ACM offers more opportunities to utilize the existing grid more efficiently
The Netherlands Authority for Consumers and Markets (ACM) wishes to enable system operators to offer contracts with so-called alternative transmission rights (ATRs), thereby freeing up capacity on the grid. One such example is a contract where the system operator and connected consumer agree in advance that the full transmission capacity can only be used during non-peak hours. During peak hours, the transmission capacity can only be used partially or not at all. In addition, ACM wishes to give system operators the option of limiting the contracted transmission capacity of those connected to the medium-voltage and high-voltage grid if it is not used for a longer period of time. This is also called use-it-or-lose it (UIOLI) in English or “Gebruik Op Tijd Of Raak het Kwijt” (GOTORK) in Dutch.
Manon Leijten, Member of the Board of ACM, explains: “ACM wishes to give system operators additional tools to ensure that the current grid is utilized as efficiently as possible. In that way, more market participants are able to get access to the grid. Solar parks, wind turbines, and battery systems will be able to get connected sooner. The freed-up capacity can also be used for users that wish to switch from fossil fuels to sustainably generated electricity. This is important for the energy transition.”
In order to make UIOLI/GOTORK and ATRs possible, the grid codes need to be amended. ACM will therefore fast-track the procedure for code amendments. Ahead of these code amendments, ACM recently held a consultation on these topics, in which it received opinions from 38 market participants. In the consultation report, ACM has already put forward several points for attention and possible solutions. ACM expects to publish the draft decision on UIOLI/GOTORK as well as the code decision on variable transmission rights later this year. In the meantime, ACM will allow contracts with ATRs and UIOLI/GOTORK if discussions about such contracts have taken place with ACM beforehand.
The starting point is that alternative transmission rights can, at this point, only be offered in areas that are or threaten to become congested, and that these are voluntary arrangements. Additionally, the reduction of contracted transmission capacity (UIOLI/GOTORK) is only permitted if it concerns grid capacity that has been unnecessarily reserved in areas that have or threaten to have a shortage of transmission capacity. In that context, it is up to those that are connected to demonstrate that the capacity is truly necessary, and that this capacity will be utilized within a reasonable amount of time. In this context, ACM believes a period of 2 years to be reasonable. With regard to alternative transmission rights and UIOLI/GOTORK, another important issue is that grid safety is well safeguarded.
Dealing with grid congestion
As a result of the energy transition and the electrification of industry, demand for transmission capacity on the Dutch grid has grown tremendously. This has led to great scarcity of transmission capacity on the grid. In order to solve the congestion problem, system operators need to make major investments in grid upgrades. ACM does give them the necessary financial leeway for such investments, when setting the tariffs and compensating the costs of system operators.
In March 2023, ACM announced that it would give system operators, when giving access to the grid, the opportunity to deviate from the principle of ‘first come, first serve’ and prioritize public-interest projects (such as new housing, fire and police departments, or schools) and projects that solve or reduce congestion problems. ACM expects to publish a draft code amendment proposal in July 2023.
In addition, ACM will take measures to ensure that, in the meantime, existing grids will be utilized as efficiently as possible. In May 2022, ACM tightened the rules for applying congestion management. Congestion management means that electricity suppliers and buyers help avoid overburdening the grid by temporarily reducing electricity consumption or injection into the grid when there is less capacity during peak periods. In such cases, suppliers and buyers receive compensations from the system operators. ACM is currently evaluating the functioning of the rules for congestion management.
As part of the National Grid Congestion Action Program (in Dutch: Landelijk Actieprogramma Netcongestie, or LAN), ACM also works together with local governments, system operators, and other market participants to stimulate a more efficient utilization of the grid. Making UIOLI/GOTORK and ATRs possible is one element of that Program.