For the third week in a row, the electricity tariff appears to be back at “normal levels.” This is not the only good energy news for enterprising Netherlands. The criteria for meeting the TEK have been adjusted downwards, so that more entrepreneurs can use the scheme. However, not all the news is favorable. Various sector organizations remain critical of the scheme because many entrepreneurs are still left out. Meanwhile, exploding transport costs threaten companies' energy bills to be higher than expected once again.
The electricity price fell low again last week. Since October 16, the electricity price has fluctuated approximately between €90 and €170. Since September 2021, the electricity price has not fallen in such a low range. The electricity price was especially low on Tuesday, November 8. At that time, a megawatt hour of electricity cost €89,96. The question is whether the price will remain in this favorable range. On Monday, November 14, the price of electricity was €173,33. The next day, the electricity price rose to the highest point of the week. On Monday, November 17, a megawatt hour of electricity cost €177,33.
The fact that the electricity price has remained relatively low so far is mainly the result of cheap gas. The Netherlands is dependent on gas for approximately half of its electricity needs. Since mid-October, the price on the TTF has fluctuated between €100 and €125 per megawatt hour. This means that the gas price is approximately 70% lower than at the end of August, when the price peaked at almost €340. This low gas price is mainly due to the favorable temperatures this autumn. Due to the warm weather, gas demand is currently about 50% lower than normal. Yet the gas price is not yet close to the level before the Ukraine war. In 2021, the gas price was about twice as low.
There is also a second reason why the electricity price has been at a fairly normal level for a month now. The electricity price is also depressed by the large production of renewable energy. Last week, no less than 42,5% of all energy was generated from renewable sources. Of this, 28,9% consisted of virtually free sources of solar and wind energy. Because the percentage of electricity from renewable sources within the energy mix is now quite high, the production of green energy now strongly influences prices. The electricity price peaked this weekend at €162 and €173 due to lower revenues from mainly wind energy.
The TEK has been changed
It is far from certain that energy costs will remain so low. If temperatures continue to drop significantly this winter, gas and electricity prices will rise sharply again. To ensure that the bakery and butcher around the corner can remain open in such a situation, the government has adjusted the scheme for SMEs. The so-called Allowance for energy costs for energy-intensive SMEs (TEK) is intended for SMEs that spend a large part of their turnover on energy costs.
Within the TEK, 50% of cost increases in energy consumption above €1,19 per m3 of gas and 0,35 per kWh of electricity are reimbursed in the form of a subsidy. The original plan of the scheme stated that entrepreneurs were eligible for the scheme if they consumed at least 5.000 m3 of gas or 50.000 kWh of electricity per year. In addition, companies had to spend at least 12,5% of their turnover on energy.
Industry organizations and members of the House of Representatives responded with fierce criticism to this original elaboration. Many companies would consume too little energy to use the scheme, but would still encounter problems due to high energy costs. That is why the cabinet decided to reduce the percentage that companies must spend on energy to qualify for the scheme to 7%. In addition, the consumption threshold was also deleted.
Despite the adjustment of the TEK, various interest groups remain critical of the aid measure. For example, the Royal Dutch Butchers (KNS) and the Dutch Bread and Pastry Bakers Entrepreneurs Association (NBOV) argue for an even lower threshold. This limit is still too high for many small companies. Before the changes, 85% of SME bakeries, 40% of food stores (such as butchers) and 36% of SME drinks manufacturers (such as breweries) met the TEK standard.
Transport costs
After the sharp increase in the costs of gas and electricity, energy transport costs are also likely to rise significantly. In 2023, prices for transport costs for entrepreneurs will probably increase by about 52%. An average baker can easily count on a cost increase of more than €100. The problems may be even greater for agricultural entrepreneurs. For example, LTO is in contact with an arable farm that has seen its energy bill increase by €5.000.