Spring Memorandum: Cabinet asks ACM to look into scope for reducing battery rates

Minister Hermans presented the Spring Memorandum last week. The Spring Memorandum contains additional announced climate measures that were taken partly on the basis of the IBO Financing Electricity Infrastructure. In the assessment of the IBO, the minister goes into more detail about the management of storage locations and the grid tariffs for energy storage.

Control of storage locations

In response to the IBO report, Minister Hermans indicates that for a future-proof energy system, both electrolysis capacity and battery technologies are essential for energy storage and grid stability. The cabinet shares the conclusion that here too, targeted location management can help limit additional investments in the electricity network. It is important that energy demand, supply, transport, flexibility and conversion are developed in conjunction, also in spatial use. Management of land and in some cases also making land available can help with this.

That is why the cabinet, together with TenneT and the regional grid operators, is mapping suitable storage locations as accurately as possible. The Lower House will be informed about this at the end of this year, in accordance with the Grinwis motion that was previously adopted.

It is also stated that if the tariff system and spatial instruments do not provide sufficient incentives to achieve the desired location management, the government will consider whether it can use subsidy conditions to manage the realisation of electrolysis capacity and batteries at locations with low social costs .

Energy Storage NL is pleased that the government is listening to the need from the sector to form a proactive picture of locations for energy storage. At the moment there is a lot of uncertainty about suitable storage locations for both the market and for provinces and municipalities, which unnecessarily slows down the development of storage projects. Looking at location management, ESNL indicates that careful consideration must be given to the processing of already submitted storage applications and how these can proceed pending this framework. In order to make location management attractive, ESNL also indicates that consideration must also be given to the reservation of necessary land positions (including necessary preconditions such as permits) for storage projects.

Grid rates for energy storage

The current grid tariffs remain a major problem for the rollout of storage projects. The minister reports that the cabinet is regularly in talks with the ACM about the grid tariff structure and the way in which it influences the Dutch energy market and has an impact on the energy and climate objectives.

In this context, the government will also ask ACM whether it sees scope within European frameworks to reduce grid tariffs for electrolysis and battery storage. This could be, for example, in light of the integration of renewable energy and security of supply, facilitating energy storage and achieving the objectives of the integrated national energy and climate plans. However, the minister indicates that it remains up to ACM to assess whether and to what extent it considers special treatment of batteries and electrolysers desirable and defensible within the European rules, whereby the principles of cost reflectivity, transparency and non-discrimination must also be observed.

In addition, the Minister indicates that the ACM will publish a draft decision for a feed-in tariff in 2025. In accordance with the motion of members Grinwis and Bontenbal of 6 March, the ACM will be asked to also include the role of storage in a feed-in tariff in the draft decision. The ACM has indicated to the Cabinet that it is sympathetic to this.

Energy Storage NL appreciates the announced commitment of the government to ask the ACM whether there is any additional room to reduce grid tariffs for battery storage, among other things. ESNL also indicates that this room is already offered by the European Commission on the basis of EU Regulation 2019/943 and Directive 2019/944, and is even urged to do so. For example, Article 3 of Regulation 2019/943 stipulates that production, energy storage and demand response participate in the market on an equal footing (they are therefore all market participants), that market rules applied by Member States must ensure that these market participants can be deployed efficiently and that they have a right to access transmission and distribution networks under objective, transparent and non-discriminatory conditions.

In the current Dutch tariff code, energy storage is de facto not seen as the market participant that it actually is, but equated with consumers. That energy storage should not be seen as a consumer is also made clear in EU Directive 2019/944, which states that with the storage of electricity, the consumption of electrical energy (by an end user) is actually postponed. This is also why countries such as Belgium, Germany, Spain and the UK do use this scope to assess storage differently in the tariff system and thus approach storage differently than the Netherlands. ESNL points out that this leads to an increasingly uneven playing field and calls on the ACM to work on this.