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Sustainable energy system
Energy market
End consumers
Energy system
Positions energy system
Position Natural Gas
Energie-Nederland is aware that we need to wean off natural gas. This point was driven home when, in 2022, gas prices skyrocketed due to the war in Ukraine. Nonetheless, gas remains an essential component of the existing energy system: it is thus of great importance that the energy transition be implemented carefully in the gas market. As such, Energie-Nederland is involved in ensuring prudent, consistent, and effective policymaking in the gas market. Although it is important to find and develop alternatives to natural gas such as biogas or hydrogen, it is also important to ensure security of supply and reasonable gas prices for consumers. Energie-Nederland is convinced that reasonable prices are best achieved by an efficient free market system, fair competition, and by avoiding market interventions which could interfere with the price mechanism. As such, it is key that wholesale costs, transport costs, and storage costs be transparent and competitive. This is also why Energie-Nederland does not support the derogation of the temporary but market-distorting emergency measures issued by the EU during the energy crisis of 2022, such as the EU gas price cap, the gas storage regulation, and joint gas purchasing. These instruments can influence the price mechanism and undermine security of supply.
Energie-Nederland advocates for these principles by negotiating with the government, regulatory authorities, market participants, and other associations. By ensuring that policy decisions relating to gas are fitting and well thought out, we can maintain a safe, reliable, and competitive gas market upon which to fall back during the early stages of the energy transition. While progress is being made when it comes to the development of renewable energy sources and the more efficient and sparing use of energy, a well-regulated gas market provides an important safety net for providing affordable and reliable electricity and heating in the meantime.
Position Electricity
Electricity is the engine of the energy transition. Electrification is becoming evermore popular, among other reasons in order to diminish gas and oil consumption. Think of electric cars, heat pumps, or electric boilers in the industry. As a result of this electrification, electricity consumption will grow. Therefore, it is important that policymaking related to electricity take into account both the current and future challenges which this sector faces. Energie-Nederland dedicates itself to ensuring that the limited capacity of the electricity grid will no longer hold the energy transition back. It is essential that the grid be strengthened as soon as possible, and be used optimally. Further, congestion management instruments must be adequately implemented and activated where and when congestion occurs. Judgement calls on congestion management need to be transparent and well substantiated.
Besides underlining the importance of an electricity grid which can support the energy transition, Energie-Nederland places its stake in expanding the production capacity of renewable electricity. On this front, all sources of renewable electricity are needed, from wind and sun to green gas and biomass, as well as new technologies.
Due to the increasing demand for electricity, it is important to stimulate the proper functioning of the electricity market. This is the best guarantee for stable and affordable prices. Further, it is key that security of supply be ensured. This will no longer be as self-evident as it is in the current electricity system, as the proportion of weather-dependent electricity generation will increase exponentially. The security of supply may be placed under extreme pressure during so-called dunkelfauten – a term meaning a period of consecutive days during which there is little to no sun or wind – which are predicted to occur multiple times per year.
A functional and sustainable electricity market requires careful policymaking, a competitive market, and the avoidance of strong market interventions which could interfere with prices or incentives. We need an energy system which is flexible enough to withstand both excess generation from wind and sun, and shortages during dunkelflauten.
Position Security of supply
Security of gas supply
Security of supply exists when there is sufficient gas and electricity to meet the demand from households and businesses. In normal market conditions, gas storage facilities are filled between April and October. This is the injection season, when the gas prices are lower. From November until the end of March is the production season. This is when the gas prices are higher and gas is sold from the storage facilities. The difference between the buying price and the selling price is called the summer-winter spread. This positive difference covers the cost of gas storage and normally yields enough to be profitable. However, this was not self-evident in the summer of 2022 due to the high prices. The Cabinet used two agreements, subsidies, and collaboration with energy companies to ensure that our gas storage facilities were sufficiently filled prior to the winter of 2022/2023.
The geopolitical context of the war in Ukraine has exposed the importance of enhancing our supply security for natural gas. This would simultaneously reduce our dependence on Russia. Energie-Nederland is satisfied with the results of the measures. In the future, it must become clear whether the gas storage facilities can again be filled to a sufficient extent. Energie-Nederland opposees filling obligations for energy supplier. Given that the filling of storages required specific capacities, the amount of energy suppliers could decrease, weakening competition and thereby increasing price.
Security of electricity supply
Security of electricity supply is largely determined by the reliability of the network and the availability of sufficient generation capacity. In addition, storage capacity, demand response, and interconnections (high voltage lines between the Netherlands and other countries) also play a role. The grid operators are tasked with ensuring a robust electricity grid. The reliability of the grid is high. In 2022, customers were without electricity for an average of 22.1 minutes due to problems on the grid.
Grid operators are struggling to meet the sharp rise in demand for transmission capacity. This means congestions (overloading) on the network. Consumers or producers now often have to wait if they want more transmission capacity. Grid operators are working on investment plans and on the strengthening of the grid. The investment plan must also deliver insight into the difference between the required grid capacity that is considered feasible in a certain year: that way, the magnitude of the challenge will become clearer to all.
Besides the reliability of the grid for the sake of security of supply, the availability of sufficient electricity production capacity is also key. This should also take capacity for storage and demand response into account. The current market model assumes that market participants invest in additional capacity as soon as they expect shortages to occur and prices to rise as a result. This is called the Energy Only Market model, which until recently was the foundation of the electricity market. However, with the rise of weather-dependent electricity production, this model does not provide any security of investment for clean dispatchable generation. The key reason for this is that the market is unwilling to invest in this type of generation capacity, such as green hydrogen-fired power plant, because the number of hours such plants are active is extremely low.
Further, the uncertainty about public and political acceptance of certain technologies is an issue. Finally, there is the risk of market intervention in the event of scarcity prices being high.Â
Energie-Nederland is calling for a supplementary framework to secure investments in carbon-free and weather-independent generation capacity. There is a need for fast decisions here, as the lead-time is too long for the development of carbon-free adjustable output. The same is true for the implementation of a supplementary framework.
Position Affordability
Assistance for payment arrears
Due to the high energy prices, an increasing number of households and businesses are struggling to pay their energy bills. This growing group does not always have access to resources or schemes to prevent (new) arrear. Yet every household or business must be able to pay its energy bill. If this is not possible, payment arrangements can be made with most suppliers.
Energie-Nederland feels a responsibility to help this group as much as possible. Traditionally, there has been a covenant on debt relief between energy suppliers and the NVVK Financial Aid Association. This covenant covers debt assistance, social credit, budget management, administrative guardianship. Recently, a broad covenant was added with agreements on early detection of payment arrears.
Affordability of energy bills is a priority in the energy sector. People with a debt settlement agreement must be adequately supported. That is why Energie-Nederland recently signed NVVK’s collective ‘Saving debt settlement together’ declaration of intent.
