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The first month of the year is behind us. Time to have a look into what the rest of the year may hold. While I may not be a trend watcher, many years of experience in the energy sector, have kept me fairly informed about the dynamic trends within this industry. Especially in 2024, there are intriguing changes ahead that will influence the energy market in the Netherlands. In this blog, I’ll delve deeper into five of these developments that, in my view, will have the most impact.
Growing grid congestion: Challenge for the energy infrastructure
An unavoidable problem we continue to face is the increasing strain on the electricity grid, known as grid congestion. The demand for energy keeps skyrocketing, and in many parts of the country, the power grid has been maxed out for some time. Even provinces like Groningen and Friesland are now experiencing the consequences of congestion, with companies being put on waiting lists for connections.
In recent years, grid operators have made significant investments in expanding and reinforcing the grid. Fortunately, the government also recognises the importance of this issue. The caretaker government recently indicated its intention to grant TenneT a €25 billion loan to ensure the company can make the towering investments in the grid in the coming years1.
However, more than just physical infrastructure investments are needed to meet the growing energy demand. To reduce grid congestion, adjustments in how we as a society manage energy are crucial. Smart energy management is becoming increasingly important in this regard.
CSRD legislation: Mandatory reporting on sustainability
As of January 1, 2024, the CSRD legislation has come into effect. CSRD stands for Corporate Sustainability Reporting Directive, an EU initiative requiring sustainability reporting from companies to demonstrate their sustainable and socially responsible business practices. CSRD applies from 2024 to companies already covered by the Non-Financial Reporting Directive and from 2025 to large companies meeting at least two of the following criteria: more than 250 employees, annual turnover exceeding €40 million, or total balance sheet exceeding €20 million.
Even though many companies have another year before they are required to report, it’s wise to start preparing now. In 2024, it’s crucial to gather the right data so that you can report adequately next year and meet the set requirements. Ensure your data collection processes are in order!
Continued growth of green energy²
More and more businesses and households are transitioning to renewable energy sources like solar and wind power. Globally, we’ve seen a record growth of over 500 gigawatts in solar, wind, and hydroelectric power generation last year, a surge of over 50% compared to the previous year. For example, in 2023, the installed solar energy capacity in the Netherlands grew by a record 25%, resulting in nearly five times the total solar capacity at the end of last year compared to the end of 2022. With an average of 3.5 solar panels per inhabitant, the Netherlands leads globally in solar energy per person.
The International Energy Agency (IEA) predicts that green energy sources will continue to grow significantly in the coming years. Sustainable energy sources are expected to make up an increasingly larger share of the global energy supply, driven by technological advancements and growing political and social pressure to implement more sustainable energy solutions.
This is a positive development for the climate and the set climate goals, but it also presents challenges that we all—businesses, government, and consumers—must address.
Uncertainty abolition of netting arrangement
The netting arrangement incentivises the use of renewable energy by allowing surplus solar power to be fed back into the grid.
The government had planned to gradually phase out this arrangement starting from January 1, 2025. Each year, the percentage of energy that can be netted decreases, resulting in a lower compensation for surplus electricity. The aim of phasing out the arrangement is to incentivise people to better align their energy consumption with solar energy production. Unfortunately, this week, the Senate decided to maintain the net metering scheme for the time being. I see the phasing out of the scheme as crucial in the energy transition and hope that these plans can still be implemented later this year.
The uncertainty surrounding the netting arrangement is already reflected in solar panel purchases. The Netherlands experienced a record growth in solar panel installations in 2023. However, this growth primarily occurred in the first half of the year. In the latter half of last year, this growth significantly slowed down, and this trend continues in 2024. It’s expected that the number of new solar panels will stabilise in the coming years at pre-energy crisis levels.
Although uncertainty prevails now, I don’t expect significant changes until the abolition of the netting arrangement actually takes place. This may lead to increased interest in battery storage, as people seek alternative ways to store and use self-generated energy. It will be interesting to see how the market for home batteries and storage systems responds to this changing dynamic.
I advise businesses to prepare in 2024 for this changing arrangement and make necessary investments, such as in a robust energy management system.
Flexibility is key
The more we rely on renewable energy sources, the greater the challenge of balancing energy supply and demand.
A major drawback of green energy sources is the unpredictability of energy production. Solar and wind energy generation heavily depends on weather conditions. No sun and no wind means no green power.
We can’t solely rely on expanding and strengthening physical infrastructure, as it’s both impractical and costly to install heavier cables everywhere. Additionally, the unpredictability of energy sources like solar and wind demands a more flexible energy demand. It necessitates an adjustment in how we use energy.
Flexibility will become the new norm in the business world, not just in the energy sector. More and more companies are transitioning to flexible contracts. To address grid congestion, we’re witnessing an emerging trend where companies offer flexible electricity capacity in exchange for compensation. This includes innovations such as customised sustainable energy production, adjusting business processes, and smart energy storage.
A good example of how society can adapt to energy differently is capacity-limiting contracts. Enexis recently entered into a “capacity-limiting contract” with a steel plant3. During peak hours, the company must adhere to the old transmission capacity, but during certain times, the contract provides extra transmission capacity. This allows the steel plant, previously hindered by a halt on new connections in the region, to add a third factory hall.
At the end of last year, Netbeheer Nederland proposed two new contract types to the regulator, the Authority for Consumers & Markets (ACM), to address grid congestion: time-block-bound and time-duration-bound transmission rights4. The former offers transport capacity outside peak times, while the latter guarantees a fixed number of hours per year, flexibly deployed by the grid operator.
By incentivising users to shift their energy consumption to off-peak times, we can utilise available capacity more efficiently. This not only relieves pressure on the grid but can also lead to lower costs and reduced necessity for grid investments.
Conclusion: Energy sector in transition
The energy market in the Netherlands is on the brink of significant changes. The challenges of grid congestion, implementation of CSRD legislation, abolition of the netting arrangement, ongoing growth of green energy, and the need for flexibility in the network are just some of the developments we’ll see this year and beyond. As an industry, we must be proactive, innovate, and adjust our strategies to navigate this rapidly changing and critical time. It’s a dynamic period for the energy sector, with ample opportunities for both businesses and consumers to contribute to a more sustainable future.
Curious about how you can contribute to a sustainable future? MeterInsight is here to help. Contact us today and discover how MeterInsight Energy Management offers advanced tools and benefits to guide your organisation towards a more sustainable future.
Main sources (Dutch only)
- NOS.nl, Kabinet komt met miljardenlening voor netbeheerder Tennet, 12-01-2024
- Nationaal Solar Trendrapport 2023 | Nu.nl, “Nederland is wereldkampioen in het plaatsen van zonnepanelen”, 31-01-2024 | Change.inc, “Nederland nu ook wereldkampioen zonne-energie”, 31-01-2024 | Nu.nl – “Opnieuw recordgroei van wereldwijde zonne-energie doelen klimaattop in zicht”, 11-01-2024 | Klimaatweb.nl, “IEA: Wereldwijde recordgroei wind- en zonne-energie” 1-06-2023 | NRC, “Vorig jaar flinke toename van bronnen voor hernieuwbare energie”, 11-01-2024
- Enexis.nl, “Uitbreiden ondanks schaarste: staalbedrijf en Enexis sluiten flexibel contract af”, 17-01-2024 | Energeia.nl, Enexis sluit ‘tijdvenstercontract’ met staalfabriek, 18-01-2024
- Netbeheheer Nederland.nl, “Netbeheerders dienen voorstel voor alternatieve transportrechten in bij de ACM”, 19-01-2024
