Powering Profits: Profits, Investments and Fuel Type Mixes in the Dutch Power Sector

Abstract

This report addresses the Dutch power sector (i.e. generation and supply of electricity), identifying the major corporate players in the market, types of fuel used to generate electricity, the CO2 emissions and nuclear waste associated with these activities, the profits being made, and investments in both renewable and non-renewable generation capacity. The report focuses on the five major corporate players active in the Dutch power sector: ENECO, Essent, Nuon, Electrabel, and E.ON Energie. For the Dutch companies, ENECO, Essent and Nuon, additional information on the ownership structure of the company, shareholders and dividends paid and received is given. A section on RWE is also included because the company is active in electricity supply in the Netherlands and has plans to invest in generation capacity in the country. Analysis of the fuels used by the companies to generate electricity in the Netherlands reveals that fuels such as coal, natural gas, and nuclear dominate the fuel mix of most companies. Companies like E.ON Energie and Electrabel rely on renewable sources of energy only for a tiny portion of their Dutch power generation. Essent and Nuon do produce some (15% and 5%, respectively) electricity from renewable sources in the Netherlands, but they generate far more from non-renewable fuels. The companies' fossil and nuclear-dominated fuel mixes lead to high levels of CO2 emissions and nuclear waste production. ENECO is the only company that has a largely sustainable fuel mix for electricity generation, but it currently has very small production capacity. The fuel mix of electricity the companies supply to Dutch consumers mirrors the production mix. Again, the vast majority of the electricity supplied by the companies in this study is based on unsustainable fuels. The company with the highest amount of renewable electricity in its supply is RWE Energy, which bases about 45% of the electricity it supplies in the Netherlands on sustainable fuels. Essent is next with about 25% of the electricity it supplies coming from renewable sources. The other companies all supply lesser amounts of renewable-based electricity. An investigation into the companies' planned investments in new electricity generation capacity in the Netherlands reveals that the country's overall fuel mix is set to become even less sustainable than it currently is. Although investment in renewable generation capacity is increasing significantly, this is overshadowed by the massive amount of investment that is being poured into unsustainable generation capacity. Five of the six companies examined in this study (Essent, Nuon, Electrabel, E.ON Energie and RWE Power) are planning to build large coal-fired power plants in the Netherlands. Although most of the plants will be able to co-fire biomass, they will be largely coal-based. If all the current plans are realised, over €5 billion will be invested in coal plants over the next few years, adding approximately 5,500 MW of coal-based electricity generation capacity to the Dutch power system and potentially resulting in a 60% increase in CO2 emissions by the Dutch power sector. ENECO is the only company in the study not currently investing in a coal-fired plant, but all companies are investing more in non-renewable capacity than they are in renewables. In this climate of largely unsustainable fuel mixes for electricity generation and supply, the power companies examined in this study are enjoying record profits. All of the companies have seen their earnings grow over the past five years, sharply in some cases. High profits are being translated into high dividends being paid to the companies’ shareholders. As owners of the three Dutch companies, Dutch public authorities have benefited significantly from the power companies’ activities, with some municipalities and provinces receiving over €100 million per year in dividends.