On 14 March 2024 the director of the ACM, the Netherland’s energy market authority, announced that ACM will tolerate the use of cable pooling for batteries in anticipation of new legislation formally allowing cable pooling for installations other than wind and solar parks. Cable pooling, which allows different installations to share a single grid connection, can help solve current congestion on the electricity grid. Pursuant to article 1.7 of the Dutch Electricity Act 1998, a wind park and a solar park in close proximity but owned by different parties can share a connection, provided the total connection capacity is at least 2 MVA. No reference, however, has been made for connection sharing with other installations. Consequently, cable pooling is currently not allowed for any other types of installations (e.g. battery storage systems). As a result, a proposal to allow cable pooling for battery storage systems was included in the Bill to amend the Dutch Electricity Act and the Act on Environmental Taxes. This will implement the phase-out of the net-metering scheme (sal­der­ing­s­reg­eling), which obligates energy suppliers to deduct the surplus solar power generated by households that is fed back into the grid from the amount of power that households consume from the grid. Given that the envisaged phase out of this scheme was deemed controversial, the Senate last month rejected the Bill in its entirety. This brings a solution for cable pooling for battery storage back to square one, as it means that parties must in principle wait for the introduction of the Bill for the Energy Act (Energiewet), which is to replace the Electricity Act and the Gas Act and will expand cable pooling to installations of production, storage, conversion, or consumption of elec­tri­city. Cur­rently, however, it is not clear if, and if so when, the Bill for the Energy Act will be adopted. The Minister for Energy Policy recently expressed the intention to amend the Electricity Act on this point. With the timing of this amendment not yet known and expected to take some time, the ACM announced at the Energy Storage and Distribution congress held in Utrecht on 14 March that it will tolerate grid operators and connected parties engaging in cable pooling for batteries and other installations, provided that this complies with the conditions set out in the Energy Bill. This includes the obligation to report the envisaged cable pooling to the ACM. We expect this decision to be very welcome since there have been frequent calls to allow cable pooling for batteries.

As the world economy increasingly embraces the push towards decarbonisation, Europe has actively sought to place itself at the vanguard of the discussion on energy trans­ition. Op­por­tun­it­ies to deploy capital abound as power sources switch further towards offshore and onshore wind, solar, heat, hydrogen, battery storage, new networks, carbon capture, and industrial decarbonisation. The latter brings an interface with other sectors such as technology companies (with power hungry data centres a particular focus), real estate, low carbon transport and decarbonisation of industrial processes such as cement, glass and steel production. As much as it is difficult, complex and highly political, the energy transition is also a huge business opportunity. To reach net zero by 2050, the International Energy Agency (IEA) estimates that global investment in clean energy alone will need to increase from the USD390bn in the first half of 2023, to USD 1.3tn in 2030. Many commentators worried that Russia’s invasion of Ukraine would put back the transition and shift Europe back towards fossil fuels. While it appears to have resulted in a renewed political focus on energy security it has also laid bare the financial and political consequences of relying on oil & gas imports, giving further impetus to renewables as a secure form of energy. Europe has also sought to be a leading light on the concept of “reaching net zero”, with the European Union (EU) having set out its ambition, back in 2019, to become the world’s first major economic bloc to be climate-neutral by 2050. This has added momentum to energy investment and M&A over recent years – 2021 and 2022 saw the second and third highest annual aggregate values of Western European M&A in the sector on record, at USD 59.8bn and USD 53.7bn, respectively, bested only by the anomalously high total of USD 89.4bn logged in 2018. Energy M&A in the region has been more subdued in 2023, but our survey demonstrates that energy executives are gearing up for a more active dealmaking period, with most expecting more opportunities and anticipating increased levels of investment in the year ahead. Capital looks set to continue to flow primarily to renewable energy projects and related assets, with solar and batteries topping the list of attractive subsectors among our respondents. Consistent with this, South West Europe takes pole position as the most promising region for investment opportunities. But there are thorns among the roses. Our respondents are cognizant of the challenges in the energy market, with supply-chain volatility and commodity price increases emerging as a prominent concern. This is unsurprising after a period of dislocation following the pandemic and amid a time of rising global demand for renewable products and commodities. Persistent inflation and elevated interest rates, combined with an uncertain macroeconomic outlook, are raising investors’ concerns, with financing risk (including the increased cost of financing) also coming to the fore for respondents. Overall, while some sense a recent softening of the market due to these fundamentals, our survey paints a picture of steadily improving investor sentiment in Europe’s energy sector, laying the foundations for a busier period ahead for M&A activity.