Homes with poorest energy ratings lag behind in energy transition

• Dutch housing market must comply with EU energy efficiency regulations by 2030

• Current progress suggests EPBD targets will be met

• Delayed renovation of homes with low energy labels poses a risk to a successful energy transition

Dutch housing market undergoing energy transition

ABN AMRO’s latest Housing Market Monitor reveals that the Dutch housing market appears to be on track to meet European energy efficiency targets. In this quarter’s focus report, the bank examines how the energy transition is progressing in the Dutch housing market. An analysis of energy labels over time shows that the average energy consumption of homes in the Netherlands has fallen by over 7 percent since 2020. ABN AMRO is also forecasting energy consumption towards 2030 across three scenarios. In the baseline scenario, the bank predicts that, following the current trend, energy consumption in 2030 will average 164 kWh per m² per year, a decrease of 17.8 percent compared with 2020. Under this scenario, the Netherlands would meet the target specified in the European Energy Performance of Buildings Directive (EPBD), which will be incorporated into national legislation in 2026. The EPBD requires member states to significantly reduce the average energy consumption of their housing stock, focusing in particular on homes with the poorest energy labels. However, the forecast shows that the share of the lowest-performing energy labels will remain unchanged in all scenarios, jeopardising the achievement of these targets. Apart from facing the problem of high renovation costs, these households also often have lower incomes and less knowledge about sustainability improvements.

Connection costs for heat networks still a barrier

The Netherlands aims to renovate 2.5 million homes by 2030, with 1 million of these being rental homes and 1.5 million privately owned. From 2027, all homes with energy label G, and from 2030 all those with label F or lower must be upgraded to at least label C. The government is focusing on measures such as insulation, heat pumps and the expansion of collective heat networks to achieve these goals. Current progress is largely the result of stringent requirements for new buildings and sustainability measures in existing homes. For example, new-build homes are now natural gas-free by default. At the same time, the proportion of existing homes with lower energy ratings is gradually decreasing. Recent policy changes, however, have slowed the pace. The government has cancelled the plan to mandate hybrid heat pumps from 2026, and the net metering scheme for solar panels will be fully phased out by 2027. The expansion of district heating grids, which reduce carbon emissions and alleviate pressure on the electricity grid, is still a key element of the Netherlands’ sustainability strategy. In 2024, approximately 500,000 households were connected to such networks, and the goal is to double this figure by 2030. However, high connection costs are still a significant barrier, prompting the exploration of additional measures such as subsidies and price caps.

Poorest-performing homes falling behind

Despite progress, renovating homes with energy label F or G remains a challenge. “The Dutch housing stock is generally performing well in terms of energy efficiency,” says Mike Langen, Senior Housing Market Economist at ABN AMRO, “but when we look at subsidy applications and energy labels among homebuyers, we see that the pace of improvement is slowing. It is often technically complex or financially unattractive to make these homes more sustainable, especially for owners on lower incomes. This is reason for concern, as regulations stipulate that half of the improvement in energy efficiency must come from homes with the lowest energy ratings. But the homes with the poorest energy labels risk falling behind, and this could jeopardise the achievement of all EU targets. Not only can targeted renovations contribute to climate goals, they can also significantly reduce homeowners’ monthly energy bills. To support these households, the government will need to take more measures.”

Download the full report here.