Without action, the growth of solar, wind and storage is in serious jeopardy KPMG: business case for renewable energy projects under pressure

The business case for solar, wind and co-located batteries has deteriorated significantly in recent years. This is evident from new research by KPMG commissioned by Holland Solar, NedZero and Energy Storage NL. The three industry associations are sounding the alarm: without urgent policy adjustments, the expansion of renewable energy and storage is at risk of stalling. This not only puts pressure on the climate goals, but also the affordability of energy and the strategic independence of the Netherlands.

Three causes of a deteriorating business case

KPMG points to three main factors:
1. Negative power prices, profile and imbalance costs.
2. Macroeconomic pressures (such as inflation and interest rates).
3. Rising development costs due to long lead times and grid congestion

Market revenues from solar and wind projects are declining mainly because of the increase in negative electricity prices. Co-located batteries can help, but their development lags due to unclear regulations, high transmission costs and permitting issues.

Financeability under pressure

Higher risks create higher return requirements and make financing more difficult. More projects drop out, the pace of sustainability slows and local ownership comes under pressure. The investment climate is deteriorating - and that is bad news for both the energy transition and the energy bills of citizens and businesses.

Call to Cabinet

The industry calls for targeted measures to restore the business case:

• Make deferred battery feed-in count for SDE++ full load hours
• Set transport costs for batteries equal to those in other EU countries
• Help municipalities and provinces with uniform and expedited licensing
• Do not introduce feed-in tariff, but encourage smart use of generated power
• Encourage green investments with interest rate rebates through ECB
• Expedite appeals through expert pools
• Provide clarity on preferred locations for solar and distance standards for wind

The business case is under pressure, time is running out. The government must act now to keep new solar, wind and battery projects possible and attractive. Only then will the energy transition stay on track.

KPMG's full report is here find.