The nationalisation of the Netherlands’ largest city heating operators needs to happen quickly to get the transition to cleaner energy back on track, but it remains unclear who will pay for the multi-billion-euro takeovers, the Financieele Dagblad said in an analysis on Tuesday.

The government is keen to nationalise the networks as a sweetener to encourage people to stop using gas-fired central heating. Officials believe they would be more willing to make the switch if they were not being forced into the hands of a private company, with no choice of supplier.

In particular, the government plans to bring the networks owned by Vattenfall, Eneco and Ennatuurlijk into public ownership as soon as possible. Together, the three companies account for about 85% of existing heat networks.

Progress on expanding district heating has largely stalled in recent years, partly due to uncertainty surrounding the new legislation, which has now been approved in the senate.

The new legislation states that both existing and future district heating networks must be more than 50% owned by the Dutch state.

With nationalisation looming, private operators have scaled back investment, while rising costs and the poor public image of district heating have further slowed growth. Several major projects in Amsterdam, The Hague and Utrecht have been put on hold because of the disputes.

Experts told the paper that private companies’ expertise is essential. Frans Rooijers, a former director of consultancy CE Delft, says state-owned Energie Beheer Nederland (EBN) should take over the major operators quickly.

“The execution power sits with the private companies, not with councils setting up small heat firms from scratch,” he said.

EBN is expected to play a central role and has been given funding to build up a national heat organisation. However, it lacks the capital needed for acquisitions and estimates for the takeovers range from €2 billion to €5 billion.

Under current rules, EBN can hold no more than a 40% stake, meaning other public bodies, such as local authorities, would have to contribute. Pension funds are unlikely to fill the gap, as the new law offers minority shareholders little influence, the paper said.

Council plans

Meanwhile, councils are pressing ahead with their own projects, hoping public ownership will restore trust after years of complaints about rising bills. Ultimately, experts say affordability will determine success, likely requiring substantial subsidies until gas prices rise enough to make district heating more attractive.

EBN director Herman Exalto told the paper that public support is eroding. “If we wait too long, the backing disappears,” he said. “Those takeovers really need to happen within two years.”