The energy transition in the Netherlands faces a critical obstacle: the lack of innovative power and agility to switch to electrical infrastructure and attract investment.
Jan Vos, Chairman of NedZero, notes that this situation stems from insufficient planning by public institutions. «In the Netherlands, grid companies are publicly owned; prices have been regulated by the ACM authority to keep them low, but this led to an underestimation of the renewable boom and the speed of change required to adapt», explains Vos. According to him, this decision to maintain low prices has impacted the grid’s ability to keep pace with the rapid growth of wind and solar energy in the country.
Vos adds that this trend of underestimating change is not exclusive to the Netherlands, but is a common challenge among established institutions in the energy transition. “Institutions, especially in the energy transition, tend to underestimate change and its speed, and this particularly impacts the electricity grid across the country”, points out the NedZero Chairman.
Over recent years, the expansion of wind and solar capacity in the Netherlands has brought renewable generation up to 56% compared to a modest 11% in 2017. However, the national grid has shown significant delays in its adaptation capacity, especially in connecting the major investments made in offshore energy.
This historic underinvestment directly affects transmission system operators (TSOs) in the Netherlands, who did not anticipate the accelerated pace of transformation towards clean energy. “State institutions, especially the TSOs, did not foresee the pace of change, and this means a delay in adapting the grid to incorporate intermittent energy sources”, says Vos. In his view, the grid’s planning structures, designed for large-scale power plants, are ill-prepared to integrate variable generation sources, such as wind and solar.
Challenges to full decarbonisation by 2030
Beyond the urgent need to modernise infrastructure, Vos highlights that one of the biggest challenges to achieving full decarbonisation of the electricity system by 2030 is solving the intermittency of renewable energy. “The last 15% towards full decarbonisation is the hardest, due to periods of low wind and solar generation,” states the NedZero Chairman, referring to the so-called ‘Dunkelflaute’ phenomenon, where renewable production falls significantly. These periods represent a balance and supply challenge that the Netherlands and other European countries must address with energy storage and backup strategies.
To tackle this intermittency, Vos stresses the importance of strengthening interconnections with other countries, such as Spain, the United Kingdom, and France, enabling the import of solar and nuclear power during times of low domestic production. “Interconnection is key; we are establishing the LionLink, an interconnector with the UK, but more connections are needed to achieve supply stability,” he asserts. Additionally, he emphasises that different time zones within European countries offer opportunities to import power during peak demand hours.
Another short-term solution, Vos says, is the implementation of energy storage systems. “Battery prices are dropping rapidly and they can be crucial for balancing the load within 24 to 48 hours”, he explains, adding that for large-scale storage solutions, technologies such as hydrogen and carbon capture and storage (CCS) gas will be needed. The Netherlands requires between 21 and 25 gigawatts of generating capacity, a target that will be difficult to meet without support from storage solutions to cover demand during low renewable production periods.
Vos also stresses that the transition is not only about adapting to renewables, but also to a fully electrified grid across most economic areas. “Everything will be electrified. We will use hydrogen, nuclear, and other energy sources, but electricity will be the dominant base, and we will need very strong grids in the coming decades”, he affirms, suggesting that the infrastructure should be oversized to support future growth in electricity demand.
The need for a long-term investment strategy
For Vos, the energy transition in the Netherlands and Europe in general requires an investment strategy that takes into account economic sustainability and social justice. He proposes that the government assume part of the grid investment costs, instead of passing them directly onto consumers and businesses.
“During a transition, more investment is needed than in business-as-usual scenarios, and the government should take on part of that financial burden instead of it falling on citizens”, suggests Vos, who highlights that the lifespan of these investments extends over 100 years, allowing for gradual amortisation.
From an economic justice perspective, Vos considers it essential that low-income citizens are not disproportionately affected by rising electricity costs. “Electricity prices must be fair. We need to avoid energy poverty and ensure everyone pays according to their means”, he says, stressing the importance of preventing the exclusion of vulnerable sectors during the transition process. He also suggests that amortisation plans for these investments should extend to 100 years, as much of the existing infrastructure, built decades ago, remains operational today.
Finally, NedZero’s Chairman calls for electrifying industrial processes as the most efficient path to decarbonisation. Although many industries still rely on fossil fuels, Vos stresses that “electricity will be the dominant base in the coming years, and it is crucial to electrify industrial processes to avoid long-term costs with more expensive alternatives, such as hydrogen”.
In his view, accelerating the shift towards electrification is an urgent matter in addressing energy challenges in the current context of climate change and geopolitical risks. Technology for the direct electrification of industrial heat processes is already available and can already meet 70% of the energy demand.
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