New Dutch Heat Act: Public Bodies in the Hot Seat
Our view on the key implications from a financial perspective
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Collective Heat Supply Act (‘Wet collectieve warmte’) at a glance
The new Collective Heat Supply Act (‘Wcw’) will replace the current heat act, which has been in place since 2014, and is built on two key principles:
- the municipality directs the transition towards making the built environment more sustainable, and
- the heat company is integrally responsible for the entire heat supply chain from production to distribution. The municipality designates a heat company on an exclusive basis to a heat plot, so that the company has the sole right and obligation to connect households within the heat plot to the heat network.
The new Act aims to make heat an affordable, reliable and a sustainable alternative to natural gas, by introducing a new legislative framework that should boost the development of the heat sector. The ministry of Economic Affairs and Climate (‘Ministry’) has the objective to double the number of heat connections in existing buildings to 1 million by 2030, with the ambition to grow to 2.6 million new connections in existing buildings in 2050. Key elements in the new act from a financial perspective include:
- Public ownership of integrated heat companies;
- Cost-based heat tariff regulation;
- Transitional arrangement and obligated transfer of heat infrastructure;
- Valuation of heat infrastructure;
- Structuring the public transition of the heat sector; and
- Financing the public transition of the heat sector.
In this article we will discuss these elements, finishing with our view on how the public and private sector can collaborate to reach the ministerial targets, and how the parties involved could move forward.
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