The Netherlands Combined Heat and Power Market - Growth, Trends, and Forecasts (2020 - 2025)

The market for combined heat and power in the Netherlands is expected to grow at a CAGR of more than 1.34% during the forecast period of 2020 - 2025. Factors such as government policies and growing environmental concerns, old power plant upgrades, reliable and uninterrupted power supply are expected to drive the CHP market in the Netherlands during the forecast period. On the other hand, factors such as low electricity prices that decrease the revenue of CHP plants, increasing focus on other renewable technologies, and issues facing while connecting smaller cogeneration plants to the transmission grid, etc. are likely to hinder the market growth.

• Natural gas-based combined heat and power is expected to dominate the market during the forecast period.
• Rising applications of CHP in various industries such as sugar, chemicals, paper & pulp, etc. along with government support, is likely to create immense opportunities for the market studied.

Key Market Trends

Natural Gas Based Combined Heat and Power to Dominate the Market

• Traditionally, natural gas has accounted for more than 70% of the fuel, for CHP. It has witnessed strong demand from the chemical sector, where CHP has huge demand. Naturally occurring gas has been the long runner in the CHP sector for years and has made a name for itself in terms of efficiency, environmental compatibility, and safety.
• Superior logistics and infrastructure, an innovative R&D ecosystem, a business-friendly environment, and highly integrated chemical production sites have resulted in significant growth for the chemical sector, in the past. This growth is anticipated to continue, in the coming years, and translate into significant demand for natural gas-based CHP plants.
• However, the demand for gas for district heating is expected to be impacted, as the government plans to have all residential buildings off-gas, by 2050. This is expected to encourage the residential sector to switch to other fuels, for new facilities.
• Natural gas, with methane as the main fuel, burns cleanly and safely, reducing maintenance and extending the life of the CHP unit. The Pro2 natural gas CHP generates heat and electricity at the same time and offers an extremely high degree of efficiency.
• Based on the EU’s emission reduction commitment, the Netherlands must reduce its GHG emissions by 20% by 2020 compared to its 1990 levels, along with a long-term GHG reduction of 80-95% by 2050.
• Moerdijk CHP plant, in the Netherlands uses natural gas as fuel has power plant capacity of 700 MW and produces electric output of 426 MW. The power plant is commissioned in 2012 and uses steam and gas turbine systems. Moerdijk consists of the two cogeneration units CHP Moerdijk I and CCGT Moerdijk II. Moerdijk I was mothballed in early 2018. Moerdijk II is a state-of-the-art unit with a capacity of 426 MW and an efficiency of 58%.
• Therefore, based on the above-mentioned points, natural gas-based CHP is anticipated to dominate the market in the Netherlands over the forecast period.

Supportive Government Policies to Drive Market

• Government policies such as energy tax exemption and energy investment allowances are expected to drive the CHP market demand.
• Entrepreneurs investing in CHP are expected to qualify for the energy investment allowance. Up to 41.5% of the investment cost in equipment and/or production costs, can be deducted from the company’s taxable profits, in the calendar year of purchase. The deduction can add up to approximately 10% of the investment costs.
• Natural gas used for electricity generation, including CHP, is exempted from energy tax. The installations must have an electrical efficiency of at least 30%, and an installed capacity of 60 kWe, or higher.
• The Sustainable Energy Incentive Scheme Plus (SDE+) is promoting the development of renewable CHP. The scheme supports renewable electricity, gas, and heat, by means of a feed-in-premium.
• Due to the strength of the established infrastructure for gas production and distribution, the government plans to convert the country into a gas hub for continental Europe once its own reserves have been consumed.
• The Netherlands, through interconnectors, is connected to several countries in the EU, including Germany, Norway, Belgium, and the UK, for the export and import of power.
• Therefore, based on the above-mentioned points, it is evident that government policies are expected to drive the CHP market demand in the Netherlands during the forecast period.

Competitive Landscape

The market for combined heat and power in the Netherlands is moderately fragmented, with the presence of numerous players, including ABB Ltd., Caterpillar Inc., Siemens AG, Capstone Turbine Corporation, and BDR Thermea Group BV.

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