The electrification of ‘everything’ does not seem to be going as well as planned (surprise!) in the Netherlands.
The electrification of “everything” does not seem to be going as well as planned (surprise!) in the Netherlands.
Thousands of businesses and households are waiting to connect to the Dutch grid, forcing network operators to ration power in an early indicator of what other European countries are likely to suffer as the speed of electrification increases.
More than 11,900 businesses are waiting for electricity network connections, according to Netbeheer Nederland, the association of Dutch grid operators. On top of that are public buildings such as hospitals and fire stations as well as thousands of new houses.
Dutch officials and companies said lengthy waits for connections were holding up economic growth and could force businesses to rethink their investment plans. Despite efforts to invest in new cables and substations, new connections in some areas of the country will only become available in the mid-2030s, according to network operators.
“Rethink their investment plans” is, I reckon, a euphemism for, in many cases, scrapping them. Companies will not commit capital to a plan until they know that it can be adequately powered, when it can be adequately powered, and at what price. Without knowing that, planning is impossible.
According to the FT, the area outside Eindhoven that hosts a cluster of high-tech companies, including ASML, the maker of the world’s most sophisticated chipmaking machines, will not have any new grid capacity until 2027. Deindustrialization is moving upscale.
Businesses that can choose to take their plans to other countries will do so — if they can. Other European countries “racing” to net zero also have this problem, if not (apparently) in such acute form. That said, a spokesman for Tennet, the Dutch grid operator, is quoted as saying, “Belgium is in trouble. The UK is in trouble. In Germany there’s lots of trouble because in Germany all the wind is in the north and the demand is in the south.”
Part of the problem was the Dutch ended production at its giant onshore gas field, Groningen, in 2023. This was due to earth tremors associated with extraction, which began in the 1980s as, the FT reports, the soft local clay and sandstone began to shift. Unlike some of the “seismic activity” associated with such operations, this had become too much of a nuisance to be ignored (any longer), although rather than provide generous compensation or, if necessary, relocation, the economically more sensible options, the government shut down this valuable, if unfashionable energy source.
Recognizing the necessity of trade-offs is an essential tool in policymaking, but in this case the decision-making process will have been distorted by the net zero imperative. The “race” to net zero is a classic example of central planning at work. This means that the plan is the plan, and the target is the target. Rather than adjusting the plan (which would probably not be straightforward with Brussels calling the shots), or moving to a more carefully thought-through plan B, the Netherlands forged ahead, despite its earlier assumption that Groningen would be onstream for longer than it was.
Plan C involves spending €200bn between now and 2040, and hiking tariffs by 4.3 to 4.7 percent in real terms annually until 2034 (Dutch wholesale electricity prices are already the highest in Europe, no mean achievement). And a form of soft(ish) (for now) rationing is being introduced, including discounts to households for using off-peak electricity.
Also:
From April 1, operators could offer contracts where large industrial users are barred from using their connections at all during certain busy hours in exchange for lower tariffs.
The Hague has also put out a “more conscious use of energy” advertising campaign across TV and social media that asks consumers to charge bikes and cars outside of the 4pm-to-9pm peak, when the grid comes under greatest strain.
When it comes to climate policy, what begins with “encouragement” ends with compulsion.