The Challenge of Grid Congestion

The accelerated growth of renewable generation has highlighted a critical challenge: the insufficient capacity of the electrical grid to handle the increasing demand and variability of renewable sources. According to the National Grid Congestion Action Programme, solutions such as energy storage and more attractive connection tariffs for strategically located batteries are being implemented.

Additionally, the potential of electric vehicle charging infrastructure, if properly managed, could serve as a resource to stabilise the electrical grid through smart charging systems. “It is essential to align the expansion of the grid with the pace of wind and solar development to ensure energy security and maximise investments,” warns the IEA report.

Transition from Natural Gas: A Historic Challenge

With a historical reliance on natural gas for both heating and electricity generation, the Netherlands faces a unique challenge in its energy transition. In the residential sector, efforts are focused on replacing gas boilers with heat pumps and expanding district heating systems. The goal is to reduce dependence on gas, which still accounts for 84% of energy consumption in heating.

However, recent cuts in subsidies for heat pumps have generated uncertainty in the market. According to the IEA, “The transition to more sustainable heating systems must be accompanied by consistent policies that provide certainty for consumers and investors.”

Hydrogen and Nuclear Energy on the Horizon

Green hydrogen emerges as another key piece in the country’s energy strategy. By leveraging its energy trade infrastructure, the Netherlands aims to become a European hub for clean hydrogen. This would involve both production and importation, taking advantage of its offshore wind resources.

“Political stability and a strong public mandate will be crucial for integrating nuclear energy into a decarbonised system,” the IEA states. The government plans to build four new reactors to complement its growing renewable capacity.

Long-Term Policies and Investments

The Climate Fund and the SDE++ scheme have been essential instruments for financing the transition. The former, with a budget of €35 billion until 2030, prioritises innovative technologies such as hydrogen and renewable energies. Meanwhile, the SDE++ has supported cost-effective solutions to reduce emissions, although it faces budget cuts starting in 2026.