2024
Energy Storage Report
Key Regional Markets
The Netherlands
GDP (Current Prices) USD (2022) | 1,010bn |
GDP Growth Forecast (constant prices) (2023-2027) | 1% |
10yr Govt Bond Yield (12-month rolling average) | 2.79% |
Country Credit Rating (S&P) | AAA |
Battery Storage Capacity | NA |
Pumped Hydro Storage Capacity | NA |
RE share of Total Electricity Capacity | 54.9% |
Battery Storage Outlook | 9GW by 2030 |
Source: IMF, Fred Economic Data, S&P Global, Energy Institute, The Energy Institute, Battery Industry
Energy Mix and Case for Storage
Note: The above representation does not explicitly show hydropower generation with a 0.04% share in the total.
Source: The Energy Institute Statistical Review of World Energy
The planned phase-out of ageing coal-based power generation is part of the decarbonisation goals (Deloitte, 2023). The target is a 49% reduction in emissions by 2030, compared to the 1990 level. The power sector must rationalise its emissions by at least 26% by 2030 to meet the national emission targets. Pursuing such goals is thus underway through measures, including planned induction of small-scale nuclear power generation and the acceleration of renewable energy projects, led primarily by solar and offshore wind.
By the end of 2023, share of renewable energy was half of the total power generation from all sources. The Nationaal Klimaat Platform of the Netherlands tracked this. But it has been a challenge to absorb the rising renewable energy in the grid. In June 2023, entire solar and wind power generation outstripped demand for 140 hours in the grid (PV Magazine, 2023). The excess energy was channelled to the neighbouring countries in the region based on interconnector linkages. But not all the excess energy could be exported. For the year 2023, the grid operator had over 300 hours’ worth of negative prices, for which the due payouts were done as the excess energy could not be integrated (NL Times, 2023). With the rise in the renewable project pipeline, the market will likely face negative prices without storage options.
Capacity: Status and Trend
The Netherlands’ grid-scale energy storage has yet to reach the required scale corresponding to the renewable energy share in total grid-connected power generation. With hydropower contributing a negligible share in the country’s energy mix, the option of pumped hydro-based storage is ruled out. As deployed so far, battery storage units were initially led by technology demonstration projects and later co-located battery units with renewable energy generation projects (Frontis, 2020), (PV Magazine, 2022). Standalone storage, especially in the long-duration segment, is relatively insignificant in the Dutch energy market due to the limited regulatory incentives in the bulk power market. The installed storage capacity is engaged for short-duration grid balancing services such as frequency regulation and congestion management. Long-duration energy storage is yet to be deployed on a commercial scale.
Netherlands’ Existing Utility-Scale Battery Storage (Indicative)
| Capacity (MWh) | |
|---|---|
|
Giga Rhino Netherlands |
12 |
|
Heerhugowaard battery and flywheel storage (combined with wind project) |
13 |
|
Netherlands Advancion Energy Storage Array |
10 |
|
Alfen Hartel Rotterdam |
10 |
|
Amsterdam ArenA |
4 |
|
Bonaire Wind-Diesel Hybrid |
3 |
Source: PV Energy, Frontis Energy
Policy and Regulation
The country’s policy and regulatory framework, while recognising the energy storage assets in the system, is yet to be aligned with the industry’s needs. Fundamental regulation changes are due to critical factors such as the charges storage units must pay or the tax incidence. Recent steps taken indicate progress. For instance, since January 2022, the regulatory authorities have exempted storage assets from double taxation on the import and export of power (CMS, 2022). With the amended regulations, storage units could avoid dual tax if the storage operator had a large-scale consumption connection and declared its exemption from the levy to the supplier.
Yet, there are other norms overdue for revision. The energy storage assets are liable to pay grid fees (as a consumer of grid power). Such an arrangement is misplaced as the same storage assets are also expected to inject the energy back into the grid at a designated time slot and capacity. With a typical standalone battery storage asset charging entirely from the grid, the charges levied could be a sizeable part of operational expenditure. The regulatory gap in this context must be closed as soon as possible to enable new capacities. Notably, the European Union guidelines suggest scrapping the grid transportation cost for energy storage. It is thus also incumbent on the country to revise its regulations.
In other instances, the regulations regard storage assets as power generation sources. Grid access is one such instance. Under existing rules, battery storage operators must contract network capacity for charging and discharging. Such a process shuts out the batteries during times of network congestion. With the rising share of renewable energy supply (intermittent), grid congestion frequently impacts storage assets. Pilot storage projects led by network operators will explore the possibility of deploying large-scale batteries to circumvent the issue of renewable energy clogging the network.
Rising challenges around network congestion prompted a revision in the grid code (as of November 2022). The revised regulations stipulate the creation of Congestion Service Providers (CSP) to manage the peaking power while operating as independent operators between grid operators and final connected customers (PV Magazine, 2022). The role of CSPs is to manage the peaking capacity in the grid supply for a fee. Such a norm favourably impacts the standalone battery units, many of whom are seeking congestion management as one of their revenue stacks.
Market Developments and Opportunities
The high-voltage standalone battery storage market (grid-scale batteries) is gradually emerging. One example is the business model of companies such as Lion Storage (Energy Storage News, 2023). As an independent developer, the company’s pipeline is worth 350MW targeted by 2025. The company’s model is to develop the project up to the final investment decision stage, at which point it is sold to a strategic or financial buyer. From there on, it is generally 2-2.5 years for operationalisation.
Many other grid-scale projects under construction continue with their variants of business models. The 30MW Project Pollux, for instance, has one entity, SemperPower, to develop, finance and operate the storage system and an energy storage firm, Alfen, to manage the design, supply, civil works, installation, tests, and maintenance (ETN, 2023). Project Pollux is meant for a grid-integration role andhas come online on December 2023 (Energy Storage News, 2023). In November 2023, SemperPower inaugurated a 30.7MW/62.6MWh BESS project, Castor, in the Netherlands. Several equipment manufacturers and technology providers are similarly exploring ventures for standalone grid-scale battery storage units, with the rise in demand for grid integration services.
A congested grid strengthens the business proposition of battery storage units. For instance, utility-scale renewable energy developers are exploring co-located battery units to circumvent the Dutch network constraint. German utility RWE, as of September 2023, finalised the investment decision for a €24 million, 35MW co-located battery storage at its OranjeWind offshore wind project in the Netherlands (RWE, 2023). The battery unit is meant for grid frequency management in combination with the generation project. The project construction has begun and will be commissioned in 2025 (RWE, 2024). The co-located battery storage units are also instrumental in the faster commissioning of the projects. The Dutch developer PowerField, for instance, could expedite its Valthermond-based solar park mainly due to a 12MWh battery linked with the project (PowerField, 2023). Without the grid-scale battery, the grid-connectivity requirements related to the project would have meant commissioning by 2028. Instead, with battery storage connected, the solar park is planned to be commissioned in 2023. Further, municipalities are backing the Dutch BESS market. In December 2023, the Dutch Municipality drafted a zoning plan for the Netherlands’s first 1GWh scale BESS, which is due for inspection by local residents by the end of January 2024. The project is expected to secure permit applications in 2024, begin construction in 2025, and become operational by 2026 (Energy Storage News, 2024).
Other grid-scale technologies are in the fray to meet the demand for long-duration storage. One such technology is Ocean Battery – which uses the pumped hydropower generation route for storage at the bottom of a sea-bed or lake to supply long-duration power at short notice. Ocean Grazer, a developer, had won a tender floated by RWE for a project based on Ocean Battery in the Hollandse Kust West VII offshore wind farm site (Windpowernl, 2022). Ocean Grazer’s project initiative has attracted investor interest. In November 2022, Rabobank approved an innovation loan in this regard. Around the same time, the Groningen regional fund approved 40% financing to develop the first full-scale Ocean Battery system (Knowesg, 2023).
Outlook
The Dutch grid operator’s projected grid storage requirement by 2030 is 9GW, based primarily on battery units. System stability and flexibility are two of the most critical factors driving the grid-scale battery storage demand in the Netherlands (Battery Industry, 2023). The need for frequency restoration reserve could rise among specific areas, with a decline in conventional energy units traditionally used for grid balancing services. Other potential battery-based grid service areas include congestion management and reactive power supply. The emphasis is securing large-sized battery storage (above 70MW) and strategically placing them across regions with varying demand loads and renewable power generation.
The recent private investments towards standalone grid-scale battery storage units indicate the interest in tapping into the emerging opportunity. Policy and regulation must extend the supporting measures to develop the storage market. Net metering is one such case. In February 2023, the Dutch lower chamber had approved a proposal to phase out net metering from 2025. But the same was rejected by the Dutch Senate later in February 2024 (PV Magazine, 2024). Political issues are likely to have played a role in such a decision. A phase out of net metering strengthens the case for distributed energy storage (based on the rooftop solar PV).
The need for enabling regulatory measures is even higher in utility-scale storage. One is rationalising grid charges levied on batteries as users due to charging. Grid charges make battery units less attractive when compared to other European countries. Also, battery units are subject to a non-firm grid connection, implying possible temporary disconnection from the grid – a drawback on the revenue model. Policy and regulatory authorities are deliberating on the options to resolve the issues battery developers face. The incentives available in the Dutch battery storage business will determine how flexible generation can accommodate the energy transition in the grid’s power mix.