dutch lawyers provide details on geothermal financing and the support scheme set up by the government in the Netherlands.

In a background article by two lawyers of Stek Advocaten in the Netherlands, details are provided on geothermal financing developments in the country.

Currently, the Mining Act applies to geothermal projects in the Netherlands that drill deeper than 500 meters. This requires exploration and production permits to be sought, as well as environmental permits for the area of the project and the actual structure of the planned installations.

In the Netherlands, “geothermal energy projects may become eligible for an Encouraging Sustainable Energy Production (SDE+) subsidy in the Netherlands. An SDE+ subsidy serves as compensation for the shortfall between the cost of the renewable energy generated and the market price. The SDE+ subsidy scheme is available not only for geothermal energy projects, but also for other renewable energy sources, including: biomass, wind, water and solar power projects.

In 2017 subsidy requests can be filed in two separate rounds. In each round, EUR 6 billion is available for all categories (the second round will open in October 2017).”

In additional to the subsidies, several support schemes are available, both national, local and European. The Dutch government has provided for a guarantee scheme, under which investors can be protected against exploration risk. With the green deal signed by the government and several private sector participants, there is evidence that the Dutch government sees a potential in geothermal and is willing to help the sector to develop.

At the moment it is unclear how calls for a better regulation and safeguards for geothermal development, similar to those set for the oil and gas sector, will effect things, but the Energy Transition Financing Facility is a great move forward for the sector, as it will provide EUR 100 million ($120 million) of subordinated financing by state-owned bank BNG that helps developing markets, such as geothermal.

Source: International Law Office