August 17, 2023
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The Netherlands conundrum: Low grid capacity, high feed-in

The Netherlands is, in many respects, a role model for the energy transition. With 279 charge points per 100,000 inhabitants, the Netherlands has the third densest charging network in Europe. And its rate of 29% residential solar PV installations among eligible single-family homes is the second-highest in Europe. But assets alone are not enough, meaning there is still room for improvement.

The expansion of the Dutch power grid has not kept pace with the growth of distributed energy resources, resulting in massive constraints in both grid off-take and feed-in. In 2022, grid operators invested 3.9 billion euros in the electricity grid – twice as much as in 2019. The target is to double the country’s power grid capacity in the next 10 years. On top of that, the action plan on enhancing the Dutch grid capacity, which was presented by national and regional governments, network operators, ACM, and market stakeholders last year, revealed that there is a deficit of 13,000 technicians required by network operators along the value chain. 

As such, a shortage in skilled workers and materials means the grid cannot keep pace with the fast-evolving green energy transition. In fact, Dutch Minister for Climate and Energy Policy, Rob Jetten, told Bloomberg, “grid infrastructure is actually my main concern looking at the ambitions we have for 2030-2035...there will be scarcity for eight years or so.” As a result, other solutions that make assets work more intelligently and efficiently within existing grid infrastructure must be leveraged to support the much-needed energy transition.

Off-take shortage capacity – A standard across Europe

The main reason for grid capacity shortages is the electrification of the heating and transport sectors and the subsequent increase in electricity demand. New regulation is accelerating this change. For example, the Dutch climate agreement allows only emission-free cars by 2030, which means an expected 1.9 million electric passenger vehicles by then. The logistics and public transport sectors will also be electrified. If these expectations become a reality, the currently registered 575,000 electric cars will increase four-fold by the end of the decade.

The Netherlands' dense charging network

Number of charging stations in each statistical region across Europe, January 2023

The ever-increasing number of heat pumps in households will simultaneously cause a surge in electricity demand. However, as shown in the map below, the Dutch power grid has already reached its capacity limit. In some cases, there is no more capacity available to connect large consumers, such as charging parks. The map shows the available space in the grid for large-scale commercial users. A competition for available capacities has begun. If we use brains rather than copper, however, this issue can be overcome.

To overcome issues of cost and time when it comes to grid expansion, energy companies in the Netherlands are realizing the need for intelligent power off-take, or demand-side management. The government is also pushing this through measures, such as the action program ‘Smart charging for everyone’, which aims to make every destination charging session smart by default by 2025. The end goal is to minimize the need for grid expansion as much as possible, and maintain (or accelerate) the current speed of the energy transition. 

Intelligent and holistic energy management is the key here. For example, peak shaving allows EV charging parks to automatically shift loads to reduce peaks without compromising charging comfort. Additionally, smart integration of photovoltaic and battery technology into the charging infrastructure fosters independence from the power grid. This makes EV charging infrastructure more environmentally friendly, cost-effective, user-friendly, and faster to install. What’s not to love? 

For prosumers – households that also produce their own energy – the usage of smart energy management systems is becoming increasingly important. By controlling heavy consumers, such as EV chargers or heat pumps, and maximizing the usage of self-produced solar power, reducing strain on the grid. This means less reliance on slow and costly grid extensions.

The Dutch feed-in paradox

However, the increasing amount of power off-take is not the only challenge for the grid. Since 2004, the government has incentivized the expansion of rooftop PV through net metering. Initially, a maximum of 3,000 kWh/year of electricity per household could be net metered. Since 2012, the limit has been abolished, resulting in only minimal incentives for household batteries. This has resulted in a high PV installation rate and uncontrolled feed-in, leading to significant feed-in congestion and rising costs to balance the grid. While the impact of a single residential PV installation is rather small, the increasing number of installed systems heightens their collective impact. To cover the rising cost of stabilizing the grid, energy suppliers such as Vandebron are starting to charge return delivery costs for PV owners based on the amount of energy fed back into the grid per year. While this may temporarily abate energy suppliers’ rising costs, it is more of a band-aid solution rather than a long-term solution.

One way to resolve feed-in congestion is a regulatory shift from net metering phase-out to self-consumption. By incentivizing the use of batteries and optimized self-consumption, self-produced solar power will be used intelligently rather than simultaneously fed back into the grid at times when demand is low. Energy management systems are a crucial tool to enable self-sufficiency optimization.

Building on top of this, another core solution is dynamic tariffs, which give end users financial incentives to consume electricity during low price periods when production is high. In the Netherlands in the first half of 2023 there were already around 120 hours of negative prices – this is directly correlated with an increase in variable renewable energy (VRE) in total generation. Intelligent control of feed-in power, which is adjusted according to these fluctuating electricity prices, saves users money, encourages better integration of renewables and helps stabilize the grid.

No energy transition without smart solutions

The country will fall behind if they don’t shift their focus to smart solutions

Account Executive Mascha Bandow says, “although the Netherlands has thus far been a leader in the energy transition, the country will fall behind if they don’t shift their focus to smart solutions. We cannot rely on costly and slow grid extensions alone. Nor is abundant PV power enough. Renewables must be integrated with electricity-consuming assets, energy storage and dynamic tariffs, which ensure that clean energy is produced, distributed and consumed in the most efficient and intelligent manner.”

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