Consumer energy bills will double within 10 years, analysts claim
Despite the declining costs of wind and solar energy, the energy transition is not resulting in lower expenses but rather an increase, according to calculations by consultancy firm PwC for de Volkskrant. Over this decade, consumers and companies are expected to face a 92 percent rise in costs for electricity and natural gas.
In the next decade, energy expenses, encompassing both gas and electricity for consumers and businesses, are expected to nearly double, rising from 22 billion euros in 2020 to 43 billion euros by 2030. By 2040, this figure is projected to reach 56 billion euros.
The surge in electricity bills will be particularly significant, driven by increasing consumption and higher generation costs. Although natural gas prices are also forecasted to rise, the overall cost increase will be lower due to its declining usage.
The Netherlands is increasingly producing green energy, which is cheaper per kilowatt hour. By the end of the decade, 70 percent of the electricity supply is expected to be green. However, energy specialist Rutger Bots from PwC highlighted that a portion of electricity is still generated using gas-fired power stations. When these stations operate, electricity prices soar due to the escalating costs of natural gas and CO2. This contributes to the overall increase in electricity expenses.
Electricity costs in the Netherlands are expected to remain high, even with the partial use of green hydrogen in power stations, as green hydrogen is currently scarce and expensive. Moreover, gas-fired power stations need to remain operational even when not in use, leading to higher costs for the last portion of gas-generated electricity, as noted by energy specialist Rutger Bots. This will be reflected in consumer bills.
The cost of transporting electricity is also rising due to the reinforcement of the Dutch electricity grids. The share of network costs in the total electricity bill is expected to increase from 26 percent to 31 percent. Furthermore, taxes related to electricity are projected to double, from 10 billion to 20 billion euros by 2040.
Paul Nillesen, a partner and energy specialist at PwC, told de Volkskrant he believes that there is too often an overly optimistic depiction of the costs involved. "The energy transition is necessary and offers opportunities, but it's not something we've achieved easily. The costs are high and it will take decades. The political leaders should be more transparent about this."
According to Nillesen, a key concern is about who will bear the costs of the energy transition. If these costs are passed on solely through energy bills, it could disproportionately impact financially constrained citizens, potentially affecting public support for the transition. He noted that there are already suggestions to slow down the process, even though "the really difficult part is still to come."
Nillesen suggested that fixed costs of the energy transition, like the construction and maintenance of the power grid, should be funded through the National Budget or the 35 billion euros Climate Fund. He added that costs related to consumption could be managed through energy bills, as this allows citizens and companies to influence their expenses through energy savings.
The Ministry of Economic Affairs and Climate told the newspaper it could not analyze PwC's figures due to a lack of knowledge about the underlying assumptions. The Ministry pointed out that electrification, such as the use of heat pumps and electric cars, results in more efficient energy consumption. It also noted that future decisions, particularly regarding the implementation of energy taxes, will significantly influence the overall impact and costs of the energy transition.
