The realisation of advanced smart grids in The Netherlands is legally possible. There are no laws and regulations that prevent energy communities to generate, store and control energy, also not with the ambition to unlock flexibility via different flex/balancing markets, thereby serving the needs of the energy transition.
However, serious restrictions apply and as a result the main challenge in realizing a futureproof smart grid is a financial challenge.
The key barrier in this regard is the current inability to monetize on the value of a smart grid for households or energy communities. The problem in this regard is the existing cost structure of the energy bill in The Netherlands, which does not reflect the actual value of flexiblity. In addition, the incentives are missing for households to store and export their electricity as a result of the netting scheme.
As a result it is difficult to create a viable business case for energy communities in The Netherlands, despite the many regulatory barriers that have been eliminated over recent years and the access that end-consumers or energy communities currently have to markets with short term price variations.
Could you explain a bit more about this existing cost structure of the energy bill and how that creates a disincentive?
I would think that the complexity and the upfront investment costs also pose a significant barrier, especially for energy communities that are less well-resourced. What do you think?
Roughly said, the energy bill of a household consist for approximately 75% of costs that are fixed (Opslag Duurzame Energie, energiebelasting, etc.). These costs are independent from the real prices at the wholesale markets at the moment of supply.
Next to this, most energy suppliers offer fixed tariffs or variable tariffs, both independent from the real prices at the moment of supply during the day. Even though some energy suppliers offer contracts for households with time-of-use pricing, their impact is relatively limited, as the majority of the energy bills is still determined by fixed costs.
For households to leverage on the real value of flexibility, the existing cost structure of the energy bill needs to eliminate the dominant fixed cost structure by linking taxes to the real electricity prices at the moment of use.