Energy Law

Financial Mismanagement

Financial mismanagement in energy projects can range from incorrect cost allocations in investment estimates to failing to adequately provision for the remediation costs of old gas fields or biomass plants. When a grid operator or energy-producing company prepares its budget without a solid risk analysis for environmental costs—such as residual contamination or legal cooling periods for gas drilling—this can lead to unforeseen shortfalls when environmental remediation treatments must be carried out. This forces involved authorities to demand additional guarantees, putting pressure on the liquidity of the project and causing funding rounds to stall. Moreover, poor financial reporting undermines the confidence of banks and institutional investors, leading to stricter covenants and higher risk premiums on loans for renewable energy projects, such as offshore wind farms or geothermal installations. Ultimately, permitting authorities may decide to enforce additional guarantees or bank guarantees, which can extend project timelines by months or even years, delaying the national energy transition.

Fraud

Fraud in the context of energy legislation often manifests in manipulated revenue calculations or false environmental and safety certificates. For example, an operator of a biomass plant may deliberately report lower CO₂ emissions to qualify for subsidies under the SDE++ scheme, or a consultancy may provide incorrect soil and water samples to avoid delays in the permitting process. Once such malpractices are discovered—often by the Environmental and Transport Inspection (ILT) or a Public Prosecution investigation—large-scale reassessments and fines can reach millions of euros. Project partners may be forced to revise all interim reports, which not only incurs significant legal costs but also puts public acceptance under pressure, as local stakeholders may lose trust in sensitive information. Additionally, cases of fraud open the door for civil lawsuits from neighbors and environmental organizations, leading to operational shutdowns and significant reputational damage.

Bribery

Bribery occurs when officials or external advisors actively accept bribes or other illicit benefits in exchange for expedited or favorable permitting. In the energy sector, this can manifest in unlawful “consultancy fees” disguised as legitimate expenses in zoning plan amendments for large-scale solar parks or gas storage systems. Corruption can run internally through various layers of government—from municipal project leaders to staff at the Ministry of Economic Affairs and Climate—corrupting the entire decision-making process. When judicial investigations prove bribery, not only do the involved officials and executives face criminal prosecution, but all granted permits are legally invalidated and reassessed, often under the supervision of external regulators. This intensifies due diligence requirements for financiers and can result in the exclusion of future tenders, making investors more cautious and undermining trust in the Dutch permitting system.

Money Laundering

Money laundering practices within energy projects often use the acquisition of real estate, participation in consortia, or inflating operational costs as a cover for injecting criminal money into seemingly legitimate infrastructure. Criminal networks, for example, may purchase land positions in wind or solar parks through shell companies, with the legal operations masking the origin of the funds. Municipalities and provinces that are insufficiently alert to unusual pricing or strange cash flows risk becoming facilitators of money laundering, which can be punished by the Dutch Financial Intelligence Unit (FIOD) with fines and administrative enforcement. Financial institutions and notaries, bound by reporting obligations under the Anti-Money Laundering and Terrorist Financing Act (Wwft), may freeze the entire financing structure when suspicious transactions are reported. This not only delays the execution of the project but can also lead to the forced sale of assets under unfavorable conditions, resulting in heavy losses for legitimate investors.

Corruption

Corruption extends beyond individual cases of bribery and involves systematic abuses of administrative power within the energy sector. Consider long-standing lists of agreements where a provincial government allocates subsidy funds to parties who donate to political campaigns, or regional grid operators demanding kickbacks in exchange for priority maintenance of grid infrastructure. Such structural corruption undermines the transparency of subsidy schemes and permits, disrupting fair competition and preventing innovative, clean technologies from having a chance. Once exposed, intense parliamentary and governmental investigations often follow, resulting in motions of no confidence, legislative revisions, and sometimes even intervention by the national regulator. Companies that are unwittingly involved may see their creditors and suppliers withdraw, suffering significant reputational damage and enduring lengthy legal proceedings as a result.

Violation of International Sanctions

In cross-border energy deals, international sanctions—imposed by the UN, EU, or bilateral treaties—can directly affect investments in pipeline projects, electricity connections, or the supply of critical components such as turbine blades. Violating such sanctions by engaging sanctioned partners or suppliers leads to the immediate freezing of contracts, revocation of permits, and the imposition of fines by both Dutch authorities and European bodies. In addition, involved executives risk personal sanctions, such as travel bans and the freezing of personal assets, which undermines management continuity and severely damages decision-making capacity. Projects are halted, funding rounds fail, and the Netherlands’ international reputation as a reliable investment climate is permanently damaged.