NL: CHP remains important as energy costs rise sharply due to new policy – Hortidaily

Report on the Future of Combined Heat and Power (CHP) in Dutch Horticulture

Executive Summary

A report based on the autumn 2025 CHP Barometer, prepared by BlueTerra for Glastuinbouw Nederland, indicates that Combined Heat and Power (CHP) units will remain integral to the Dutch horticulture sector’s energy strategy until at least 2033. Despite rising energy costs and the phasing out of tax benefits, CHP systems maintain a competitive advantage over separate heat and electricity generation. This continued reliance on CHP has significant implications for several Sustainable Development Goals (SDGs), particularly in the areas of energy, infrastructure, and climate action. The technology serves as a critical bridge, ensuring grid stability and operational viability for growers while the sector navigates a complex transition towards more sustainable energy sources amidst considerable policy uncertainty.

CHP’s Role in Advancing Sustainable Development Goals (SDGs)

H3: SDG 7 – Affordable and Clean Energy

CHP systems directly contribute to SDG 7 by providing an efficient and reliable energy source for the horticulture industry. Their ability to generate both heat and power simultaneously is more resource-efficient than purchasing electricity and producing heat with a boiler separately. However, the affordability aspect of this goal is under pressure.

• Financial Pressures: The phasing out of lower energy tariffs, the reduction of natural gas exemptions, and the introduction of a CO₂ levy are increasing operational costs for growers, challenging the affordability of energy.
• Grid Reliability: As the national grid becomes more dependent on intermittent renewable sources, the controllable and flexible power from CHP units is crucial for maintaining supply security. Grid operator TenneT warns that without such flexible capacity, reliability standards may not be met post-2033, highlighting CHP’s role in ensuring reliable energy for all.

H3: SDG 9 – Industry, Innovation, and Infrastructure

The continued use and strategic evolution of CHP technology support the development of resilient and sustainable infrastructure. The horticulture sector’s energy strategy exemplifies industrial innovation in response to changing economic and environmental conditions.

1. Resilient Infrastructure: CHP units function as a decentralized and flexible part of the national energy infrastructure, providing essential balancing capacity as coal-fired plants are phased out. A decline in CHP capacity could weaken the overall security of the energy supply.
2. Technological Innovation: The projected future involves a hybrid approach, integrating CHP units with heat pumps. This innovative model aims to optimize energy use, with heat pumps operating during periods of low electricity prices and CHP units covering peak demand, thereby fostering a more sustainable industrial energy system.

H3: SDG 13 – Climate Action

While natural gas-fired, CHP technology plays a vital transitional role in the broader strategy for climate action. Its operational flexibility enables greater integration of renewable energy sources, and its efficiency minimizes emissions compared to less efficient alternatives.

• Enabling Renewables: CHP units are increasingly operated during hours when solar and wind production is low, providing the necessary backup to stabilize a grid with a high share of renewables. This facilitates a smoother transition away from more carbon-intensive fossil fuels.
• Policy and Emissions Reduction: The introduction of a CO₂ levy and future policies like ETS-2 and mandatory green gas blending directly link CHP operations to climate policy, incentivizing growers to manage their carbon footprint and invest in cleaner alternatives over the long term.

Economic and Operational Outlook for CHP (2025-2033)

H3: Shifting Usage Patterns and Profitability

The operational strategy for CHP units is evolving from providing baseload power to serving peak demand and grid balancing services. Growers are increasingly running their units when electricity prices are highest, typically outside of peak solar generation hours. This shift is expected to continue as the energy landscape changes.

H3: Long-Term Projections and Challenges

The profitability and operational hours of CHP are projected to face significant challenges in the coming decade.

• 2028: CHP profitability is expected to remain strong. The rising cost of natural gas increases the expense of boiler-produced heat more rapidly than CHP-produced heat, maintaining CHP’s competitive edge. Its role in providing emergency and balancing capacity for the electricity network will grow.
• 2030: The number of full-load hours for grid-supplying CHP units is forecast to drop to between 2,500 and 3,000 annually. Operation will become less predictable, making it more difficult for growers to efficiently utilize the co-produced heat and CO₂.
• 2033: Full-load hours are expected to fall further to approximately 2,000-2,200. Increased competition from heat pumps and other renewable technologies, combined with higher energy taxes and grid fees, will challenge the economic case for CHP and raise questions about the future affordability of energy-intensive practices like plant lighting.

Policy Uncertainty and Strategic Implications

Significant uncertainty surrounding future government policies and potential compensation schemes complicates long-term investment decisions for growers. The current analysis in the CHP Barometer does not include calculations based on proposed policies, awaiting further clarity. This uncertainty poses a risk to the sector’s ability to plan its transition effectively. For the next decade, CHP will remain a cornerstone of the horticultural energy mix, but rising costs necessitate strategic investment in flexibility and sustainable alternatives to align with long-term climate and energy goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy

  The article is centered on energy production, costs, and supply security in the Dutch horticulture sector. It discusses the role of Combined Heat and Power (CHP) units, the rising costs of electricity and natural gas, the integration of renewable energy sources like solar and wind, and the future adoption of heat pumps. This directly relates to ensuring access to affordable, reliable, and modern energy.

• SDG 9: Industry, Innovation and Infrastructure

  The text examines the energy infrastructure of a specific industry—Dutch horticulture. It highlights the need for innovation (“Kas als Energiebron” innovation programme), upgrading infrastructure to handle fluctuating renewable energy, and retrofitting industrial processes (e.g., moving to a mix of CHP and heat pumps) to remain competitive and sustainable.

• SDG 13: Climate Action

  The article explicitly mentions several climate-related policies impacting the sector, such as the “CO₂ levy,” the phasing out of fossil fuel-based power plants (“coal-fired power plants”), and the introduction of “ETS-2” (Emissions Trading System). These are direct measures to combat climate change and its impacts by putting financial pressure on fossil fuel consumption.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 7.2: Increase substantially the share of renewable energy in the global energy mix.

   The article points to this target by mentioning that “the share of renewable energy keeps growing” and that the future energy mix will include “heat pumps” operating alongside CHP units, especially when solar and wind production is high.

2. Target 7.3: Double the global rate of improvement in energy efficiency.

   This target is relevant because CHP systems are a form of high-efficiency energy generation. The article states that “CHP systems still offer a competitive advantage compared with producing heat with a boiler and purchasing electricity separately,” which is a direct reference to their superior energy efficiency.

3. Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable.

   The article discusses the need for the horticulture industry to adapt by investing in “flexibility and more sustainable alternatives.” The projected shift towards a “mix of CHP and heat pumps” by 2030 is a clear example of retrofitting the industry’s energy systems to become more sustainable and adapt to a changing energy landscape.

4. Target 13.2: Integrate climate change measures into national policies, strategies and planning.

   This target is directly addressed through the mention of specific government policies designed to reduce carbon emissions. The article lists the “CO₂ levy,” the phasing out of the “natural gas exemption,” and the upcoming “ETS-2” and “mandatory green gas blending” as policies putting financial pressure on greenhouse companies, demonstrating the integration of climate measures into national planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for Target 7.2 (Renewable Energy Share): The article implies progress by stating that “the share of renewable energy keeps growing” and that heat pumps will “take over during hours with low electricity prices,” which are typically hours with high solar and wind production. This shift in operational strategy is an indicator of increasing renewable energy integration.
• Indicator for Target 7.3 (Energy Efficiency): A key quantitative indicator mentioned is the “number of full-load hours” for CHP units. The article projects a drop from current levels to “2,500 to 3,000 hours” by 2030 and “around 2,000 to 2,200” by 2033. This metric reflects the changing role and operational efficiency of CHP within the broader energy system.
• Indicator for Target 9.4 (Sustainable Industries): The article points to the industry’s investment in “flexibility and more sustainable alternatives” as a qualitative indicator. The planned adoption of a “mix of CHP and heat pumps” serves as a concrete indicator of the industry retrofitting its infrastructure for sustainability.
• Indicator for Target 13.2 (Climate Policies): The article provides direct indicators by naming specific policies. The implementation and financial impact of the “CO₂ levy,” “ETS-2,” and the “phasing out” of the lower energy tariff are measurable indicators of how climate change measures are being integrated into national policy.

4. Table of SDGs, Targets, and Indicators

Source: hortidaily.com