Calculated for the first time: 25 billion invested in energy transition

In 2023, the Netherlands invested at least 25 billion euros in making energy supplies more sustainable. This is according to the Energy Transition Investment Monitor 2023, prepared by SEO Economic Research on behalf of the Dutch Sustainable Energy Association (NVDE), Invest-NL, Rabobank, Alliander and Gasunie. Although these investments seem in line with what is needed to meet the energy targets, the report warns that it is still uncertain whether the investments are sufficient.

Work is in full swing to make the energy supply in the Netherlands more sustainable. Investments are being made in wind and solar energy, cleaner industry, energy-efficient homes and improving our energy infrastructure. These efforts require significant investments to reduce CO2 emissions and make the economy less dependent on imported energy. But is this enough to meet long-term goals? And are the investments being made in the right places? To investigate this, SEO Economic Research has mapped how much will be invested in the energy transition by 2023.

25 billion

The research shows that at least 25 billion euros was invested in sustainability in 2023. Companies contributed the largest share, with 14 billion euros, followed by grid operators with 7 billion and households with 4 billion. This investment amount is roughly in line with current estimates of what is needed annually until 2025 to achieve long-term energy and climate goals.

Still many uncertainties

At the same time, the study points out that the figures still contain many uncertainties and that the methodology used needs further refinement. SEO mainly relies on subsidy and tax schemes to estimate investments, but this does not give a complete picture. In addition, this method becomes less accurate as sustainable investments become more profitable without subsidies, partly due to the phasing out of fossil subsidies that currently still create unfair competition. More insight is also needed into whether investments are targeting the right sectors and technologies. While much of the focus is on renewable electricity, the report raises the question of whether there is sufficient focus on other key developments, such as the transition from natural gas to renewable heat. Moreover, it remains uncertain whether current estimates of needed investments are complete.

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Chicken-and-egg story

According to Olof van der Gaag, chairman of the NVDE, it is very questionable whether the Netherlands will achieve the €25 billion in investments in the coming years, he tells the FD. He argues that the government should do more to pull the Netherlands out of the current impasse.

He further explains that the Netherlands is currently in a chicken-or-egg situation. The big emitters, such as Tata Steel and the refining industry, need to switch to clean energy sources, but these companies are not willing to invest until they are sure that enough green power will be available when the new plants are ready. For example, Tata needs the power from four hundred wind turbines to produce green steel. Meanwhile, wind farm developers want to be sure that there will be sufficient demand for power when their farms are operational and that they can get a fair price. This also requires timely infrastructure, but grid operators already cannot keep up with the growing demand and supply of power. Moreover, infrastructure developments for the use of green hydrogen, essential for making industry more sustainable, are delayed. The risk is that everyone will be waiting on each other.