Port of Amsterdam
The Port of Amsterdam has spearheaded an initiative encouraging local companies to join forces and tackle the challenges of an overloaded power grid. For the first time in the Netherlands, Liander, the grid operator, is working with private companies in a group capacity reduction contract: 29 companies have formed an energy hub and made agreements with Liander to coordinate their energy consumption. These energy hubs enable the smart use of available grid capacity.
Grid congestion is ‘a spanner in the works’
With 1,200 hectares of port and industrial area, the Port of Amsterdam is one of Europe's largest seaports. It’s responsible for operating and managing this vast area, and fulfils the role of market master, matchmaker and co-creator. It also fosters a good business climate in the area, bringing parties and sectors together to initiate new activities in the port and promote development.
The port has ambitious sustainability goals, with an aim to be climate neutral by 2050. Together with the companies located in the port area, Port of Amsterdam wants to switch from fossil fuels to green energy. But that's where the sustainability ambitions mostly run aground. The electricity grid is congested and there is a queue for new connections.
This not only inhibits the port from achieving its sustainability ambitions, but also affects businesses in the area. The great uncertainty about getting a connection prevents the port from developing further. There was also uncertainty from established companies in the area about expanding their power supply, which hindered their growth.
To see how the available capacity could be better utilised, Port of Amsterdam sat down with grid operator Liander. It turned out that the grid had enough availability at most times, because companies do not use their maximum contracted capacity at every moment of the day. Kennedy Van der Laan was called in to advise on the design and structure of the cooperation between the companies themselves and with Liander. In this way we wanted to ensure that energy consumption could be handled more efficiently and flexibly.
Large-scale approach
New congestion management rules from the Dutch authority for consumers and markets, ACM, opened the way for a capacity limitation contract (CBC, in its Dutch initials) at both an individual and group level. Liander and Port of Amsterdam believed that a group-level CBC would be the most efficient solution. In a group, companies can unite and make agreements to coordinate energy use and electricity input in order to prevent peaks in usage. Because companies in the Amsterdam port wanted to unite in an energy cooperative, the Energie Coöperatie Amsterdamse Haven (ECAH), this project offered Liander the opportunity to take a first step into this unexplored area.
what is a CBC?
A capacity limitation contract (CBC) allows the grid operator to prevent grid congestion. For a fee, companies with a CBC waive the full use of the agreed connection and transmission capacity. This allows the grid operator to issue more transmission capacity to parties queuing for it. With a group CBC, the grid operator invokes a limitation (only) at the group level. Within the group it can then see who is willing to temporarily reduce their electricity consumption or who can turn to their own power supply, such as batteries. In the process, consumption and local generation can also be offset against each other, meaning that a participating company will not, if ever, actually suffer the disadvantages of a limitation in its transmission capacity.
Everyone on board
To establish a group CBC, we had to get companies in the port on board. Thanks to Port of Amsterdam's expertise in bringing companies in the area together, and Kennedy Van der Laan's expertise regarding the legal aspects of congestion management, all parties at the table came to a solution together. It was important to accommodate both the interests of companies and the grid operator.
For the companies in the port area, a priority is being able to consume energy freely without limits hanging over them. For some parties, obtaining a connection was problematic. Parties that were already connected sought a financial incentive to abandon their existing transmission capacity. For the grid operator, they needed to be able to meet connection requests while ensuring grid security.
The grid congestion problem is not unique to the Amsterdam port: throughout the Netherlands, the congestion map is turning red, and estimates show that about one-third of the large companies in the Netherlands have little more room to grow or become sustainable due to the full power grid. Local congestion problems arise because there is not enough space to meet electricity transmission demand. This affects both companies that purchase power and those that want to (re)supply green power to the grid.
In the case of Port of Amsterdam, Kennedy Van der Laan negotiated on behalf of Port of Amsterdam with the grid operator about the conditions of the group CBC and the entry agreement for participating parties. From its experience with previous grid congestion issues and setting up energy hubs, Kennedy Van der Laan was able to tailor the group CBC to the specific needs in the Amsterdam port area. In addition, Kennedy Van der Laan organised the contractual fixation of the establishment of the energy cooperative and agreement between the members with mutual implementation agreements.
"The joint effort of this group of companies and the knowledge of both Liander and Kennedy Van der Laan has ensured that the electricity grid can be better utilized and that the sustainability ambitions in the port area can move forward again. It is a wonderful example of what is possible when there is innovative and out-of-the-box thinking and cooperation," said Wilko Tijsse Claase, member of Port of Amsterdam’s General Counsel.
Figurehead: the first Dutch CBC
Over thirty companies in the port area have joined together in an energy hub to establish a group CBC with Liander. This makes it the first of its kind. These companies that were on the waiting list for a connection could therefore be connected.
By collating contracts into a group contract, the existing electricity network can be better utilised. Thanks to the scope offered by this tailor-made contract, companies in the port area can move forward with their sustainability ambitions.
Wondering if a group contract or other solutions can help with your issue due to grid congestion problems? Or are you looking for broader advice on setting up an energy hub? Please contact Astrid Sixma and Quirine Tjeenk Willink.
