The House of Representatives approved the new Energy Act on 4 June 2024. One of the most important developments for the renewable energy sector is that cable pooling will also become possible for storage and consumption, and that cable pooling parties, together with the grid operator, will be required to enter into a connection and transport agreement (a so-called “multi-party connection and transport agreement” or multi-party CTA).
Background of cable pooling
Cable pooling refers to sharing an electricity connection on the electricity grid operated by a public grid operator. Traditionally, the Dutch electricity grid has been organised in such a way that each user of grid services (producer or consumer) has its own electricity connection. Cable pooling makes it possible to use the electricity grid more efficiently, which is urgently needed given the high levels of congestion on the Dutch electricity grid. Through cable pooling, existing connection capacity can be utilised more efficiently and market parties can be connected more quickly than if a new grid connection had to be realised for each individual project.
One of the attractive aspects of cable pooling is that it enables better use of contracted transport capacity. Another major advantage is the sharing of grid connection costs, which can result in significant cost savings. Agreements on cable pooling can be made for both existing and new projects. In practice, there are already examples of existing wind farms opening up their grid connection for one or more solar parks and/or battery projects still under development. For solar and wind parks, the Electricity Act 1998 was amended in July 2020, making cable pooling between solar and wind projects possible for several years already.
Next steps in the process
Before the Energy Act, including the provisions enabling cable pooling for storage and consumption, can enter into force, it must still be approved by the Senate. Earlier this year, in February, the Senate rejected the bill on the phase-out of the net metering scheme.
Cable pooling for storage had been included in that proposal, which meant that the expansion of cable pooling to storage was also taken off the table at that time. Now that the new Energy Act has successfully passed the House of Representatives, there is a good chance that cable pooling for all installations — including storage and consumption installations — can enter into force in the near future.
Tolerance policy and uncertainty regarding compatibility with European law
In March 2024, the Netherlands Authority for Consumers and Markets (ACM) already announced that cable pooling involving storage and consumption would be tolerated. However, the implementation of this tolerance policy has been delayed because the Ministry of Economic Affairs and Climate Policy sees a potential conflict between cable pooling and European law.
More specifically, cable pooling would only be permissible under European law if the cable pooling installations operate as a single installation. Among other things, this would mean that the operators of the installations would only be allowed to enter into electricity agreements with third parties jointly. In practice, this would significantly reduce the value of cable pooling, because from both an investment and project financing perspective it is not workable for one project to be exposed to the operational and liability risks of another project.
Moreover, the requirement for “joint contracting” would mean that, for example, if a new battery project were to enter into a cable pooling arrangement with an existing solar park, the existing power purchase agreement on which the solar park’s financing is based would have to be renegotiated. Together with several industry associations, Ventolines is currently in discussions with the Ministry of Economic Affairs and Climate Policy and the ACM to find a solution regarding the potential conflict with European law. We will publish further updates as soon as possible.
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