The share of solar power of the total amount of sustainably generated electricity rose from 1.83% in 2012 to 23.7% in 2019. However, the level of sustainable energy is still too low to meet the government’s climate targets. The key policy challenges for the development of solar parks in the Netherlands include decentralised decision-making and streamlining various spatial interests in a densely populated country. It is also expected that, by 2030, grid capacity will be low for two out of three electricity substations (high and intermediate). To overcome this, the capacity of the existing stations will be increased and new substations will be added to the network. However, this is a time-consuming and especially a costly process.

Janine de Ruiter, Associate, Renewable Energy Investment at Savills in the Netherlands, explains: “The sector is facing both policy-related and practical challenges. But even though many countries still require subsidies to make solar parks viable, an increase in interest can be observed among institutional investors. Take Union Investment, Nordcap and Aguilla for example, who have recently set up a renewable energy fund to diversify their portfolios with the aim of benefiting from favourable alternative risk-return profiles in times of low interest rates.”

This raises the question of what the risk-return profile of a solar park looks like, in comparison to real estate for example. Initially, parties invested in the development of solar parks, which were then held in a portfolio; partly due to a lack of investors in this type of product, we are now seeing the first sales of developments and completed solar parks to investors in the Dutch market. The main reason for more traditional investors to enter the market is the certainty about the viability of solar parks, the scale-up of the solar parks and the government’s incentive policy. In addition, this is leading to a run on suitable land, where the aim is to install tens of thousands of solar panels at once. All of the above is indicative of a maturing market, largely driven by the effects of irreversible and ambitious sustainability targets. Solar park investments are becoming an alternative asset class.

The Dutch government provides a subsidy for the generation of renewable energy: the Stimulating Sustainable Energy Production (SDE++) scheme, intended to fund the unprofitable top margin that is the difference between conventional and sustainable methods of energy production. The application period for the new SDE ++ subsidy round opens on Tuesday 24 November at 9 a.m.

Read the full report here.