End of hunger for panels: does solar energy still have a future in the Netherlands?
A crisis is looming among solar panel installers in the Netherlands. Not only have energy prices dropped, but the lucrative net metering scheme has also reached its end. What remains of the bright future for solar energy in the Netherlands?
As the founder of Booking.com and an early investor in Uber, Kees Koolen has a proven knack for lucrative ventures. It is telling that on May 22, the bankruptcy was declared for four of his companies. The multimillionaire is pulling the plug on BonGo Solar, Koolen Industries Solar, Koolen Installation Services, and Novavolt BV, his four solar companies in his sustainable energy mini-empire. According to Koolen, there is no more money to be made from installing solar panels in the Netherlands.
According to curator Bert Jansen, the turnover of the four companies had already halved in recent months, and the impending right-wing government gave the final push. In its main agreement, the coalition will abolish the lucrative net metering scheme for solar panels by 2027. That closed the door.
Koolen is not alone. “We are speaking to installers who have lost up to 95% of their turnover,” says a spokesperson for Techniek Nederland. The industry association fears a wave of bankruptcies, especially among certified installers with qualified staff and thus often higher costs.
The sector’s potential fall is closely linked to the heights it reached. Nowhere in the world are there more panels per capita. In one small Western European country, there are more panels than on the entire African continent, according to figures from the International Energy Agency (IEA).
During the energy crisis two years ago, the demand for panels was at its peak. And investor Kees Koolen is far from the only entrepreneur who rode that wave. Research by Het Financieele Dagblad shows that the number of installers grew from 670 in 2013 to over 4,700 in 2022. A year later, that number almost doubled to 8,500.
Due to the significant influence of government policy, the solar panel industry is used to boom and bust cycles. But the extremes happening now are unprecedented.
The decline in enthusiasm for installing panels last year has two causes. Energy prices dropped, and there was a debate over the net metering rule. Net metering means that panel owners can offset the electricity they supply to the grid during sunny periods against the electricity they consume when the sun is not shining.
This favorable scheme is the engine behind the Dutch solar panel success, and also its brake. Because now that one in three roofs generates energy, a flood of green electricity flows into the grid during sunny periods. As a result, electricity prices are very low at those times, much lower than when the sun is not shining. For energy companies, net metering means an increasingly significant loss.
Pig Cycle
Although energy companies and experts have warned for years that the scheme is unsustainable, it has been politically challenging to find a majority for its reduction. The cabinet proposal for this was defeated earlier this year after a fierce lobbying battle in the Senate. Meanwhile, energy companies have found a way to circumvent the scheme. Almost all of them now charge panel owners ‘return delivery costs.’
Due to these costs, which can quickly amount to several hundred euros per year, a significant part of the net metering advantage is gone. However, there is still a tax advantage, as no energy tax is paid on netted electricity. This costs the treasury about 600 million euros per year. If the new cabinet abolishes net metering by 2027, panel owners will lose that amount.
Techniek Nederland is highly frustrated with the current situation. The industry association wants to talk with the government and energy companies ‘in the very short term’ about the prospects. “There are already entrepreneurs who have to lay off their staff, and they cannot hold out until a new proposal possibly comes on Budget Day,” said the spokesperson.
Yet, no one really thinks this crisis means the Netherlands will massively stop buying panels. Solar energy has become too cheap for that.
In the short term, especially. Europe is being flooded with cheap Chinese panels. China is responsible for about three-quarters of the world’s production and has significantly increased that production in recent years. So much so that the United States, to protect its own market, has imposed substantial import tariffs. And so, the panels are entering European ports by the millions, significantly impacting the price. Where installers were still buying their panels for around 100 euros each last year, the price has now almost halved. As a result, solar panels are becoming attractive again, even with only two years of net metering left.
And behind that pig-cycle-like price dip lies a structural trend: the production costs of solar cells are falling year after year. Half a century ago, the price per so-called peak watt was about 100 euros; it is now below 5 cents. Nothing suggests that this trend will stop.
Because of this, the long-term prospects for solar energy in the Netherlands are favorable, according to Tennet. Every year, the high-voltage grid operator makes an inventory of the Dutch electricity supply over ten years. In May, it revised the growth of solar energy capacity upward by no less than 10 gigawatts.
If that prediction comes true, the Netherlands will have 69 gigawatts of solar panels in ten years – roughly the same capacity as 43 nuclear power plants of the type the new cabinet wants to build. Abolishing the net metering scheme may have some negative impact, but according to Tennet, it is still difficult to estimate how much.
European Action
At the European level, there are other concerns than the boom-bust cycle of Dutch panel installers, says Diederik Samson, who was until recently the chief of staff for climate commissioners Frans Timmermans and Wopke Hoekstra. “The dependence on China is too great.”
When Samson put together the European Green Deal five years ago, no one in Brussels cared where the millions of solar panels came from. “A pandemic and a war later, we are on a completely different path,” says Samson.
It is a fact that the European solar industry is being wiped out by cheap Chinese panels. In the Netherlands, the panel factory Exasun went bankrupt earlier this year, and in Germany, the Swedish company Meyer Burger laid off 500 people in March because it moved production to the US.
Europe’s response is the Net-Zero Industry Act, a law that stipulates that by 2030, 40% of the technology needed for the energy transition in Europe will be made by European companies. In the short term, it is quite possible that the EU, following the US, will introduce import tariffs to protect its own solar industry. This could mean that panels in Europe will become somewhat more expensive again, Samson confirms. “But the hope is that we can then make an extra leap to even more efficient technologies.”
The Dutch industry is already focusing on panels that are different from the standard dark blue slabs. Take Solarge in Weert, a company that opened its doors a year ago. Solarge produces lightweight, recyclable solar panels. Because they are lighter, they can be installed on roofs that cannot support the weight of regular panels, such as the roofs of distribution centers. This opens up a new market.
But now that the factory is running at full speed, Solarge is hindered by two factors: large companies often cannot get a heavier power connection due to grid congestion. Solarge has therefore started focusing more on small and medium-sized businesses, but they are now affected by the end of the net metering scheme. “We are in the midst of the transition chaos,” summarizes commercial director Huib van den Heuvel. “The uncertainty created now does not help.” Still, he is optimistic: “The business case remains strong.”
The chance that the EU will regain a full-fledged solar cell industry is not high, says Erwin Kessels, professor of applied materials and specialist in solar cells at TU Eindhoven. “After Europe lost the production of solar panels to China, the machines needed for production were still made here for a long time. But that is now largely happening in China as well.” According to him, large, long-term investments are needed to reverse that trend.
Bright Future
“The Chinese dumping is ongoing; you can’t compete with that,” says program director Albert Polman of SolarNL, a consortium of companies, knowledge institutes, and universities that hopes to set up a new industry with the next generation of solar panels. “That’s why you need to differentiate. This can be done with a new type of solar cell, with higher efficiency and new materials.”
The caretaker cabinet previously allocated 312 million euros for a national program to restart large-scale solar panel production in the Netherlands. Among other things, through SolarNL. In the long term, 7 gigawatts of solar panels should be produced in the Netherlands, including very efficient solar cells and flexible solar films.
Polman sees Solarge, which claims to be on its way to 1 gigawatt production, as an example of such a new company. “And we are building another factory that will start producing in two years.”
That solar panel installers are having a hard time now is certain. And threatening clouds are also gathering over the European solar industry. But the outlook for solar energy in Europe remains bright.
By Tjerk Gualthérie van Weezel and Bard van de Weijer