September 30, 2022

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Renewable energy producers can survive without subsidies due to high energy prices

Renewable energy producers can survive without subsidies due to high energy prices

Since then, the price of electricity has been well above the subsidy limit of €110 per MWh almost all the time, with peaks exceeding €400 per MWh. “Now our factories can be run there without subsidies,” says de Groot. “And if you look at the long-term outlook, we won’t need support in all of 2022 and into 2023.”

A spokesperson for the Ministry of Economic Affairs and Climate says that if the price of electricity remains too high, it could be hundreds of millions of euros that will not have to be paid in subsidies in 2022. Whatever is saved goes back to the subsidy pot. “If we can get more projects done with less support and save money, it will still be available for climate projects in the future,” says Energy and Climate Minister Çetin.

Peak prices

Gas also saw its price peak in months. “Direct alternatives to natural gas such as biogas and geothermal energy are competitive at current prices,” says van der Gag, president of NVDE.

This does not mean that van der Gaag expects that huge new projects will now be created that can be implemented without support. He added, “The investments will be made over decades. I do not expect the price of gas to remain high for that long. At the beginning of the Corona crisis, gas was still almost free.”

Moreover, biogas entrepreneurs are already producing less at the higher prices that wind or solar power producers receive. “Rates are high enough to be able to dispense with subsidies,” says Ids Schaap, of biogas company Agradu. Unlike wind farms in De Groot, Schaap does not sell its energy at daily prices, but on the basis of long-term contracts. “As a result, we’ve only secured a portion of our gas at really high rates.” The rest of the production is still tied to the old contracts at lower prices.

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In addition, entrepreneurs who have brewing facilities are facing rising prices for raw materials. They use not only manure, but also residual fluxes from the food (animal) industry in their digestion. Due to the rise in the prices of raw materials, the industry has become more economical with raw materials. Thus there is less waste left for biogas. Purchasing additional fertilizer is difficult due to the required permits.