After years of financial problems, the Rotterdam Municipal Executive wants to stop the construction of the sustainable heat pipeline from the port of Rotterdam to Leiden. The ailing heat company of Rotterdam, in which the municipality has invested about 300 million euros over the years, is heading for bankruptcy.
The council decision, which the city council still has to vote on next week, is a major setback for the energy transition in South Holland. The pipeline to Leiden also had to supply regional municipalities such as Katwijk, Leiderdorp, Oegstgeest, Voorschoten and Zoeterwoude with industrial heat from waste processor AVR and Shell in Rotterdam.
The first part of the heat pipeline from Rotterdam to The Hague may still be laid by energy company Gasunie, the owner and operator. The Heat Company of the Municipality of Rotterdam was to lease the pipeline from Gasunie for the heat transport.
One of the reasons for the failure is that, according to the European Commission, the private parties involved are willing to contribute too little, says Alderman Arjan van Gils (Finance and Majeure Projects, D66) in an interview with NRC. For example, Rotterdam would pay a disproportionate amount and run a risk, which could lead to state aid.
Read a reconstruction about the Heat Company: Decay of a Rotterdam prestige project
Private parties, such as AVR, Shell and energy companies Vattenfall and Uniper, have discussed a contribution of “several millions”, the council writes to the city council. That contribution would stand in “stark contrast” with the – unknown – contribution of the municipality of Rotterdam.
‘All imbalance’
“It cannot be the case that one party keeps putting money into it endlessly and taking on all the risks: that is all imbalance,” says Van Gils. The alderman regrets that private parties have no longer been willing to commit themselves to this sustainable project. “My image, when I look at it for a long time, is that the Warmtebedrijf has walked around with a wide arc.”
The risks for the municipality of Rotterdam are also too great, because there are still many uncertainties surrounding the contract with Gasunie, says Van Gils. Where and how the pipeline should be connected from the port of Rotterdam to Leiden has not yet been determined and could cause delays for the project.
Het Warmtebedrijf was founded in 2006 to heat some 300,000 to 500,000 homes in the region with residual heat from the port. But the Heat Company was stuck at 60,000 homes. It was therefore decided to extend the pipeline to Leiden. The initial plan for a pipeline via Zoeterwoude was exchanged at the end of last year for a pipeline via Rijswijk.
Both the Rotterdam Court of Audit and a council inquiry committee have issued a critical report on the debacle with the Heat Company. Due to fear of losing face, wishful thinking and the structural underestimation of risks, the Heat Company became a political and financial fiasco, according to an earlier reconstruction of NRC.