Dilemmas and lessons learned
Alliander always aims to perform its duties and carry out its activities to the best of its ability. However, we are faced with dilemmas that can influence the way we plan to carry out our work. Moreover, certain incidents, developments and events can have unforeseen consequences. By being aware of this and learning from it, we can continue to enhance the quality of our company. In this chapter, we present a few of the dilemmas and events we encountered in 2020.
Our dilemmas
Support versus system integration in the RES plans and in the district approach
Support is an important criterion in the Regional Energy Strategy plans. It is the reason why many regions have opted for decentralised, small-scale solar power generation. That kind of infrastructure is easier to integrate in the environment and meets with less local resistance than, for example, a wind turbine. However, on closer examination, we see that the first draft RES plans will result in an energy system design that is both difficult to implement and much more expensive. Only limited consideration has been given to a design that will guarantee timely, achievable and affordable infrastructure in the RES process. Regional authorities need to take into account the fact that the affordability of the energy supply is ultimately also a support issue. And the feasibility of the RES should also be considered when planning this huge task. So, for each RES region, we have drawn up and calculated an ‘alternative view’ that does take system efficiency into account as a basic factor for the RES. This approach can save up to almost 60% of the costs to society, 60% of the space required and 50% of the work.
We see the same dilemma in the district-oriented approach to the heating transition. There too we see growing resistance to the idea of making districts gas-free on a large scale in a single operation. This district-oriented approach has been agreed in the Climate Agreement because it results in the lowest social costs. The resistance is due to the fact that making the district sustainable requires drastic changes inside residential homes. Here again, there is a conflict between an efficient approach and/or the local and/or individual impact. Alliander resolves this dilemma by focusing to a greater extent on a phased transition in the district. This will help encourage all the stakeholders to make the necessary changes. Because a large part of the natural gas grid will remain serviceable for many years to come, the natural gas grid can be used as a transition tool. So insulation, the heating source and infrastructure can be disconnected from each other and residents can make their homes more sustainable at the time of their choosing while still being able to rely on energy from the gas grid.
Regulatory framework versus energy transition
The transition to a sustainable energy system will require major investments in energy infrastructure. We can also achieve a great deal by deploying innovations, which will allow us to accommodate more customers on the same infrastructure. This more effective use of the networks is necessary because the new forms of generation and consumption lead to much higher peaks and troughs in the use of the electricity grid. Our dilemma as network operators is that the investments for scaling up these innovations are required right now, however they are not always applicable in terms of the business case and within the current regulatory framework. Techniques such as peak shaving (capping) at the renewable energy source, cable pooling, smart charging, hydrogen conversion, storage and alternative tariffs are not yet adequately covered by regulations, or have punitively high front-end costs, or are associated with pricing set by regulations that is inadequate to allow large-scale implementation. These aspects, and by association our rules for using the energy system, will require significant changes in the very near future. In addition, getting legislation amended takes years and we no longer have that time available to us for the energy transition. So Alliander has opted to innovate in close collaboration with (private and public) stakeholders to ensure that we can make this possible technically, legally and financially, in spite of the barriers. We also bring these barriers to the attention of policymakers so that they can prepare the regulatory framework for the future energy system. We have done so for some time and we will continue to do so because the energy transition needs all these innovations.
Plannable versus non-plannable when it comes to the energy transition
The ideal situation for network operators is a planned economy in which the transition can be scheduled and the optimum system solution designed. A ‘top-down’ approach of this nature would significantly favour the feasibility and affordability of the task. However, in practice we know that local support and market forces mean that the world cannot be controlled like this, which is why we are changing our role to that of an assertive network operator that participates in the bottom-up process and helps design it. We have already shifted our approach to one of assertive collaboration and crystal-clear analysis of the impact on infrastructure. We transparently present the consequences of the choices made by regions and consumers and offer good system alternatives. We do this at municipal, provincial, national and market level and in the various Climate Action Programmes (such as the National RES Programme). We understand completely that we are part of a dialogue in which a balance must always be found between the sustainability challenge, support, space and system efficiency.
In addition to this bottom-up participation, we are working explicitly on making the whole exercise plannable. Rather than waiting for demand to appear, we map out a long-term development path together with government bodies and market players and then invest in our networks in anticipation of these developments, so that they are ready in time to meet the targets. We are also working with local and regional government on implementation programmes to ensure that spatial assimilation of the infrastructure can be realised in the shortest possible time. We need the backing of local and regional governments here and find it important to properly analyse and weigh up the choices for society. Setting up a national programme and regional programmes that focus on the energy system can help in this respect.
What have we learned?
Transparency about bottlenecks in the power grid leads to understanding
Liander’s customers have an increasing need for electricity and opportunities to feed energy back into the grid. This causes congestion in the power grid. We are not always immediately able to deliver the capacity that customers demand because expanding the grid takes time. This has a major impact on business customers in particular. For example, they may be subject to transmission restrictions. The recent media exposure relating to this topic has led to negative public opinion.
To encourage the media to adopt a more balanced tone, Liander launched a publicity offensive on the topic of transmission capacity. We chose, even more than before, to transparently outline the challenges we face, provide factual information about the bottlenecks in the grid and explain what options we are exploring to solve the problem. This new approach not only resulted in more media exposure on transmission capacity, the sentiment in the media switched from negative to neutral. We intend to use this transparent communications approach to inform consumers who will increasingly be affected by transmission restrictions.
Regulatory framework versus customer demand
As a regulated network operator, Alliander works under a significant regulatory burden and has to adhere to several codes. Strict interpretation of these rules and codes can stand in the way of flexibility and slow down innovation. For example, the transmission restrictions we have to impose on solar farms when the grid is ‘full’.
Instead of simply saying ‘no’ to new solar farms, we could also investigate other options for accommodating them. One possible option would be to design the infrastructure for a solar farm at 70% of the peak capacity, thereby limiting the size of the connection. This makes sense because a solar farm only generates electricity at more than 70% of peak capacity 3% of the time. So producers of solar energy would sacrifice a small part of their annual production, but, on the other hand, they would also pay lower connection costs for a smaller connection and more solar farms could be connected to the grid. We have chosen to sign covenants with our customers to obtain their agreement for smaller connections of this type. Given the legislative framework, we can still connect solar farms in this way, based on a clear understanding of each other’s situation, and avoid mutual claims.