My Company Cannot Go On Due to Grid Congestion – What to Do?

The Dutch electricity grid is unable to cope with the surge of power consumption, and extending the grid in the near future is not possible. Since the grid is close to its maximum capacity, we are faced with grid congestion: the impossibility to create new connections and expand transmission capacity. The consequences of this problem can be seen in many places already: plans for a new supermarket in the Noordoostpolder region cannot go ahead, housing projects suffer delays, and companies cannot set up business or are even considering leaving the Netherlands. 

Grid managers are working hard to expand the electricity grid, but this will take years. Over the past years, the ACM has made several solutions legally possible as alternatives. In this article we will give you a bird’s eye view of the various solutions and the steps you may take to put these into practice. 

Almost all solutions have in common that transmission capacity available is used more efficiently through the further coordination of consumption between companies. 

In a Group Capacity Restriction Contract (in Dutch“Groeps-CBC”), a group of companies reduces their transmission capacity at specific times when the grid manager so requests, in exchange for a fee. The aim is to prevent local overloading of the electricity grid during peak hours and to utilize grid space more efficiently. The way in which they implement this request is decided by the group.

Group Transmission Agreement (in Dutch “GTO”) is a form of contract in which several companies located in each other’s proximity enter into a collaboration (energy hub) and jointly conclude one transmission capacity agreement with the grid manager. This GTO serves to replace the individually contracted transmission capacity (in Dutch: “GTV”).

Closed (distribution) systems have already existed for some time, but may also be used as a solution for grid congestion. There is one main connection to the electricity grid of the grid manager, behind which is a local network within a delimited area. A closed system is subject to strict requirements.

Cable Pooling works with a single main connection to the electricity grid, behind which a maximum of four companies located close to each other are connected. This group uses that main connection as if it were one single connected party, and jointly concludes a connection and transmission agreement (in Dutch “ATO”) with the grid manager. 

Some companies may be eligible for transmission capacity sooner on the basis of Social Prioritization. In deviation of the ‘first come, first served’ principle, grid managers are obliged to give priority to parties that contribute to important social goals. Examples are hospitals and schools, but also ‘congestion softeners’, such as a battery project.

Finally, there are alternative transmission rights, e.g. a time-bound contract or a (completely) variable transmission right. Since these are not really (collective) solutions for grid congestion, they will not be discussed further in this article.

By choosing one of the above-mentioned solutions, you will open up growth perspective; participating companies can implement their expansion or sustainability plans after all, despite grid congestion.

The idea is that the contracted transmission capacity (GTV) to be divided by the grid manager will be lower if it is allocated to partnerships. This way, room will be freed for companies in the queue to be provided with GTV as well, and with a connection, if they did not have one already.

An energy hub may save costs since its transmission costs are lower, and the attractiveness of investments – for example in solar panels or batteries – will increase, since their costs can be shared within the group and their payback time will be shortened.

Now that you know the solutions and benefits available, the question is how to put them into practice. We advise that you go through the following steps.

Explore

1. Energy demand: Identify your own current and future energy profile and demand for energy
2. Environment: Explore which nearby companies are (possibly) encountering the same problems and might be interested in joining an energy hub
3. Information: Request the necessary data from your grid manager and metering company.
4. Feasibility analysis: Analyse the technical, financial and legal feasibility of the intended solution

Plans and designs

1. Announcement: Report your plans to the grid manager in advance
2. Collaboration: Set out the organisational, technical and legal frameworks for the collaboration in the energy hub
3. Selection of service provider: In order to put the solution into practice, you will often need a collective energy management system. Select a service provider that will supply this system and its associated services
4. Contact grid manager: If necessary, submit the application for the solution concerned to the grid manager and discuss the (pre)conditions that apply

Realize

1. Recording: Record the arrangements made between the companies – please refer to the tool kits of Invest-NL and Kennedy Van der Laan for inspiration and template contracts
2. Contract with grid manager: If applicable, conclude a contract with the grid manager
3. Technical implementation: Implement and realize the necessary facilities, (collective energy management) systems, and assets for the performance of the solution
4. Go live: Start the performance of the solution according to the arrangements made, and monitor compliance with those arrangements

Even though grid congestion is causing big problems, more is possible than you might think. Please follow the step-by-step plan and discover the options for your company.