Minister Wiebes of Economic Affairs and Climate Policy is currently drafting a feed-in tariff scheme for renewable energy. He announced this in a letter to the House of Representatives. This will be one of the measures aimed at achieving the 49% reduction in CO₂ emissions (by 2030 at the latest) to which the Government is committed.
Net metering scheme
The scheme is primarily aimed at encouraging members of the public to get involved in renewable energy projects. Solar panels are currently by far the most common way in which members of the public are getting involved in generating renewable energy. There are two ways to recoup the investment in solar panels, namely through the electricity generated
- for immediate personal use;
- to feed into the electricity grid.
The advantage of electricity consumed directly by the household is, of course, that it does not need to be purchased from an electricity supplier.
But in practice, it is not possible to use all the electricity generated by solar panels yourself. Usually, a household’s total electricity consumption exceeds the amount that can be generated by the solar panels. And, of course, solar panels do not always generate electricity when consumption is at its highest.
At times when the solar panels generate more electricity than is consumed, the surplus is fed into the grid. If there is a shortfall in electricity, additional electricity is purchased from the grid. By offsetting the electricity supplied to the grid against the electricity purchased from the grid, you only need to pay for the net balance. A significant proportion of the price of electricity consists of energy tax. The net metering scheme also applies to this tax.
Feed-in subsidy
The net metering scheme for energy tax will be abolished with effect from 1 January 2020. This means that energy tax must be paid on all electricity purchased from the grid. For electricity fed into the grid from solar panels (the scheme will also apply to renewable energy generated by other means), a feed-in subsidy will be introduced. The level of this subsidy will be set so that the payback period for the investment in solar panels is approximately 7 years (under the net metering scheme, the payback period is expected to be only around 4 years by 2025). Research shows that, with a payback period of seven years, private individuals are still willing to invest in solar panels.
The feed-in subsidy applies to members of the public and businesses that feed renewable electricity they have generated themselves into the electricity grid. No energy tax is payable on electricity used for personal consumption, even after 2019. An annual subsidy cap is set for the feed-in tariff. Once this cap is reached, applications for the subsidy will no longer be accepted. As promised by Wiebes, there will be a flexible transitional arrangement for those who are using the net metering scheme before 1 January 2020.