Challenges in the regions
As described previously, we are already seeing bottlenecks in the Dutch power grid that pose an obstacle to the energy transition and to the further economic development of the Netherlands. The electricity grid is busy with delivering power, but also with the feed-in of electricity from solar and wind energy generation facilities. Expanding the grid is a process that will take many years. In view of this challenge, we have decided to adopt a different approach to the energy transition by applying smart solutions and innovations wherever possible in the regions where Liander operates.
Insufficient transmission capacity
In the transition to a sustainable energy supply, wind and solar farms are producing more and more green electricity. They are often located in rural areas where little electricity is used. Consequently, the electricity must be transported to consumers elsewhere in the country. Industry, agriculture, electric mobility and sustainable residential areas also need more and more electricity. All these factors present major challenges for network operators, specifically because the grid is designed to supply electricity from gas and coal-fired power stations to consumers. The lower the number of consumers in an area, the thinner the cables. But it is exactly these areas where most renewable energy is generated because of the abundant availability of space and cheap land. The power grid has not been dimensioned to cope with this development.
The power grid is currently running at full capacity or near full capacity in some places. In rural areas, there is little or no capacity available for connecting new solar farms. In Liander’s service area, there are capacity restrictions at roughly 20% of the high-voltage substations, and 35% of the medium-voltage substations are running at full capacity. So companies that want to expand, and therefore use more electricity, cannot immediately be offered a connection in areas where there is a shortage of transmission capacity. In more and more cases, they will have to wait until we have upgraded the grid locally or until other solutions become available. In 2020, Liander started publishing biweekly updates on the available grid capacity.
To continue facilitating the transition, Liander is investing significantly in expanding and upgrading the energy networks and in new, smart technologies. In the period up to 2030, we plan to expand and build around 100 substations in collaboration with TenneT. An additional 10,000 medium-voltage facilities will also be required and 20,000 km of new medium-voltage cable will have to be laid. In 2020, we invested more than €890 million in the network. For example, we completed a major upgrade project at a power station in Wolvega and laid an extra cable in Nijmegen-Noord so that Liander could accept dozens of new requests for additional power.
Thanks to the hard work done last year, we have eliminated transmission capacity shortages at a number of locations. We expect to do this in several other areas in the coming years. Nevertheless, as expected, the number of bottlenecks increased in 2020, particularly in Friesland, Noord-Holland and Gelderland. In contrast to the past, when mainly large-scale customers were affected, we also found that consumers were occasionally unable to feed all of their renewable energy back into the grid last year, for example, on very sunny days.
In the years to come, our investments will increase to more than €1 billion per year. Despite this, we do not expect the capacity problem to be resolved in the near future. As we expand the power grid, more and more solar panels and wind turbines are being added at the same time and the two cancel each other out to some extent. So we must continue to innovate, together with market parties and other stakeholders, in order to use the power grid more efficiently. Cable pooling (solar and wind energy on a single cable), congestion management (see box), curtailment and the use of the ‘emergency capacity’ in the network are solutions that we are developing and deploying to create greater capacity in the power grid.
Connection at 70% capacity
In 2020, we and the other network operators signed the ‘Stroom Betaalbaar op het Net’ [Affordable Power on the Grid] covenant. One of the agreements in this covenant is that solar power projects must be connected at 70% of the nominal installed capacity. On average, this 70% connection is adequate for a solar farm 97% of the time. This allows us to connect more projects at lower costs and create a healthy market for solar power.
But more is needed. The energy transition also calls for all the parties involved to collaborate in creating a smart and efficiently designed future energy system by, for example, reducing the distance between generation and usage so that fewer cables and transformers are required. Our task is to keep costs at the lowest possible level. It is also important to ensure an adequate supply of wind energy, in addition to solar energy, and combine power generation initiatives. An overview of all the developments is required in order to make optimum choices. An integral approach at national and regional level is becoming increasingly important.
Congestion management in Neerijnen
The Neerijnen region in Gelderland is one of the areas where the power grid has reached the limits of its capacity. As in other places, the growing demand for electricity and the rapid increase in the amount of solar and wind power being fed back into the grid here are causing congestion. In Neerijnen, this is mainly due to horticulturalists starting up or expanding businesses, or making their businesses more sustainable. We are expanding the power grid in many places in order to create greater grid capacity. Neerijnen is one of these places. However, the work will not be completed until 2023. As in other places with insufficient grid capacity, we investigated the option of applying congestion management in Neerijnen. This involves splitting the available space on the grid fairly and efficiently. We ask the parties participating in congestion management to use or generate more or less power. The market parties indicate the price at which they wish to purchase electricity or feed back power into the grid. As the study clearly indicated that congestion management is possible in Neerijnen, we held discussions with the different parties in 2020 to encourage them to participate in the system.