Final opinion Gerard Schouw: more flex incentives are necessary

Gerard Schouw, independent advisor "Smart with Power for Green Growth" appointed by the Minister of KGG, today delivered his final advice that should give new impetus to flexibility and storage, among others. The final advice contains several proposals around queues, energy hubs and financial incentives for flexibility that emerged from the so-called breakthrough tables. Energy Storage NL spoke at the breakthrough table on financial incentives for flexibility. The main outcomes are discussed below.

Flex targets, variable tariffs and uniform grid operator policies

Gerard Schouw sees that with the right financial incentives and forecasts about the required demand for flexible capacity in the medium term, 5-10 years, market parties are better able to invest in flexibility and storage capacities. What is needed for this?

• Setting clear flex targets, for example, by province. With recognizable frameworks and performance agreements on energy storage, an incentive policy through tendering, subsidy, or other form of compensation. Other countries are already working with this, such as Spain, Italy and Greece. The EU Commission also recommends this;
• Allowing more variable rates. Variation in net rates encourages flexibility with power. Day and night tariffs. Rates for ìn and rates for off-peak power. But location incentives can also help. Incorporating more location incentives will likely require changes to the ACM's regulatory framework;
• Setting up a uniform consideration framework, within the existing Flexibilization Roadmap, for the deployment of electricity storage. A uniform policy is needed from network operators for the deployment of flexibility at the decentralized level. It helps if network operators at the provincial level provide insight into how much flexible capacity and storage is needed for the future energy system;
• Creating specific contracts for flexibility, think multi-year contracts.

Minister Hermans: clarity needed on where storage is wanted

The government recognizes that energy storage, as a form of flexibility, plays a crucial role in the transition to a flexible and decentralized energy system. For example, batteries can serve as a buffer during fluctuations in supply and demand and contribute to the stability of the electricity system.

The government supports financial incentives such as variable and location-dependent grid tariffs. Variable tariffs, such as time-dependent tariffs from 2025, and location incentives can promote more efficient grid use and reduce the need for grid reinforcement. Flexibility tenders, in which grid operators purchase flexible power for strategic locations, are also seen as valuable. New transmission rights, such as time-based contracts (ATR85), offer battery operators benefits, such as discounts on grid tariffs, while contributing to congestion reduction.

No need is seen to develop specific targets or new financing instruments for storage. The government wants to avoid favoring storage too much over other flexibility options, as competition between different technologies lowers energy system costs. In cases where market players do not provide sufficient flexibility, grid operators can invest in storage themselves, as allowed under the new Energy Act bill.

It also points to the need for better subsidy overviews and financing options for grid congestion solutions. The recommendation to add a chapter on flexibilities to grid operators' investment plans is already partially addressed through the Energy Act, which includes flexibility services as a mandatory part of these plans.

The minister also sees that storage offers the possibility of feeding in generated power later, so it is not lost in the event of input congestion. There may be obvious locations for batteries and other forms of flexibility within the electricity grid. The government will therefore, in line with the advice, ask grid operators to identify where electricity storage and other local flexibility options could contribute to reducing congestion problems and energy system stability.