The costs and investment challenge of the energy transition in view

The Netherlands aims to be climate-neutral by 2050. This ambitious goal requires not only technological changes but also a new funding and investment agenda. Invest-NL wants to accelerate the energy transition by providing insight into its financing possibilities. A pilot initiated by Invest-NL now offers detailed insight into the shifting costs and the necessary investments that this transition entails. The method helps policymakers and financiers better understand which investments are needed for a climate-neutral energy system and to develop more targeted policies. These insights are essential for a future-proof, carbon-neutral economy.

The transition to a fully sustainable energy system with solar, wind, hydro, sustainable molecules, and biomass is in full swing. The realization of this system requires significant investments. Netbeheer Nederland has published future scenarios in the study ‘Integrale Infrastructuurverkenning 2030-2050’ (II3050). They use these, among other things, for their investment plans. Invest-NL has detailed the costs and investments of a climate-neutral energy system based on this data. The pilot ‘Financieel Inzicht in EnergieTransitie’ (FIT) offers a method for the development of research programs to explore the financial-economic implications of the energy transition.

From recurring costs to investments

The II3050 study by Netbeheer Nederland sketches four scenarios that provide insight into how society can develop toward a climate-neutral energy system by 2050. The Invest-NL pilot then shows a clear trend: costs are shifting from the import of (fossil) fuels to investments in infrastructure, production, transport, distribution, storage, and conversion of sustainable energy.

In the ‘Decentrale Initiatieven’ scenario, we see that the import of fuels – now amounting to € 27 billion annually, accounting for 61 percent of the costs – is reduced by a factor of seven. Instead, we invest more in our own energy supply: energy production, among others using wind and solar energy (tripled, to € 13 billion per year), infrastructure (tripled, to € 14.5 billion per year), investments at households such as heat pumps and solar panels (doubled, to € 8 billion per year), and energy storage and conversion (from almost zero to € 5 billion per year).

These insights emphasize the importance of clear communication: they show that the energy transition does not necessarily cost more, but that the costs are distributed differently. In the mentioned scenario, capital costs (CAPEX) are, for example, three times higher, while operational costs, especially for fossil fuels, decrease by the same amount.

Importance of further research

The report recommends a follow-up research program and includes concrete examples of analyses and research questions. A research program can help policymakers and financial institutions better understand where and how to invest to realize a climate-neutral energy system.

Further research can demonstrate the distribution of costs and investments among end-users, such as households and industry, companies, grid operators, and the government. Additionally, a solid program can clarify the role of various financial institutions and identify specific financial products that respond to the opportunities. This contributes to more effective policy and collaboration between governments and the financial sector.

Making the energy transition financially feasible with partners

The pilot Financieel Inzicht in EnergieTransitie is an initiative of Invest-NL, made possible in part by the Ministry of Finance, Netbeheer Nederland, and the Topsector Energie. The project was carried out by Quintel and TNO and partly relies on analyses conducted by Invest-NL.