Investments in our grids

Investments in 2021

The investments we undertook in our grids in 2021 are part of the Investment Plan 2020-2022. This plan sets out the expansion and replacement capital expenditure planned for the electricity and gas grids. In this context, we achieved the following results in 2021:

Our investment levels have increased significantly since 2017. In 2021, we invested a total of €687 million, of which €668 million was invested in our regulated networks. Total investments were consequently €67 million higher than in 2020.

Customer-driven investments

Customer-driven investments in 2021 amounted to €268 million. This is in line with budget planning and €4 million less than in 2020. These are the investments we make at the request of customers. Investments remained high in all areas due to the high volume of new houses being built, the increasing focus on sustainability and the work carried out at the request of public authorities. It is our expectation that the customer-driven investments will increase substantially in the coming years, driven in part by the pace of the energy transition. At the same time, national and international developments, such as energy prices, for example, have led to increased social and economic uncertainty. This trend makes planning and adjusting investments more challenging and even more important than in the past.

Grid-driven investments

Grid-driven investments are the investments that we make to guarantee and improve the capacity and quality of the existing grid. Our grid-driven investments in 2021 were €351 million. This is in line with budget planning and €75 million more than in 2020. Part of the planned grid-driven investments were hit by delay as a result of planning changes initiated by customers and/or local stakeholders (e.g. due to permit procedures that took longer than expected).

More than roughly 27,600 primary gas connections (target 2021: 25,250, achieved in 2020: 22,000), 108 gas stations (target: 117) and more than 193 kilometres of ‘brittle’ pipelines were replaced (target 2021: 186 kilometres, realised in 2020: 139 km). Regarding electricity, we replaced 27 items of medium-voltage switchgear (target: 31). In addition, we undertook many high-voltage projects (95% achieved) as well as medium and low-voltage projects (76% achieved). These projects involve work to replace stations and grids aimed at increasing supply reliability and facilitating the energy transition, including increasing grid capacity.

Smart meters

Our investments in smart meters in 2021 were €36 million, which is €12 million less than in 2020. The long-term aim of having smart meters installed in at least 80% of all households was achieved in 2021. The additional mandate from the Ministry of Economic Affairs was delayed, which, alongside the pandemic and the cold winter, resulted in fewer replacements.

Other assets

The other investments in 2021 were €32 million, which is an increase of €8 million compared with 2020. This increase is attributable, among other things, to investments we made in IT and in our office at the Anthony Fokkerstraat in Goes.

Four investments undertaken in 2021 highlighted:

From long-term to medium and short-term investment plans

To understand how demand for energy will develop, we need to have a clear picture of the necessary energy infrastructure in the long, medium and short term. For the long term, we make a master plan for each region. These plans provide a framework as well as guidance for our Strategic Investment Plan 2021-2036, which in turn is the basis for the Investment Plan 2022-2024.

From Master Plan 2050 to Investment Plan 2022-2024

For 15 subareas, we are developing a building board for our electricity grid in 2050, including the related intermediate stages. This enables us to initiate permitting procedures in good time and ensures we are predictable towards external stakeholders. In 2021, the master plans for various regions, including Gouda, Rotterdam-Zuid, Veenendaal and Driebergen, were finalised, meaning that 9 of the 15 master plans are now completed. We expect to complete the remaining master plans in the year ahead, after which we will have a building board for 2050 for our entire coverage area.

In a master plan, we use scenarios for the expected transmission requirement. We then develop alternative grid designs. The scenarios can vary greatly. To ensure robust investments, the alternatives are compared using the ‘minimum regret’ criterion. This helps us prevent disposals in situations involving great uncertainty. Our preferred grid design provides input for the Strategic Investment Plan (SIP) 2021-2036, in which investments are elaborated in greater detail and placed on a timeline. We take the SIP as a basis for assessing the extent to which we can finance and realise the investment objectives. The Investment Plan 2022-2024 is based on the SIP.

On 1 November 2021, the draft investment plan 2022 was published for customer and stakeholder consultation. The investment plan details how we will ensure sufficient capacity for the distribution of electricity and gas in the next three years and how these distribution services will be provided safely. The plan also provides insight into the planned investments for the next ten years. The available insights from the RES, among other sources, are included in the scenarios. In addition, up-to-date customer information and recognised regional and national available sources, such as calculations of the effects by the Netherlands Environmental Assessment Agency (PBL), applications under the Sustainable Energy Generation Incentive (SDE+) scheme as well as public and private property developments, were used in preparing the investment plan. The plan was made available for consultation for four weeks, to give the opportunity for comments on the proposed investments. A total of 87 opinions were submitted. The submitted opinions and our responses to them were added to the investment plan. The plan was then submitted to the Netherlands Authority for Consumers and Markets (ACM) at the beginning of January 2022. It is expected that the investment plan will be finalised in April 2022.

Planned investments

You can read about our planned investments in Utrecht, Zeeland and South Holland on www.stedin.net/investeringsplan. Here, we show the investments for electricity power stations and connections (≥ 25 kV) and for gas (≥ 8 bar) that will be carried out and completed between 2022 and 2031. This link will take you to an interactive map of our coverage area to view the projects we are working on for electricity, gas, wind or solar energy in 2022.

Fit for 55 and our investment plans

The European Commission aims to reduce net greenhouse gas emissions by 55% by 2030, compared to 1990 levels. This replaces the previous climate target of 49% from the Climate Agreement. The Fit for 55 package requires translation to national impact. The impact of Fit for 55 for Stedin’s energy infrastructure cannot be estimated as yet, in light of the many political and policy choices that are still to be determined and elaborated. Take, for example, the way in which the 55% target is to be achieved: whether by means of carbon storage, raised targets for onshore renewable energy generation or additional offshore wind turbines. It is therefore premature to incorporate assumptions in this regard in our investment plans.

Customer demand prediction as a basis for investment planning

Customer demand prediction is about identifying all possible future demand for connections and grid capacity (both energy consumption and feed-in). This information is crucial for our investment decisions and helps us to identify bottlenecks in a timely manner and to engage with customers on timing, location and capacity. High demand can have a significant impact on a high-voltage station, for example, as well as the low-voltage cables we need to connect new homes. The discussions with our customers are beneficial in that they improve our ability to predict customer demand. At the same time, we can observe that customer demand is complex and erratic. It can suddenly change, due to rising energy prices or new grants and subsidies, for example. That makes investment planning difficult.

By comparing insights regarding numbers, likelihood of realisation and regional developments within various RES themes (e.g. housebuilding, renewable energy generation and mobility), we are able to identify areas where greater demands will be placed on our grid.

Congestion

Despite the measures we are taking, electricity grid capacity shortage continues to increase. Rising electricity consumption and generation are outpacing our ability to expand the grid. One reason for this is that customer demand is developing faster than we can keep up with.

Where we foresee congestion, we plan, insofar as it has not already been undertaken, the necessary expansion capital expenditure and file an advance warning of expected structural congestion with the Netherlands Authority for Consumers and Markets (ACM). We also post a notice in this regard on our website and that of TenneT. We then examine the possibilities for performing congestion management. If this study shows that congestion management is possible, it is a temporary measure that takes place alongside investment in grid capacity and not as a substitute for it. We perform congestion management until such time as the grid has been strengthened.

Last year, we had to notify congestion for the first time in the electricity grid in Stedin’s coverage area. Other grid managers have previously had to do the same thing. In 2020, Enduris notified congestion in the area of Schouwen-Duiveland and Tholen.

Congestion management not possible

A review carried out within Stedin and Enduris found that congestion management in the areas currently affected by congestion is not possible. One criterion is that, under the current rules, the congestion may not be resolved by curtailing solar and wind production. That is because energy sources that cannot be regulated are excluded from participation in congestion management under the current Grid Code. And that is precisely the issue in the areas affected by congestion in Middelharnis, in Dordtse Kil and on Schouwen-Duivenland: congestion is caused by sustainable energy generation, and there are insufficient other possibilities for using this sustainably generated electricity at the right moments.

Furthermore, the cause of the congestion may lie in the available grid capacity in the high-voltage grid managed and operated by TenneT, as is currently the case in the province of Utrecht, for instance. The outcome is that high-volume consumers in Utrecht are unable to return energy additionally to the grid. New initiatives such as wind or solar farms and rooftop solar projects that need a heavy-use connection may request a new connection, but whether they can return energy to the grid depends on the results of analysis of the possibilities of congestion management. Resolving this congestion relies on TenneT’s high-voltage grid being strengthened.

New code for congestion management

In 2021, we joined the grid managers in submitting a proposal for congestion management to the ACM. The main thrust of this proposal is to enable customers to be connected to the grid as far as possible also in periods of shortage and to offer greater scope for flexibility to resolve the shortage. Grid security and affordability are key considerations in this context. The ACM evaluated the proposal and published a draft decision on congestion management. This was followed by Stedin and the combined grid managers jointly submitting an opinion. It is expected that the ACM will publish the finalised congestion management code somewhere in 2022.

Middelharnis high-voltage station

Impact of congestion

In all areas, the congestion only applies to high-volume consumers with a connection larger than 3x80 ampere (the limit may vary from one area to the next) who want to return generated electricity to the grid. A connection such as this is needed for a commercial roof with more than 200 solar panels, for instance, or for a small wind turbine. There is no problem for these customers in purchasing electricity. Consumers can continue to install solar panels and return electricity to the grid. The congestion affecting returning electricity to the grid does not apply to them. At present, there are no reasons to doubt the feasibility of the ambitions in the RES. The importance of integral cooperation between municipalities, provinces and grid managers is nonetheless increased as a result.

Preventing shortage of transmission capacity

All grid managers experience a shortage of transmission capacity to a greater or lesser extent. We are working on solutions together, solutions that are focused on making maximum use of the current energy grid. And also solutions that contribute to reducing power surges or that focus on accelerated implementation of new infrastructure. At present, we are able to fully exploit only a handful of these solutions. It takes time to progress from proven applicability to implementation, often because legislation and regulations need to be amended, for example.

Stedin is running a series of pilots to test how the solutions can best be applied in practice. While each solution is at a different stage, the common denominator is that we are now gaining practical experience that we can later develop into products and services for customers. We offer three standard solutions as a new service or product.

1. Dispensing with the failure reserve

To create more room for customer requests for decentralised generation, Stedin is dispensing with the failure reserve in an increasing number of areas. This ‘rush-hour lane’ enables us to avoid or limit the duration of a service interruption in large areas by diverting energy transmission in the case of a failure or maintenance. Grid overload is a real risk when grids become congested. To address this risk, we developed Distributed Energy Resource management, which involves us working with customers who generate electricity to temporarily disconnect their production capacity in the event of emergencies or work being carried out. At the same time, however, this instrument, when deployed, puts extra load on the grid, causing grid components to wear out more quickly. Maintenance and replacement costs will rise as a result.

Pilot with control box for customers

Installing control boxes at heavy-use customers who return energy to the grid enables us to disconnect them temporarily if the grid is at risk of overloading or in case of works or a failure. Customers are automatically compensated (the Non Firm Connection and Transmission Agreement) for the time that they are unable to return energy to the grid. This allows customers to return energy to the grid as far as possible, while we safeguard the security of energy supply. It is expected that this will eventually be organised at the national level in close cooperation with TenneT. For now, we are rolling out the control system as part of the System Operator change programme and operating it manually from our control centre. Eventually, there will be an automated solution that detects grid overload and automatically intervenes. We refer to this as ‘active network management’. It is already being applied in Dordtse Kil and Middelharnis.

2. Cable pooling

Cable pooling enables us to use a single cable to accommodate power generated from both and wind and solar on a single connection. This has been permitted by law since July 2020. This is important, in view of the limited utilisation of the total capacity of a connection in the case of generation plants for solar (12%) and wind (28%). After all, the wind does not always blow and the sun is not always out. The connection must nevertheless be able to cope with periods of peak load. Cable pooling enables us to curtail the output of the solar or wind farm at peak times, when the capacity of the connection is not sufficient. This limits the amount of energy that is lost. As a result, we can increase the capacity utilisation of a connection to 39%, fewer connections are needed and we can absorb more generating capacity on the grid. A 40 MVA solar farm that is planned on the border between Zeeland and Noord-Brabant, for example, will use the connection of an existing wind farm. Sharing the connection allows us to make better use of our grid.

3. Flexibility solutions

The increasing shortage of transmission capacity is creating greater need for flexibility solutions incorporating instruments as a temporary measure until a grid expansion has been carried out or to absorb peaks in supply and demand at the local level. We do this, among other things, by involving market parties, business customers, municipalities and housing associations and giving them a role in the flexible energy system, and hence in relation to issues, now and in the future, around shortage of transmission capacity. This gives us a firmer grip on the number of peaks resulting from increasing renewable energy generation and electrification. In 2022, we will evaluate with the market whether we can dampen peaks by establishing flexibility markets.

GOPACS

The GOPACS platform is a joint initiative of the regional and national grid managers that is intended to solve congestion issues, local and otherwise. The solution is based on local flexibility markets, with participating parties indicating at what price they are willing to consume more or less electricity or return it to the electricity grid. As soon as there is a risk of congestion in the grid, the grid manager appeals for flexible capacity to be made available. The past year saw a marked increase in the number of participants in the platform. More than 800 business customers now participate in the platform, of whom more than 150 are located in Stedin’s coverage area. Together, they provided more than 140 GWh in flexibility for the grid managers, valued at more than €45 million.

Zuidplaspolder

In 2020, we began a flexibility project in the Zuidplaspolder. This is designed to limit the load on the transformer station at peak times, which occur in particular during the winter. We signed a contract with AgroEnergy and Tenergy for this purpose. Between December 2020 and March 2021, we requested flexibility a total of 25 times, resulting in 52 MWh of flexibility in total being provided. This first period yielded positive experiences with regard to cooperation, the assignment of tasks

and responsibilities and the way in which market parties and the grid manager help each other, with respect for each others’ interests. We also gained experience in making daily predictions of grid load and congestion in the area and how to deal with them. The pilot project will run until 2024, when the new high-voltage station will be delivered in cooperation with our partners TenneT and Alliander and the grid expansion realised.