John Laurenson (0:59)

For what? It's a big dog. SAP Concur helps your business move forward faster. Learn more@concur.com welcome to Business Daily from the BBC World Service. I'm John Laurenson. Today, an energy crisis for the 2020s. I'm in the Netherlands, where the network, or grid of cables that transports electricity from producers to users can no longer cope with the transition to green energy.

Damien Ernst (1:28)

They have invested a lot in solar panels, in batteries and in EVs, and they cannot connect those devices anymore to the grid. New companies cannot connect to the grid, so they really have a grid crisis.

Eugene Byings (1:41)

In the Netherlands we have about 12,000 organizations, so factories and the bakery and the larger industries who want to take off and consume electricity. And we need to put people to the waiting list because we cannot grant them the capacity that they requested.

John Laurenson (1:58)

Grid congestion, a world of pain for the Dutch economy. Coming up in Business Daily, an electric delivery truck arrives at a charging station at a distribution centre belonging to the Lidl supermarket chain in Al Mary on the outskirts of Amsterdam. You gonna charge it up? Yeah. This depot got its first e lorry three years ago. Now it has 17. The aim is to replace the entire 30 diesel truck fleet with E vehicles transport, heating, cooking, the host of rechargeable devices we now use. The Netherlands is electrifying extremely fast. It has the largest number of EV charging points per per capita in Europe, for example. As for electricity production, the Netherlands has replaced gas from its large North Sea reserves with wind and solar leading the way in Europe for the number of solar panels per person. More than one third of Dutch homes have solar panels on their roofs. Which is all good, right? Not if you're this nation's grid, it isn't. Keith Jan rameau is the CEO of the Dutch energy producer and supplier Eneco, 70% of whose electricity is now solar and wind.

Kees Jan Rameau (3:22)

Grid congestion is like a traffic jam on the power grid. So it's caused by either too much power demand in a certain area or too much power supply. So too much power being put on the grid, more than the grid and the transformers can handle. And the reason why it's it's an issue nowadays is because originally our power grid was designed in the days when we had just a few very large power plants, mainly gas fired plants and also some coal plants. And then we used to have a grid with very big power lines close to those power plants and increasingly smaller power lines as you got more towards the households. And nowadays we're switching to renewable power. And that means that there's a lot of power also being injected into the grid in the outskirts of the grid, where there's only relatively small power lines.

John Laurenson (4:19)

So when there is too much demand of the grid, either by people putting too much power in at a certain time or wanting to take too much power out at a certain time, what is the consequence?

Kees Jan Rameau (4:31)

The consequence is that if it's too much supply, so too much power being put into the grid, we have to curtail our wind and solar farms. That means basically just stop them from producing power. Has a characteristic that every second really you have to put exactly the same amount of power onto the grid as that is taken off the grid. So it has to be in balance every second.

John Laurenson (4:58)

Maintaining that balance is made harder by the intermittence of solar and wind power, that wind turbines and solar panels produce a lot of power when the wind is blowing and the sun is shining and none when they aren't. And also the sheer scale of renewable energy. Now, Damien Ernst, professor of electrical engineering at Liege University in Belgium, is one of Europe's leading experts on electricity grids.

Damien Ernst (5:24)

In the Netherlands, they have around 27 gigawatts of PV panels installed. So it's an enormous capacity of PV panels. It corresponds to 27 standard nuclear reactors or like 16 nuclear reactors as we have in the UK. So yes, it's a lot of power. And when it's sunny, I mean this 27 gigawatt of PV panel, they are going to produce, I would say around 25 gigawatts of power. Okay. And it's much, much more than what the Netherlands is consuming during a sunny day.

Damien Ernst (6:01)

And it's the same in every country in the EU. In Belgium, we are reaching 10 gigawatt of power. In Germany, they have more than 100 gigawatt of installed capacity. So we have an enormous AM of PV panels being installed. And they are installed at a rate which is much, much too high for the grid to be able to accommodate those new PV panels. They have a grid crisis. They haven't invested enough in their distribution networks, in their transmission networks, and so they are facing bottlenecks everywhere in those networks, and it will take years and billions of money for solving them.

Kees Jan Rameau (6:46)

Here we're in the virtual power plant of eneco. This is the brain, you could say, of our operations.

John Laurenson (6:52)

At his company's head office in Rotterdam, Kees Jan Ramo shows me a very large control panel. It's their virtual power plant that uses AI to help balance the grid. The Dutch have been skillful in managing challenges to the grid so far, avoiding blackouts. When production is too high, they turn wind turbines out of the wind and turn off solar panels, wasting a lot of power, but protecting. As for congestion, when demand is too high, for example, when people come home in the evening, turn everything on, plug in their rechargeables, and the grid just doesn't have the capacity to deliver all that power, then the first thing is to try to persuade people to switch things off. When we all use electricity at the same time, our power grid gets overloaded, explains this TV public service announcement. This can cause malfunctions, so use as little electricity as possible between 4 and 9. Flip the switch another way. The electricity companies can do what they call peak shaving. Reducing demand at peak times is through special contracts where individuals or companies agree to allow their energy provider to stop or lower their electricity supply when the network is under strain in exchange for a lower price. The bigger problem is people, and especially companies who want to scale up their use of electricity with a new or larger grid connection. That increasingly is just not possible.

Kees Jan Rameau (8:29)

Kesan Ramo Again, we have both consumers, but also businesses, and all are affected. For example, consumers, increasingly, they request us, for example, that they want to install a heat pump or they want to charge their electric vehicle at home. But those are applications that require often a much bigger power connection than they used to have, and increasingly they just cannot get it. So the grid operator cannot offer them that bigger connection and then we cannot offer that service. And the same, or even maybe worse, applies for businesses, because the Businesses, often they want to expand their operations and they just cannot get extra capacity from the grid operators. And it's now gotten to the point where even new housing construction in the Netherlands is becoming increasingly difficult because there's just no capacity to connect those new neighborhoods to the grid.

John Laurenson (9:25)

What happens to those people, those housing developers, those companies, is they get put on waiting lists. In one of the most advanced economies in the world, if you want electricity for a new factory, a new car charger, a new housing estate, you can't get it hooked up to the grid for three, five, 10 years. There are also waiting lists for those who want to supply the grid with power. A warehouse with solar panels on the roof, for example. Eugene Byings is in charge of grid congestion with Tenet, the company that runs the national electricity grid.

Eugene Byings (9:59)

We have about 8,000 companies who want to feed in electricity and produce with either solar panels or wind farms. And we've got about 12,000 organizations, so factories and the bakery and the larger industries who want to take off and consume electricity off the grid. And for both categories, the grid is congested.

John Laurenson (10:24)

You're listening to Business Daily on the BBC World Survey.

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John Laurenson (11:04)

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Kees Jan Rameau (11:09)

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Eugene Byings (11:15)

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John Laurenson (11:19)

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John Laurenson (11:33)

I'm John Laurentson and today I'm looking at an energy crisis for our times in the Netherlands, which is also looming, by the way, in many other countries, including the uk, the us, Germany and Italy. I talked to a few businesses about how this crisis is affecting them. To Lidl, one of whose tremendous E trucks we heard at the start of the programme about delays and complications to its efforts to decarbonise deliveries to their Stores to the Dutch Data Centre association about how grid congestion is slowing the expansion of this thriving but very energy hungry sector. And the Dutch Chemical association, which represents 120 companies in 400 locations across the Netherlands. Its president is Ninka Homan.

Ninka Homan (12:19)

Grid congestion is putting the future of the Dutch chemical industry at risk. And chemical industry can be seen as the mother of all industries. They produce basic ingredients for how to make products. And this chemical process takes energy and we want to make it more sustainable. So you need renewable energy, you need renewable feedstock, but right now there's such a high ask for these new electrons that it takes up to 10 years before while these chemical plants actually can get these new electrons. So, yes, if you don't have electricity and you're not sure if you can do that, it's also a problem, then companies cannot invest because, yeah, they have to have a business case.

John Laurenson (13:00)

What about the cost of this when it comes to grid connection charges, which I believe have increased quite a bit.

Ninka Homan (13:07)

Yes, indeed. So the costs of the grid are definitely a problem. So we have grid connection being not only a technical issue, it's a competitiveness issue. And now you see that it pushes actually the investments and therefore also the jobs abroad. And I think the high energy costs combined with the bottlenecks in the grid we have, we really have the risk that Dutch industry will shut down, get less, and in other countries it will be easier to invest. And, well, the problem with chemical industry is they're all value chains and chemical processes are mostly combined processes and if you lose a part of that, then it can have a chain reaction.

John Laurenson (13:55)

So was all this avoidable in hindsight?

Kees Jan Rameau (13:59)

I think almost every problem is avoidable.

John Laurenson (14:01)

Enerco CEO Kesian Ramo we had the.

Kees Jan Rameau (14:05)

Paris climate agreement in 2015, and then after that there was a big Dutch climate agreement as basically implementation for the Paris Agreement in 2018. And the government, the energy sector, the industry and the NGOs, they got together and they agreed on a big package. If I look now, back in hindsight, we were very much focusing on increasing the renewable power generation side, but we kind of underestimated the impact it would have on the power grid. So the grid operators have started to catch up. Now they're investing huge amounts. They're projecting to invest no less than about 200 billion euros until 2040 to reinforce the power grid, which is really an astonishing amount. But they're still catching up. And due to long planning and permitting procedures, it will take a long time before all the bottlenecks are removed in.

John Laurenson (15:03)

The grid 200 billion euros. $235 billion. A gigantic sum for a smallish country. There's also a big cost, of course, for not investing that money in expanding the grid, in lost growth, wealth creation, investment taxes totaling between 12 and 47 billion dollars a year. That's according to a recent study by the Boston Consulting Group. But unfortunately, it's not even a question of one or the other, it's both. This is going to take are fixed that the Dutch are going to have to pay to overhaul the grid, and for not having done it already. Eugene Byings Grid Congestion Manager at Grid.

Eugene Byings (15:43)

Operator Tenet to strengthen and reinforce the grid, on average, we need to double or triple or maybe even tenfold the existing grid in the Netherlands. And it's costing on average about 10 years to do a project like that before it goes live, of which the first eight are legislation and getting the rights to put cables in the ground with all property owners. And only the last two years are this construction period. And there are even projects expanding to 15 or 16 years from start to realization. So that's taking an extremely lot of time. And meanwhile, the energy transition is going that fast that we cannot cope with it with the existing grid. So every additional request is coming to the waiting list.

John Laurenson (16:31)

Could this have been avoided with better planning? Shouldn't this have been anticipated by the technicians who know about this, that is the people in your company Tenet?

Eugene Byings (16:41)

Yeah, well, everyone is pointing at each other whether this could have been prevented. About 10 years ago, our planning and our suggestions to already invest ahead in the system wasn't allowed according to the legislation in the Netherlands. So we were only allowed to invest a euro if we were sure that we already had the request visible in a contract. So investing ahead was difficult in the Netherlands, but either way, as all other countries in Europe, we committed ourselves to be CO2 neutral in 2050. So it would still have demanded the same investment in the grid and the same transition, but maybe we could have lowered the pace.

John Laurenson (17:24)

The professor of electronical engineering, Damien Ernst, sympathises with the grid operators. He says they were ignored by the politicians and NGOs. On the subject of the policymakers, he's harsh. They can do a good slideshow, he says, but they don't know anything about engineering. I approached the Dutch Energy Ministry, which is actually called the Ministry for Climate Policy and Green Growth. The minister, Sophie Hermans, wasn't available for an interview, but her office sent us written replies to a couple of our questions. Two Is the government at least partly to blame for going all out for solar and wind, all out for electric cars, while failing to sufficiently reinforce the grid.

SAP Concur Representative / Ministry Representative (18:07)

The Ministry in hindsight, the speed at which our electricity consumption has grown might have been collectively underestimated in the past by all parties involved. It is also hard to predict where the growth will occur first, as this results from individual companies, sectors and households.

John Laurenson (18:27)

As for solutions, the Ministry says it has a National Grid Congestion Action Plan focused on adjusting legislation so grid expansion permits can be granted more quickly. It's encouraging people to make better use of the existing grid with, for example, the public service announcements we heard. And there's a promise of $230 million of infrastructure investment, a sum which is almost exactly 1,000 times less than the cost estimate we heard earlier in the program for making the grid fit for purpose. One recent government policy the Ministry did not mention was a U turn on the deal for people with solar panels on their roofs. The financial incentive for people who feed their surplus electricity into the grid is being reduced to almost nothing. In some cases, people will even have to pay to put solar power into the grid. You've been listening to Business Daily on the BBC World Service. You can hear more episodes by searching for Business Daily. Wherever you get your BBC podcasts from me, John Lawrenson Goodbye.

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