07 Mar 2019
Posted in Energy
Complete reliance on gas for base-load capacity may result in energy security concern for the Netherlands by 2030
The Dutch government’s decision to completely phase out both coal power generation and Groningen gas field by 2030 is expected to result in a massive renewable capacity addition in the Dutch energy mix but also lead to energy security concerns as bulk domestic gas production will stop by 2030, according to GlobalData, a leading data and analytics company. Arkapal Sil, Power Analyst at GlobalData, offers his view on the future of the Dutch power market in the next decade:
“As of 2018, the Netherlands was heavily dependent on thermal power, which accounted for over 70% of the country’s installed capacity, followed by wind and solar with 13% and 11%, respectively. Gas-based power generation will continue to support the base-load capacity, accounting for over 30% of total installed capacity in 2030 while around 60% of capacity will comprise of solar and wind.
“Though transition to renewable energy sources for power generation is an environmentally friendly idea, total dependency on gas for base-load may lead to energy security concerns, given the price volatility of natural gas in the international market, coupled with future diplomatic relations with other gas supplying countries.
“The Netherlands has been a net importer of electricity; however, with the increased renewable capacity addition along with the presence of high voltage interconnections with Germany, Denmark, Norway, Belgium and England, the country is expected to export electricity in the near future, especially in the event of nuclear phase out in Germany and the UK in the next five and 10 years respectively.”
“The ambitious target of phasing out coal-fired power plants and the largest gas field is likely to pose developmental challenges for the country in future. As of 2018, 55% of power generated in the Netherlands came from gas and even though it is projected to decline at a compound annual growth rate (CAGR) of 2.51% by 2030, gas will dominate power generation with 37% share. In this context, the decline in domestic gas production is a concern, especially as Groningen gas field is cutting down its production every year since 2013 before finally shutting down in 2030, resulting in the country becoming a net importer of gas in 2017. As a matter of energy security, the Netherlands must secure a steady supply of gas as it will dominate the power generation till 2030.
“Furthermore, the government’s plan to shut down all coal-fired plants, if not met by alternate base-load capacity in time, may lead to a power deficit in the country. Therefore, the country needs to effectively balance its retiring power generation fleet with proper base-load capacity to continue uninterrupted power generation, along with securing a steady supply of gas for power generation in the future.”
Information based on GlobalData’s report: The Netherlands Power Market Outlook to 2030, Update 2019