ESNL responds to ACM consultation on feed-in tariff: recognize unique role of energy storage

Energy Storage NL (ESNL) has submitted its views on the Authority Consumer & Market (ACM) consultation on the design of an input tariff. In our response we emphasize that a future-proof tariff structure is necessary, but can only be effective if it does justice to the unique role of energy storage in the energy system. An input tariff that does not take sufficient account of system efficiency can have the opposite effect, namely: higher costs, less investment and delay of projects that actually reduce congestion.

Energy storage increases system efficiency

Energy storage makes a direct contribution to reducing costs for grid reinforcement, congestion management and ancillary services. Storage systems are used to reduce peaks in off-take, provide flexibility to grid operators and support security of supply. The societal benefits of this are large. Research shows that batteries can save hundreds of millions of euros per year in imbalance costs and backup power. This while energy storage in the current system is disproportionately burdened by rising transmission tariffs.

ESNL stresses that an input tariff should not create an incentive that discourages the deployment of energy storage or steers towards less system-efficient behavior. From that perspective, it is essential that tariffs for (deferred) feed-in are kept as low as possible and in line with tariffs in surrounding countries, so that the Dutch investment climate does not deteriorate.

Pressure on investment climate increases

High and rising transportation costs are currently the biggest barrier to the realization of new storage projects. Combined with declining market revenues, this leads to projects being postponed or canceled.

Our calculations show that the introduction of a feed-in tariff, as proposed, leads to an average cost increase of 6 to 25 percent for storage systems, with peaks of up to 37 percent for systems with asymmetric connection capacity. This is at odds with the need to develop more flexibility and energy storage to relieve congestion.

Avoid double pricing in storage

A major concern is the risk of double pricing. Energy storage acts as both buyer and feeder, but does not consume energy as an end user. Storing energy serves only to return it to the system at a later time, in the interest of system balance and congestion reduction. The European Commission has repeatedly stressed that storage should not be double-taxed and that tariff methodologies should support the development of energy storage. ESNL notes that the current proposal contains insufficient safeguards to prevent this. ESNL therefore calls on the ACM to conduct a legal review and clarify how double charging will be prevented.

Need for a new connection category for energy storage

The revision of tariff structures offers an opportunity to structurally recognize the unique role of energy storage. ESNL advocates the introduction of a separate connection category for energy storage, whereby storage is treated as an input rather than a customer. This aligns with European definitions and avoids unnecessary barriers for new projects. Such a category contributes to transparency, non-discrimination and fairer cost allocation, in line with the ACM's principles.

Download herewith our entire response: Feeding rate_ESNL final