Flexible regulatory framework needed to achieve transition to sustainable heat supply

The government needs to work on a flexible regulatory framework for the transition to a sustainable heat supply. Without additional policy, the desired growth in the number of connections to a heat network will not materialise or will lead to excessive increases in energy bills for affected households and businesses. That is the conclusion of the study on the regulation of the Dutch heat market that we conducted on behalf of Netbeheer Nederland in cooperation with SEO.

In the coming decades, almost the entire built environment in the Netherlands must get rid of gas. More sustainable energy sources should take over the role of natural gas. Heat networks are a possible solution for this.

Shared principles
For a successful transition to heat networks, coordination and cooperation between national government, municipalities and other parties is important. Central government must set clear goals and create clear frameworks within which municipalities and market parties can jointly make energy supply more sustainable. To form a common view on the desired development of the heat market, shared starting points are needed. For instance, about the structure and functioning of the heat market, about the effect of measures that change this structure and about the criteria used to assess the outcome.

Analysis framework
On behalf of Netbeheer Nederland, Ecorys, in collaboration with SEO, investigated which policy measures are needed to shape the transition to a sustainable heat supply in the built environment, with a focus on the contribution of heat networks. We developed an analysis framework that can help the various parties agree on the basic principles of the heat market and define a common way forward.

Flexible regulatory framework
The conclusion of our study is that the government must play a guiding role in realising the transition to heat networks. Without additional policy, the desired growth in the number of connections to a heat network will not materialise or will result in excessive increases in energy bills for affected households and businesses. Central to the task of developing heat networks is market regulation. This will ultimately determine whether the government’s policy goals are realised or not. This market regulation must safeguard public interests, but at the same time be flexible enough to accommodate the technological development of the market and give space to sustainable initiatives from the bottom up.

For more information, read the full report in Dutch.