The Dutch solar energy market: Grid parity and alive and kicking – with no incentives

Recently, the Dutch module manufacturer Scheuten Solar and the Dutch Solar cell producer Solland Solar both ran into financial troubles. Equipment from the thin-film startup Helianthos was sold in public auction following the breakup of this initiative. On top of this, the government stopped all subsidies and incentives in 2012. One could be forgiven for thinking that solar is now officially dead in this country, which was a leading market with unique projects just one decade ago.

Tiny but independent of incentives
However, much to the surprise of many, today this market is alive and kicking. In fact, there are over 50 initiatives being operated by all kinds of stakeholders: municipalities, corporates, housing associations, environmental groups and enthusiastic civilians. Some of these initiatives are sizable, with a couple of MW. Since the government cut  all incentives for solar PV in 2012, the Dutch market has grown rapidly. Numerous new companies have entered the market. Market volume will most likely grow more than 50% in 2012 to more than 45 MW. Admittedly, this is small in comparison to the country's Belgian and German neighbours. But what is exceptional about this case is that this will be a market volume realised entirely without government support. Indeed, it would appear that the government's withdrawal stimulated market growth. How come?

End of crazy stop-and-go policy
First of all, entrepreneurs hate uncertainty – and the ‘stop-and-go’ policy of regularly changing complicated subsidy schemes drove customers and stakeholders crazy. The feeling was, “It is better to have certainty than no subsidies.” The rapid drop in solar module prices and one of the highest electricity prices in Europe are helping to establish a sustainable grid parity market for residential PV applications. Not bad for a country renowned for its cold, windy and rainy climate.

No shocking financial benefit
The interesting situation today is that the government now has little influence. Apart from some general fiscal instruments for commercial applications, the market is mainly based on residential applications driven by net metering.
PV systems can now be purchased on a 10-year payback basis – again without any incentives. However, this is not the sole reason the market has started to grow. The financial benefits of investing 5000 euro for a saving of around 500 euro per year isn’t exactly shockingly convincing – definitely not in a country known for its stinginess. System prices are also still higher than those in Germany. So what is the driving the Dutch?

Green sun-loving Dutch
First of all, a serious part of the population has ‘green sympathies’. Environmental protection has always been a serious topic – perhaps due to the fact that most of the country would not survive melting polar ice, as well as being densely populated. Still, these green tendencies have always been present so do not explain why the market has suddenly started to boom. Furthermore, financial yields were better when the subsidies were in place. No, this does not explain the solar behaviour of the sun-loving Dutch.

No heroic roof conquerors
Why, then, are Dutch people suddenly joining en masse the collective purchase initiatives? Thousands of households have signed up for a 1-3 kWp PV system on their roof within just two months. This is just one of over 50 initiatives running. The attractive system prices offered as part of the massive collective purchase campaign are fine, but not the best available on the Dutch market today, and definitely higher than those Germany.
So why are people suddenly all going solar? My personal opinion is that the market is driven by a few things. One is the relatively low entry cost of just 2,500 euro for a 1 kWp system. An amount that a considerable part of the relatively rich Dutch population can afford to invest for a good cause. Secondly, it is viewed as important that a household is able to make a step towards a form of independence; loosening of the government and the energy utility – the Dutch hunger for independence and freedom. Thirdly, you are no longer alone. Joining a campaign along with thousands of other green enthusiasts helps a lot. We may well have a heroic history at sea, but a lot of fear of the unknown has yet to be conquered with regard to our roofs. An Initiative started by the largest national association of homeowners feels safe and secure. They must have figured out all details in the right way. And if so many are doing the same thing, the system offer must be cheap and of good quality. The massive collective purchasing initiatives offer a form of ‘collective trust’.

Ain’t no stopping us now...
Neither the government nor utility can stop the market now – unless they take unpopular measures such as introducing additional taxes on solar energy. Although politicians have demonstrated their incompetence before, it seems that the market is now free. Creativity rules, new business models and new companies are emerging. It seems that the Dutch have reached the tipping point for grid parity. And more stakeholders will become inspired, based on all the initiatives currently up and running. This will further boost the market.
My prediction is continued growth of at least 50% in 2013. Holland is growing towards the first 100 MW market without any subsidies. We can now become a frontrunner grid parity laboratory for other markets in which incentives will also disappear in the near future...