Smart use of scarce power grid capacity can ease grid congestion

• Grid congestion a growing problem for businesses seeking to grow or go greener

• New legislation vital to improve use of scarce grid capacity

• Collaboration makes it possible to benefit from ever better and cheaper technology

Power scarcity an obstacle for companies looking to grow or electrify

As the energy transition progresses, the supply of green electricity is growing. This is leading to more and more places in the Netherlands experiencing insufficient grid capacity to transport all the electricity generated. The problem is also affecting companies that have applied for new or larger grid connections. Because the power grid is not growing fast enough to keep pace, grid congestion is becoming increasingly common in various parts of the country. This means grid operators often have to say 'no' to companies that want to scale up their power connection, build new premises with a connection or further electrify. While the new Dutch Energy Act will not ease the situation until 2025, the Netherlands Authority for Consumers and Markets (ACM) is already adjusting the rules to facilitate greater flexibility in the purchase and supply of electricity so that peaks and troughs can be absorbed better. Together with grid operators and local authorities, companies are also looking for solutions to make smarter use of scarce capacity, according to a report by ABN AMRO that maps out the causes of and solutions for the growing pressure on the power grid.

Grid operator must use spare grid capacity for larger or new connections

The problems on the power grid are largely the result of the energy transition – the demand for electricity is expected to more than double by 2050. According to ABN AMRO, the power grid is not growing fast enough to keep pace with the electrification of energy demand, due to lengthy permit processes and a shortage of qualified personnel. Shocks in electricity production are also increasing due to the decentralised generation of, for example, solar and wind energy in changing weather conditions. Due to the huge increase in the number of solar panels, the supply of electricity is sometimes greater than electricity consumption, and more than the grid can absorb. While in many cases there is still physical space available on local grids, it may be reserved for companies that were allocated more space in the past than they actually need. Grid operators do not always recover space that has already been allocated to other customers. Companies are often unwilling to give up this unused space because they may need it later to grow or to electrify processes. Nevertheless, grid operators are already legally required to allocate the unused contracted capacity to other companies, unless companies that previously had more space available can prove they are actually going to use it.

Energy collectives offer an opportunity to accelerate the energy transition

According to ABN AMRO, the current legislation is not appropriate at a time when grid capacity is scarce and renewable energy is playing an increasingly important role. "In anticipation of the Energy Act, ACM is already rapidly adapting legislation to make much smarter use of the scarce capacity available on the electricity grid. For example, it enables companies to acquire 'time-bound transport rights', so that grid capacity can be used when the power grid is being used less intensively," says Albert Jan Swart, Sector Economist for Industry, Transport and Logistics at ABN AMRO. “In the meantime, business owners can ease the pain of existing obstacles by investing in solutions that can be used right now, such as generating their own solar or wind power, and using generators, batteries or energy management systems. Collaboration between companies, grid operators and specialised service providers will make it possible to take full advantage of new legislation and ever better and cheaper technologies in a few years' time."