Investment in infrastructure

Investments in our grids

The investments we made in our grids in 2022 are part of our 2022-2024 investment plan. This plan sets out our expansion and replacement investments to expand the electricity and gas grids. In 2022, we invested a total of €712 million, of which €700 million was invested in our regulated grids. Consequently, total investments were €25 million higher than in 2021.

Customer-driven investments

Customer-driven investments are made on the request of customers and public authorities (reconstructions). In 2022, these amounted to €252 million, €11 million less than expected (and €16 million less than in 2021), This was due to lower investment in reconstructions. We expect that customer-driven investments will remain high in the coming years, driven in part by the pace of the energy transition and higher energy prices. Both supply and demand are volatile. This makes planning and adjusting these investments more challenging and more important than in the past.

Grid-driven investments

Grid-driven investments are the investments we make to guarantee and improve the capacity and quality of the existing grid. This includes the replacement and reinforcement of stations and grids. Our grid-driven investments in 2022 were €410 million. Financially, this is in line with budget and €59 million more than in 2021. Some of the planned grid-driven investments were delayed due to changes in planning by customers, issues in the environment (for instance, lengthier permitting procedures) and/or lack of materials at contractors. As a result, we were not able to complete the entire planned scope. At the same time, prices rose due to scarcity, so the investments were in line with the budget. Ultimately, we were not able to achieve our target for the realisation of the grid-driven scope for electricity and gas, with scores of 93% and 96% respectively.

1. * Based on GIS data from early February 2023; information for 2022 is not yet complete due to changes yet to be included.
2. * Excluding realisation in Zeeland region

Smart meters

In 2022, our investments in smart meters amounted to €34 million, Which was €2 million less than in 2021 and less than budgeted. This was due to the postponement of a major contract from the Ministry of Economic Affairs and Climate Policy relating to the phase-out of the netting scheme for the feed-in of rooftop solar energy. Currently, 84.7% (2021: 82.4%) of households in Stedin’s service area have a smart meter. Under the bill for the phase-out of the netting scheme, a suitable meter will be mandatory. These meters can measure both the supply and the feed-in of electricity separately. At year-end 2022, nearly 87% of all meters in Stedin’s area met the criteria for a suitable meter. This is because there are actually also non-smart meters that display the feed-in as required. However, with these meters, the customer has to manually report the meter readings.

Other assets

Other investments in 2022 amounted to €16 million (€16 million less than in 2021), with €4 million invested in the telecommunications network. Due to the deferral of the investments in steam and heating at NetVerder, investments were €15 million lower than budgeted.

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

Changes to the transmission grid take many years to complete. To set these changes in motion in good time, a master plan is needed for the long-term development of Stedin’s electricity grid. We have divided our service area into 18 areas, for which we have formulated a master plan for the period until 2050. The biggest uncertainty is the future development of demand for energy. We try to address this uncertainty by applying available national and Stedin scenarios. To identify the right investments, we compare alternatives using the ‘least regret’ principle. This helps us avoid disposals in situations involving great uncertainty, and also enables us to initiate permitting procedures in good time.

Planned investments

The master plans set the direction for our Strategic Investment Plan (SIP) 2022-2037. We prepare an Investment Plan (IP) based on the SIP once every two years. The IP for 2022-2024 was adopted in April 2022. The available insights on electricity generation from the RES, among other sources, are included in the scenarios. In addition, up-to-date customer information and available recognised regional and national sources, such as effects calculations 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. More information on our planned investments in Utrecht, Zeeland and Zuid-Holland is available at www.stedin.net/investeringsplan. An interactive map of our service area, showing the projects we are working on, is available via this link.

Congestion

We work hard to avoid congestion as much as possible. However, we are close to the capacity limit of the TenneT high voltage grid in several parts of the Netherlands. Heavy-use customers in our service area are also affected, in the Port of Rotterdam, Goeree-Overflakkee and the province of Utrecht. Once there is congestion in the high voltage grid, this causes congestion in the relevant area of the regional grid manager. The cooperation with TenneT is thus a crucial issue for us.

TenneT congestion areas

1. Port of Rotterdam and Goeree-Overflakkee

• Congestion in consumption, study is ongoing

In a large part of the Port of Rotterdam (Europoort, Botlek and Pernis) and the regions of Voorne-Putten, Goeree-Overflakkee, Hoek van Holland and Hoogvliet, Stedin and TenneT are studying whether use of the electricity grid could be improved with congestion management for the consumption of electricity. In these regions, the high voltage grid is virtually at maximum capacity as a result of a growing number of requests for grid reinforcement to enable the electrification of industrial processes and the connection of devices such as electrolysers, e-boilers, shore-side electricity and e-logistics. Collectively, these requests amount to 650 megawatts (MW). Under the various scenarios, this increase was projected to take place only around 2030. This increase of 650 MW is similar to four times the peak capacity of the grid of the city of Delft. TenneT expects to have the results of the congestion management study available in the summer of 2023. The permanent solution is an expansion of capacity for this region, and would involve the addition of three transformer stations. This is expected to be completed between 2027 and 2029. For more information, visit www.stedin.net.

2. Province of Utrecht

• Congestion for generation, congestion management possible to a certain extent, with the majority placed on a waiting list for transmission rights

• Congestion in consumption, study is ongoing

Congestion in the province of Utrecht was announced in 2021 due to transmission restrictions by TenneT. The congestion management study showed that capacity could be made available for a large part of our waiting list to offer feed-in capacity (>3x80 amperes) in response to new customer requests. In consultation with our customers - in waiting list order - we discuss how much capacity has been freed up for feed-in. TenneT also issued a pre-announcement for structural congestion for consumption of electricity in November 2022. TenneT is studying the possibilities for congestion management and expects to have the results available in the summer of 2023. TenneT also expects to resolve the current bottlenecks with works to expand the high voltage grid in 2029. There have been requests for 265 MW in transmission capacity in the province of Utrecht in the past two years. This is comparable to the peak demand of the city of Utrecht. For more information, visit www.stedin.net/utrecht.

Status in the three Stedin congestion areas

Stedin did not announce any new congestion area in its own regional grid in 2022.

1. Dordtse Kil

• Congestion for generation, re-examination in progress

Since September 2021, new sustainable projects at the Dordtse Kil III and IV industrial estates have not been able to feed the energy they have generated into the electricity grid. This will again be possible once the grid expansion is completed (in mid-2025). The new congestion management code offers us more possibilities for congestion management. Accordingly, Stedin initiated a request to the market on 10 November. This will free up room in the electricity grid and possibly enable us to connect more customers. We expect the review in response to the new congestion management code to be completed in the first quarter of 2023. For more information, visit www.stedin.net/dordtsekil.

2. Middelharnis

• Congestion for generation, re-examination in progress

At peak times in Middelharnis, almost three times as much electricity is generated as is used. As a result, we need to transmit a large volume of generated electricity off the island. More than €100 million has been invested in this over the past ten years, and we will invest just under €7 million more on installing additional transformers in the coming years. The review in response to the new congestion management code will be completed in the first quarter of 2023. Additional room for new feed-in is expected to be available from the beginning of 2024, as the additional transformers will be in operation by then. For more information, visit www.stedin.net/middelharnis.

3. Zeeland: Schouwen-Duiveland and Tholen

• Congestion for generation, re-examination in progress

A notification of structural congestion was issued for Schouwen-Duiveland and Tholen in the autumn of 2020. We are working on solutions to strengthen the electricity grid here in collaboration with TenneT. To this end, we are installing new transformers in both Schouwen-Duiveland and Tholen, linked to a new 150kV connection to Bergen op Zoom to replace the existing 50kV Noordring. This is expected to be in operation by mid-2027. We are also calling on parties in this area to exercise flexibility, in return for a fee. This has now led to a first contract with Zeeuwind for the Noordpolder wind park. For more information, visit www.stedin.net.

In Schouwen-Duiveland and Tholen, we are running a pilot project with a ‘Non-Firm Connection and Transmission Agreement’. Under this agreement, we can connect customers in areas subject to congestion, but they have no guarantee that they can always feed electricity into our grid and/or purchase energy from our grid. We agree with the customer that their production installation will feed less electricity into the grid or none at all if the grid is at risk of overloading.

Waiting list

As a result of congestion, 228 businesses and institutions were on our waiting list at year-end 2022 for connections amounting to 194 MW (In Utrecht, 141 customers are on the list, in Zuid-Holland 47 and in Zeeland 40). In the case of 188 of the 228 businesses on the waiting list, the request is for feed-in, with 40 waiting for consumption of electricity with a capacity of 40 MW. In our service area, we have 99.9959% supply security. The customers on the waiting list, however, have supply security of 0% of their request. We very much regret the fact that we are not able to provide any new transmission capacity. We make every effort to avoid congestion and operate our grids as efficiently as possible.

Impact of congestion

Where congestion management is not an option, congestion in all areas applies only to heavy-use customers with a connection with a capacity exceeding 3x80 amperes. Consumers can continue to install solar panels and feed electricity into the grid. If congestion management is possible, we make agreements with customers that they will use the grid to a lesser extent at specific times. This creates room for other customers, so that they will in principle not experience problems due to congestion. The scale of congestion management is subject to a maximum. Customers with whom agreements are made receive compensation for this.

Preventing shortage of transmission capacity

Flexibility

If we foresee a problem in our grid due to a specific request, we discuss with the customer what they wish to take up and/or generate. We show the customer what is possible, put things into perspective and discuss about whether or not to apply flexibility in order to reduce peaks in electricity consumption. For customers who agree to flexibility, we work with ‘capacity limiting’ contracts. Customers receive financial compensation for this flexibility.

Expenditure on flexible control power capacity

To be able to apply flexible control power capacity in practice, various agreements have to be made between Stedin and the party offering this flexible control power capacity, including agreements on the fee for this. This is a difficult area. Firstly, the fee has to be sufficient to be attractive to participants - they should not lose out. On the other hand, in the context of a fixed budget, the cost of flexibility directly affects the number of customers that can be connected by means of congestion management. The higher the cost of flexible control power capacity, the fewer customers on the waiting list can be helped and obtain capacity again. Stedin has opted for cost-based fees to compensate customers for the use of flexible control power capacity. This means that when the output of a solar park is reduced, customers receive a fee from Stedin equal to the revenue they would have received for the sale of energy on the day-ahead market.

GOPACS

GOPACS is a collective platform of the regional and national grid managers on which they can collectively and efficiently purchase, align and coordinate flexibility. The platform aligns with existing trading platforms on which participating parties in a specific grid area indicate the price at which they are willing to consume more or less electricity or feed more or less into the electricity grid. As soon as there is a risk of congestion in the grid, the grid manager calls for flexible capacity to be made available. The past year saw a marked increase in the number of participants in the platform.

GOPACS accounted for 721 connections divided between 27 trading companies in 2022. In our service area, those were 219 (2021: 150) connections and 7 trading companies. This year, for all grid managers including TenneT, GOPACS delivered nearly 182 GWh in flexibility with a ‘value’ of more than €59.5 million (2021: 140 GWh / €35 million). The ‘value’ in this case is the difference between buy and sell orders (so what the grid manager pays). As a result of the new congestion management code, we expect to use GOPACS more frequently in future.

Use of our grids

Besides flexibility, we have several other tools designed to achieve maximum use of the existing energy grid. Stedin is developing various initiatives for this that will not endanger reliability of supply. Examples include dispensing with the failure reserve, and cable pooling.

Dispensing with the failure reserve and generation management

If a power cable fails and the failure reserve is no longer available to divert electricity, we work with generation management. This concerns the decentralised and remote use of a control box to manage generation capacity (of solar and wind) in case of failures or maintenance works. This service enables us to temporarily reduce production at large-scale generators such as solar and wind parks. In case of a failure, this means we can still use the failure reserve and limit the duration of the failure. This ensures that the high level of reliability of our electricity grid is maintained. Stedin developed its generation management service together with commercial partners and customers Sunrock, Kieszon and Eneco. Sunrock and Eneco are working this year for the first time with a control box in the areas of the Europoort and Dordtse Kil. In Dordtse Kil, this control box is especially useful in helping to prevent an outage in case of a failure. We installed control boxes at three customers in 2022. Now that we have connected two large wind parks (Kroningswind and Harde Zeewering), we can manage more than 200 MW. Our aim is to install control boxes at 500 customers in 2023. From next year, this service will also be made suitable for batteries.

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 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. In 2022, we can see that the market is not yet at the point where cable pooling between different parties is applied in Stedin’s area. However, we expect that this option will become increasingly attractive due to scarceness of capacity.

The interdependence of parties in new initiatives is still cited as an obstacle, as well as caution on the part of financiers. After all, unknown is unloved. An example of the realisation of the technical and economic benefits of cable pooling is the cable pooling ‘light’ project by Vattenfall, which opened this year at Goeree-Overflakkee, combining wind, solar and batteries.

Easing of cable pooling regulations

Several customers have indicated that they wish to make use of cable pooling in situations where a generator and a user are involved. This is however not permitted under current regulations, which state that cable pooling may only occur in combinations of solar and wind. Solar and wind are indeed often complementary. An easing of the cable pooling regulations for generators and users (including battery operators) would be attractive to Stedin and its customers for better use of our grid capacity. For better division of the ‘one-way traffic (generation only)’, we would then be able to use a larger part of the grid for ‘two-way traffic (generation and use)’ with the same infrastructure. Since generation and use are complementary, parties would not have to reduce their generation in periods of strong wind or sunshine, contrary to the situation for cable pooling between generators only. This would make mutual agreements easier to achieve.

Via the National Action Programme for Grid Congestion (Landelijk Actieprogramma Netcongestie) and in other ways, Stedin strives to reduce the barriers for its customers and make this easing of regulation legally permissible.