In conversation with Ruud Nijs and David Peters

‘2022 is the first year of a huge acceleration in the batteries market,’ says Ruud Nijs. ‘The year before there was still widespread hesitation. Now we see many different parties taking up the challenge and starting to collaborate. Geopolitical developments have certainly played a role, because we no longer want to depend on energy, financially nor in terms of availability. And of course congestion is becoming an ever more important factor as well.’ David also points out that the energy transition has now ‘left the paper stage’ for the first time. ‘On all fronts, things are beginning to move. Our models have shown for a long time that storage was going to be crucial for the future energy system. But now we can see it happening, it’s like a tsunami.’

The pain of change
The growth of GIGA Storage gives us an idea of just how fast that market is developing. In five years’ time, the company has grown into an enterprise with 25 employees managing the two largest batteries in the Netherlands. What Ruud experiences is not so much growing pains as the pain of change. ‘Storage can really help to solve the congestion problem. At present, everybody is looking at everybody else, based on rules from the old economy.’ As a battery operator (and developer), Ruud sees two main challenges ahead: the waiting list and transmission costs. ‘A grid manager is required to process requests in the order in which they come in. New requests are simply put at the bottom of the waiting list. But how logical is that? And then there are the transmission costs. According to the law we are both a producer and a consumer, but of course we are neither. And as a consumer you pay the full transmission costs. While we can actually help prevent congestion.’

Skirting close to the lines
In the current situation it can sometimes be necessary to colour outside the lines, or at least to skirt close to those lines. And that creates dilemmas. David: ‘I have no problem with reconsidering how we deal with the waiting list or transmission costs if that enables me to connect more customers, which serves the public interest. But in return, I want the batteries to be of optimal service to the grid. And that’s where it gets complicated, because not all operators are willing to make agreements. But if we don’t make agreements, batteries can actually cause congestion.’

As a battery operator, Ruud sees it as his raison d’être to help solve the congestion issue with batteries rather than with gas-fired power stations. He has little sympathy for operators who do not share that goal. The regulatory context plays an important part in this regard. The operators should of course be able to work in a realistic business environment. ‘The transmission costs make it difficult to maintain a realistic business case. What we need is a local earnings model - less transmission - and practical IT solutions: the Internet of Technology. We are slowly but surely evolving into an IT company, with algorithms indicating the best times to buy and sell energy.’

Piece of the puzzle
One crucial piece of the puzzle in the energy transition is the flexibility provided by storage. David and Ruud agree about that. At the same time, reinforcement of cables remains important, says David. ‘Without reinforcement, so more cables and more stations, we won’t make it. We will also need look at how we can scale up and down in a smart way to make optimal use of the flexibility we have.’

What would Ruud do if he were in David’s shoes? ‘First of all I’d continue seeking partnerships with all bodies involved, from the ACM to commercial parties. I would also ask the operators to fund part of the investment up front. That way you can separate the wheat from the chaff.’ And vice versa? David laughs: ‘Mainly connect everything, everywhere!

What is certain is that we are in a pioneering phase right now, which involves a great deal of innovation. Ruud: ‘I expect it will ultimately become a tendering market, where we will install the batteries at the locations indicated to us by regional grid managers.’ Ruud expects the pace of technological development to be very high. ‘I think that’s fantastic. We’re in the vanguard of developments here in the Netherlands. Technical universities are eager to visit us, all sorts of things are happening there.’ David agrees, and thinks we are going to see many unexpected developments over the next two or three years, and not only in the field of storage. ‘The effects of that are difficult to estimate with absolute certainty, so we are in for a fascinating period.’