In april 2024, the media buzzed about the new package of measures presented by the Authority for Consumers and Markets (‘ACM’) to combat grid congestion. The energy transition has triggered a growing local sustainable energy production and electrification of companies, which has resulted in a scarcity of transmission capacity on the electricity grid. Until recently companies could always count on being connected to the grid or expand their capacity, but are now faced with the denial of such requests. To utilize the available capacity as efficiently as possible, new rules and legal tools are being developed.
Though this package is not entirely new to insiders in the sector – (pilot) projects using these tools were already rolled out in the past few years – this is a good occasion to provide an overview of the main current and future measures and possibilities.
Social prioritization
The trigger for the ACM’s announcement was its decision published on 18 April about the latest member of the grid congestion family: social prioritization. Grid operators are now required, in deviation of the ‘first come, first served’ principle, to give priority to parties that contribute to important social goals when allocating transport capacity. Examples are hospitals and schools, but also the so-called ‘congestion softeners’, such as battery projects. This measure has been greeted with controversy, as it will make parties without a social function having to wait longer for their connection or expansion.
Capacity Restriction Contract (CBC)
In May 2022, the ACM published the decision that made it possible to conclude a ‘capacity restriction contract’ (in Dutch: ‘CBC’). Under a CBC the grid user reduces its transmission capacity at specific times at the request of the grid operator, in exchange for a fee. The aim is to prevent overburdening of the electricity grid during peak hours and to utilize grid space more efficiently. A CBC can also be entered into with a group of connected parties. In that case, the group is responsible for reducing its joint transport capacity during peak hours, and will decide as a group on the way in which to implement this request. In January this year, the first group CBC was signed by the grid operator Liander and the ‘energy hub’ Energie Coöperatie Amsterdamse Haven
(Port of Amsterdam Energy Cooperative).
On 18 April, the ACM also published its draft decision implementing a number of changes, including on the mandatory requirement to enter into a CBC.
Non-Firm Connection and Transmission Agreement (NFA)
In this form of contract, grid users enter into a contract that gives them a variable right to transmission capacity. Transmission capacity can be restricted at times when the grid is overburdened. In exchange for offering flexible use, connected parties pay lower rates. The ACM published a decision on this in early 2024.
Alternative transmission rights
Alternative transmission rights is an umbrella term that includes other time-bound transmission rights besides NFA. One of these is the time-duration-bound transmission right, which entitles the connected party to transmission during 85% of the hours on an annual basis. This right relates to TenneT's high-voltage grid. A time-block-bound transmission right grants the connected party the right to transmission within agreed time blocks. This measure will become available on the regional (medium-voltage) grid. Last March, the ACM published a draft decision in which it proposed to make this possible as of 1 April 2025.
Closed Distribution System (GDS)
A closed distribution system is a privately-owned electricity grid that falls within a defined geographical territory. The owner of the GDS, rather than the grid operator, is responsible for its operation. It is the owner who has to guarantee the quality of the network and ensure that it meets the legal requirements. In February 2024, ACM published a decision obliging GDS’s to participate in congestion management. This way, the flexibility of a GDS can be used to resolve grid congestion on the public grid. These obligations are imposed on GDS operators.
Use it or lose it (GOTORK)
GOTORK (the Dutch abbreviation of ‘use it or lose it’) is a set of conditions that is added to codes to allow for reduction of unnecessarily contracted transmission capacity, so that this capacity can be made available to other grid users. In October 2023, the ACM published a draft decision in the scope of GOTORK.
Group Transport Agreement (Groeps-TO)
As part of the National Grid Congestion Action Programme (‘LAN’), a group transport agreement (in Dutch: ‘Groeps-TO’) is being developed. Under this, a group of connected parties are jointly allocated transmission capacity, to be divided among themselves. Members of the group can help each other flatten the demand for transmission during peak hours. Netbeheer Nederland
(the association of grid operators) published a position paper on this in August 2023. Pilot experiments with this form of cooperation are already running.
The legal playing field in the context of transmission capacity is clearly in a state of flux. This poses new challenges to companies, but definitely plenty of opportunities as well.
