The effects of a decrease in gas-fired electricity generation in the Netherlands

Abstract

The share of natural gas-fired electricity generation in the Netherlands decreased as an effect of national policies and under pressure of a liberalized market, from 57% to 49% between 1998-2018. While coal-fired electricity generation decreased with 1 percent point (29-28%). Further decrease of fossil-fired electricity generation could pose future problems, as this provides the required reliability of electricity input into the grid. Meanwhile, gas-fired electricity generation is more efficient and flexible, and less CO2-intensive than coal-fired generation. Therefore this research posed the question: ‘What are the driving factors behind a change in the share of natural gas in the fuel mix for electricity generation in the Netherlands, and what effects might be expected until 2030?’. The research answered question by reviewing the historic capacity since the start of the liberalization of the electricity market, the costs of electricity generation, and by researching effects on efficiency, CO¬2-intensity and flexibility in future scenarios. To find the effects, a range of scenarios with different characteristics for capacity and generation of electricity was researched. A range was researched in order to distillate the effects caused by future changes for natural gas-powered electricity generation. Results found in the research are as follows: newly built gas-fired capacity is cheaper than coal-fired capacity. However, for existing capacity, coal-fired electricity generation is favoured, as the short run marginal costs are lower (25.37-28.60 €/MWh versus 37.38-44.19 €/MWh). Concerning the change in capacity, it was found that the ratio between gas- and coal-fired capacity decreased from 3.6 in 1998 to 2.3 in 2018 and resurges to a range of 2.7-3.3 in 2030. The ratio between gas and coal-fired electricity generation decreased from 2.0 (1998) to 1.8 (2018) and decreases further to a range of 0.6-1.9 (2030). Furthermore, results show a decreasing share of fossil-fired capacity and electricity generation from 86% and 85% (1998) to 67% and 81% (2018), to ranges of 37-63% and 25-61% in 2030, respectively. The shift from natural gas to coal in fossil-fired power generation leads to a decrease in the average energy-efficiency of fossil-fired generation (-3.4 to +0.1 percent point in 2030, relative to 1998), an increase in fossil CO¬2-intensity (-4 to +115 tonne CO2/GWh), and a decrease in flexibility for the majority of the researched flexibility parameters: ‘flexible capacity’, ‘ramp rate’, and ‘reliable capacity’. The last parameter, ‘highly flexible capacity’, on the other hand increases with 0-2 percent point to the value of 2018.