ESNL Response to Parliamentary Letter on Grid Congestion: Important Steps, but the Business Case for Flexibility Is Under Pressure

The letter to Parliament dated October 5 regarding the Progress in Addressing Network Congestion includes key steps to make better use of and expand the electricity grid. Energy Storage NL (ESNL) is positive about, among other things, the further development of congestion-mitigation measures, the expansion of the Flex-e scheme, and the announced time-dependent grid tariffs for small consumers. These measures can accelerate the deployment of energy storage and thus contribute to a reliable and affordable energy system. At the same time, Energy Storage NL (ESNL) warns that rising grid tariffs and insufficiently detailed contract terms are putting pressure on the business case for flexibility.

FGU Approach

The crisis response in Flevopolder, Gelderland, and Utrecht (FGU) will serve as a model for other regions where grid security is under pressure. Flex tenders and improved administrative cooperation are key tools in this regard. ESNL advocates explicitly prioritizing CO2-free solutions in flextenders, for example through criteria that prevent additional CO2 emissions and promote clean flexibility. The FGU approach also demonstrates that more intensive information exchange between grid operators and market participants helps identify suitable locations more quickly. ESNL therefore advocates continuing along these lines and further improving information transparency.

Batteries Are Becoming Increasingly Important for Alleviating Congestion

The letter to Parliament cites batteries as an important example of congestion-mitigation measures. More than 1,000 parties have applied for priority status for these measures; a significant portion of these applications relate to battery projects. ESNL sees this as a major opportunity to free up additional grid capacity more quickly. We are positive about the improved cooperation between grid operators and market participants regarding the assessment frameworks and communication for congestion-relief measures, but we also see room to further develop these tools and apply them more flexibly. ESNL looks forward to continuing these discussions with grid operators and market participants.

Progress in flexible grid use, but the business case is under pressure

The letter to Parliament correctly notes that the growth in waiting lists is leveling off, more parties are being connected to the grid, and the number of flexibility contracts is rising. The number of alternative transmission rights and congestion management contracts is also increasing.

According to ESNL, however, there is an important caveat. The expected increase in grid tariffs of approximately 20% in 2027 could significantly weaken the business case for flexibility solutions. Battery projects with time-dependent transmission rights (TDTR) will also be affected by this. If flexibility contracts remain insufficiently financially attractive, a key component of the strategy for improved grid utilization will come under pressure. This calls for additional measures in the short term.

Capacity Management Contract Not (Yet) Market-Ready

ESNL supports the further development of the capacity management contract (CSC), but the instrument is not yet ready for the market. The standard methodology and compensation structure have not been sufficiently developed. Market participants will only participate on a larger scale once the contract terms offer a viable business case. Grid operators, ESNL, and market participants must therefore work together to further develop the product.

More Room for Flexibility Through Legislation

ESNL welcomes the announced changes to laws and regulations aimed at better leveraging flexibility. These measures include standardizing flexibility, placing greater demands on existing grids, and gaining better insight into queues, available capacity, and flexibility. These measures can make grid capacity available more quickly and contribute to a future-proof energy system. To achieve this, the government must also tailor the regulations for energy storage design and refine.

An Extra Boost with Flex-e

The expansion of the Flex-e program to approximately €35 million in 2027 provides companies with an additional incentive to explore and implement flexibility measures. The program can thus accelerate the deployment of battery storage and other flexibility solutions. ESNL is eager to contribute ideas on the further development of Flex-e, ensuring that the program aligns with real-world practices and supports investments in energy storage.

Time-of-use electricity rates offer opportunities for batteries

In October, the ACM will publish a draft decision on time- and volume-based grid tariffs for small consumers. These tariffs are intended to better spread electricity consumption throughout the day and thereby reduce grid congestion. This presents opportunities for residential batteries: consumers will have a financial incentive to store energy when the grid is less burdened and to use it during peak hours. In this way, battery storage can better balance supply and demand and contribute to a more efficient energy system.

ESNL emphasizes that stable waiting lists do not automatically indicate success. The lack of further growth may also be the result of long waiting times and high financial barriers, which discourage applicants from submitting new applications. A clear understanding of the factors behind the figures is therefore necessary to implement effective policy.

Good steps, but flexibility in implementation is under pressure

The letter to Parliament shows that grid congestion policy is increasingly shifting from grid expansion alone to smart grid use and flexibility. This is a development that ESNL supports. Positive steps include the continued use of batteries to alleviate congestion, the expansion of Flex-e, the development of time-dependent grid tariffs, and measures to better embed flexibility in regulations. At the same time, it remains essential to maintain the business case for flexibility. Without economically attractive contracts and manageable grid tariffs, there is a risk that a large part of the solution to grid congestion will fail to get off the ground.