Dutch Heat Act amended: what to expect after 1 July 2019?
Even though the Dutch Heat Act was formally amended more than a year ago, (some of) these amendments only recently entered into force. (per 1 July 2019). In this article, we will discuss the relevant changes for parties active in construction, project development and the real estate market, and elaborate on how to cope with the amendments that recently came into effect.
Because its low carbon dioxide emissions will lead to a reduction of the current dependency on natural gas, renewable heat is considered one of the key drivers of the Dutch energy transition. To tackle bottlenecks hindering the development of heat projects and to encourage the use of (renewable) heat systems, the Heat Act (which originally entered into force in 2014) needed to be amended and updated. These bottlenecks mostly concerned the scope of the Heat Act, like the fact that, according to the Heat Act, lessors of housing qualify as heat suppliers, security of supply of energy (third party access in particular), and the financing of heat grids.
By amending the Heat Act, the Minister of Economic Affairs and Climate Policy (hereinafter: ‘the Minister’), aims to tackle these bottlenecks.
What are the most important changes to the Heat Act as per 1 July 2019?
First, the amended Heat Act contains an overhaul of the legislative definitions which recently entered into force (with one exception, see below). The amended Heat Act introduces a new set of definitions such as:
- a “connection” (“aansluiting”) with a distinction between an individual (“individuele aansluiting”) and a centralised connection (“centrale aansluiting”);
- an “internal heat system” (“binneninstallatie”)
- a “built-in pipeline system” (“inpandig leidingstelsel”); and
- definitions for heat (project) parties such as “building owner” (“gebouweigenaar”), “supplier” (“leverancier”); “system operator” (“netbeheerder”) and “licence holder” (“vergunninghouder”).
Other definitions, such as the definition of a heat “consumer” (“verbruiker”) and the internal heat delivery set (“afleverset”) will enter into force on 1 January 2020.
Scope of the Heat Act
Previously, the legislative scope of the Heat Act also included associations of owners, or entities of an equivalent legal status (e.g. a cooperative association), and suppliers (within the meaning of the Heat Act) who act as a lessor for consumers (e.g. building owners). These entities had to deal with significant administrative duties and legal obligations under the Heat Act.
Under the amended Heat Act, these entities are, as per 1 July 2019, exempted from almost all obligations of the initial Heat Act, provided that heat supply is part of the lease agreement.
By making heat supply part of a lease agreement, tenants are legally protected under Dutch tenancy law and therefore don’t ‘need’ extra protection from the Heat Act. As set out in section 1a subsection 2 of the Heat Act, the only obligations that remain in force and still affect these entities, pertain to metering (services).
Severe heat supply failure and compensation
As per 1 July 2019, heat consumers can claim compensation from their supplier in case of severe heat supply failure. This also applies to consumers with a connection to a built-in pipeline system. The heat supplier has to pay the compensation, even if the supply failure did not occur in the suppliers network (but e.g. in a built-in pipeline system). If the latter is the case, the supplier has (notwithstanding other contractual arrangements – see section 3d subsection 2 under b of the amended Heat Act) the right to reclaim the paid compensation from the owner of the built-in pipeline system.
For small-scale heat consumers, these are merely background changes related to consumer protection. In case of a heat supply failure, the heat supplier remains the first point of contact.
Equal to electricity outage and gas failure regulations, the obligation to pay compensation does not apply in case of:
i) an extreme situation causing a severe heat supply failure that cannot be attributed to the heat supplier/heat grid operator; or
ii) heat supply failure that lasted less than 24 hours, but only when no supply failure occurred in the 12 months prior to the heat supply failure.
Security of supply and third-party access
For heat producers, the amended Heat Act introduces a model of so-called 'negotiated access' to the heat network. In order to strengthen the position of these producers, the amended Heat Act ensures that, at the request of a heat producer, the operator of the heat grid needs to enter into negotiations concerning access to the network. A producer can request the network owner (under section 21) to provide the following information:
- available transport capacity on the heat grid;
- the applicable tariffs, if necessary;
- technical characteristics such as pressure or flow rate; and
- the transportation profile.
The amended Heat Act does not contain any provisions on third-party supplier access. Therefore, heat consumers are (still) unable to choose between multiple suppliers.
Finally, a grandfathering provision is added to the amended Heat Act for heat supply agreements prior to 1 July 2019.
Amendments not yet in force
The amended Heat Act also contains provisions on the heat tariff, such as the method to calculate these tariffs as well as the connection fee. These provisions will enter into force on 1 January 2020.
The amended Heat Act also contains a provision on conducting experiments leading to a more sustainable heat supply (and further CO2-emission reduction). This provision will not enter into force until fully determined.
To conclude, with the amendments, the Minister aims to resolve any remaining bottlenecks. For example, as per 1 July 2019, associations of owners, or entities of an equivalent legal status, and suppliers who act as a lessor, are exempted from the Heat Act and no longer face the administrative burden. Further, it is now easier for tenants to claim compensation in case of heat supply failure.
More information on project development and construction in the Netherlands can be found here: https://www.lexology.LoyensLoeff - Project Development & Construction in the Netherlands, and in the Loyens & Loeff publication ‘Building in the Netherlands’. Development projects require a multidisciplinary approach. Loyens & Loeff provides this by combining the in-depth knowledge and expertise of its tax advisers, lawyers and civil law notaries.