THE HAGUE - Minister of Climate and Energy Rob Jetten has informed the Dutch House of Representatives that further greening of the energy supply in Curaçao, Aruba, and Sint Maarten will require a maximum of €150 million in investment subsidies. While the current cabinet has earmarked sufficient funds, Jetten emphasized that the final decision to allocate these funds will be made by the next government.
The Kingdom of the Netherlands is committed to making its energy supply more sustainable, not only in the European Netherlands but also in its Caribbean territories: Aruba, Curaçao, Sint Maarten, and the special municipalities of Bonaire, Saba, and Sint Eustatius. To support and accelerate the energy transition, various instruments are available, including the Sustainable Energy Production and Climate Transition Subsidy (SDE++).
In line with the coalition agreement, the SDE++ scheme will be open to applications from the entire Kingdom, including Aruba, Curaçao, and Sint Maarten (ACS). To explore this possibility, the Netherlands Organization for Applied Scientific Research (TNO) conducted a study commissioned by the Ministry of Economic Affairs and Climate Policy (EZK) on greening local energy supplies and the feasibility of extending the SDE++ to the ACS.
Findings of the TNO Study
Jetten explained that the TNO study revealed the current SDE++ framework is not well-suited to the small scale and market conditions of the electricity markets in the ACS. Instead, the most effective approach would be to finance a few key projects per island, focusing on capital investments rather than operational costs. This approach mirrors the strategy used in Bonaire, Saba, and Sint Eustatius, which have already received subsidies for projects aimed at rapidly transitioning to sustainable electricity production.
The TNO study outlines the total investment needs for the three countries and the impact on the energy transition. The main conclusions and recommendations are as follows:
Key Projects for CO2 Reduction
Wind and Solar Energy: These projects are crucial for CO2 reduction.
Electricity Grid Investments: Necessary for the overall energy transition.
Viability of Wind and Solar Projects
Profitability: Wind and solar projects are profitable compared to fossil fuel production.
Investment Willingness: Commercial parties and households are willing to finance these projects.
Subsidy Impact: Subsidies could generate additional profits for commercial entities or, through utility dividends, benefit the island governments.
Costs for Integration
Public Company Expenses: Costs for integrating wind and solar projects include grid connections, battery storage, and grid expansion.
System Flexibility: Investments in grid strengthening and electricity production flexibility are necessary for a predominantly renewable energy system.
Investment Subsidy over Operational Subsidy
More Suitable Approach: Investment subsidies, or low-interest loans, are more appropriate than operational subsidies like the SDE++ for these regions.
Funding Needs: An estimated subsidy of up to €150 million will be needed.
Broader Societal Impact
Comprehensive Benefits: Projects should also consider impacts on grid stability, the transition to zero-emission mobility, and energy costs for residents.
Further Development
Minister Jetten supports the TNO study's conclusions and emphasizes the need for investment subsidies focused on grid enhancements, connections, and battery storage. Wind and solar energy projects are already viable in the ACS, with sufficient investment interest from commercial parties and households.
The allocation and management of funds will be detailed in the coming period, in close consultation with Aruba, Curaçao, and Sint Maarten. This process will address the final amount of support per country, the method of subsidization, cash flow pacing, and co-financing conditions. Funds are expected to be available from 2030, but expenditure requires parliamentary approval and future government decisions.
These investments aim to bolster renewable energy production in the Caribbean part of the Kingdom, reduce fossil fuel dependence, and achieve CO2 reduction goals. This approach aligns with the objectives of the SDE++ and the needs of the islands as outlined in the TNO study.