STROOM Bill introduces new duties for Dutch system operators

This is the third part in a series of six on the Dutch STROOM Bill [see for part one and part two]. STROOM enacts new provisions for the production, transportation, trade and supply of electricity and gas and was submitted to the Dutch House of Representatives on 4 May 2015. The STROOM Bill aims to create a new, clear and simple framework for the Dutch electricity and gas market, based on European law. This newsflash sets out the main proposed amendments in relation to the duties of system operators.

Investment plans

The Bill proposes a clear framework for the duties of system operators including some changes to existing duties and introducing a number of new duties. Amongst other objectives, the Bill aims to accommodate the energy transition. In view of the energy transition, system operators are facing a challenge replacing and expanding the current grid to accommodate the growing supply of renewable energy and the growing share of local energy production. To anticipate on these developments in the energy market and to make sure that required investments are done in time, the Bill obliges all system operators to adopt an investment plan. Such investment plan replaces the current quality and capacity document and the expansion investment decisions.

Investment plans should include the necessary expansion and replacement investments and will be audited by the Dutch national regulatory authority, the Authority for Consumers & Markets (ACM). In drafting the investment plan system operators must consult interested parties and incorporate any responses they may receive. Investment plans for transmission systems must also be submitted to the Minister of Economic Affairs. The assessment of the ACM focusses on whether the system operator in all reasonableness could have come to the investment plan. The Minister also looks at whether the transmission system operator has sufficiently taken into account the developments in the energy market. Further details may be laid down in subordinate legislation. Investment costs anticipated in an investment plan are considered necessary and may be settled in the distribution and transmission tariffs.

In relation to onshore wind the Bill specifically provides that areas designated for onshore wind pursuant to the relevant structure vision need to be taken into account in the investment plan. The reason behind this is to make sure that system operators timely make the necessary preparations and will discuss the grid requirements with the relevant stakeholders, such as wind park developers and the competent authorities. In relation to offshore wind the Minister of Economic Affairs will do the groundwork beforehand by adopting a so-called scenario, to be worked out in detail by the Dutch TSO TenneT in an offshore wind investment plan. The scenario will be leading.

Legal basis offshore grid

An important element of the Bill is that it provides the legal basis for development of a Dutch offshore grid by Dutch TSO TenneT for the connection of offshore wind park projects. This is to accommodate the envisaged increase of offshore wind capacity to 4,450 MW in 2023, as a consequence of which a total extra capacity of 3,450 MW has to be constructed the coming years. The first scenario that will be adopted by the Minister of Economic Affairs shall deal with this target and shall include details such as the envisaged capacity, the subsidy that will be made available for the realisation of the offshore wind parks, the life span of the wind parks and the technical concept of the connections. The Bill further contains provisions on the liability of TenneT in its capacity of manager of the offshore grid in case of a delay in the construction of the offshore grid in deviation of the scenario or in case of disruptions in the transmission of electricity through the offshore grid. The liability provisions will be worked out in detail in subordinate legislation. The offshore grid and aforementioned liability regime will be addressed in more detail in one of our next Newsflashes in this series.

Information sharing and underground cabling

The Bill further introduces the obligation for system operators to make public all information that can be of use for the energy transition. This includes the production installation register (PIR) for local energy generation, as well as the availability of user data at postcode level and detailed information on the installation of smart meters that can be read remotely by system operators and will replace the current energy meters in the coming years.

Finally, the Bill introduces underground cable installation in areas where high voltage cables are situated in close proximity of housing. In total a maximum of approximately 135 km of high-voltage cables in the Netherlands is eligible for underground cabling. It will be up to the municipalities concerned to instigate the underground cable installation, in which case they will bear 25% of the costs. The Bill enables Dutch TSO TenneT to settle the remainder of the costs in the transmission tariffs.

Our next newsflash on the STROOM Bill will focus on tariff regulation.