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Dutch Grid Fee Reforms to Boost Energy Storage Deployment

published: 2024-05-15 15:47

The Dutch government has introduced new regulations to reduce grid fees through the implementation of "Non-Fixed Agreements" (NFA) and time-weighted rates, which may increase the returns on storage systems and are expected to double storage deployment, despite reservations from storage project operators. Storage system integrators are optimistic about these rule changes.

Dutch Energy Storage Market Development

The Dutch energy storage market has lagged behind other European countries partly because operators of battery storage systems must pay high grid fees. Under the Netherlands' technology-neutral approach, these grid fees only apply to power drawn from the grid. In contrast, Belgium and Germany do not charge grid fees for battery storage systems.

The Dutch Authority for Consumers and Markets (ACM) has been considering flexible adjustments to its grid fees but faces implementation challenges while maintaining the principle of technology neutrality. Large-scale solar power facilities, wind power, and electric vehicle charging infrastructure have increased the pressure on the grid, prompting the ACM to make changes amid stakeholder pressure.

Starting January this year, storage systems will adopt a non-fixed connection operating method, reducing grid fees by about 50%. However, for 15% of the time, these systems cannot draw power from the grid due to peak grid pressure. Additionally, a time-weighted rate will be introduced, meaning storage system operators will pay more when the grid is under stress and less when it is not. These rules are technology-neutral and can also apply to large industrial users with flexible power consumption, who will receive advance notice of "free" periods each day.

Reduction in Grid Fees

These two changes will reduce grid fees by approximately two-thirds. Since grid fees account for 60% of the revenue for storage systems, this represents a significant improvement for their business case.

However, the inability to charge during 15% of the time reduces the flexibility for storage system operators to monetize their assets. Jan Stuyt expressed skepticism about the benefits of such an agreement. Stuyt said, "It is difficult for us to comment on the future development of grid fees and the impact of the NFA. The key point is that the government has recognized the importance of operating large-scale battery storage systems for the Netherlands and the grid. We believe equality and transparency are crucial to solving this puzzle. We will wait to see the impact of the NFA on battery storage system development."

The inability to charge during 15% of the time is not expected to significantly impact storage system revenue, as these periods typically coincide with peak electricity demand. However, he warned that if grid operators misalign the restricted charging periods with actual conditions, such as underestimating solar power generation, it could negatively affect storage project operations.

Impact on Storage Deployment

Without grid fee reforms, it is projected that the Netherlands will deploy less than 1GW of utility-scale battery storage systems by 2030, as most storage projects would not be profitable.

With the proposed grid fee reforms, utility-scale battery storage system deployment is expected to exceed 2GW by 2030. Furthermore, additional policy support is anticipated, which could further drive storage deployment. From 2025, the Dutch government will provide subsidies for battery storage systems paired with solar power facilities.

Source:ESCN

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