Introducing a fair network tariff system in the Netherlands

Abstract

What would you think if your neighbour, who owns a Tesla and therefore causes extra load on the already congested electricity grid and you would have to pay these costs? Feels unfair, doesn’t it? This is currently happening in the Netherlands and it concerns millions of households that consume electricity. Electricity consumers are currently paying for the extra loads that are caused by electric vehicles. Why do these consumers have to pay for other consumers that own Teslas? Why do these consumers have to pay without reaping the benefits? Why do these consumers have to pay for these costs while the fixed costs are rising through inflation and increasing energy prices (RTLNieuws, 2021)? Unfairness does not seem something to be desirable by society. So how does it suddenly arise? Unfairness of the network tariff system is in its core a cost allocation issue related to energy use. This issue is a recurring theme in the energy transition and it revolves around the central question of how we are going to divide the costs of the shift from fossil fuels to renewables. This question is currently a very relevant topic in the political and public debate and unfairness of the network tariffs further undermines the very necessary energy transition. The climate goals associated with this transition contributed to the development of sustainable energy technologies such as the electric vehicles, heat pumps, solar panels and wind turbines. The increasing penetration of these technologies cause extra costs for distribution system operators, the managers of the electricity grid. Electric vehicles, for example, congest the grid and therefore system operators will have to invest in the grid. The system operators will have to recover these costs from consumers through a network tariff system. The current tariff system uniformly distributes the costs for all households without making a distinction between heavy and light consumers. This means that consumers that cause extra costs for the system operators pay the same tariff as consumers that cause less costs. This was not a problem in the past because the differences in loads were small and inconsequential. This leads to an outdated network tariff system and causes unfairness for consumers. The system operators (Netbeheer Nederland) in the Netherlands luckily also recognize the seriousness of unfairness and therefore they initiated a multi-actor decision-making process with the goal of introducing a new network tariff system for small consumers in the upcoming years. This will be done in collaboration with a lot of stakeholders in the energy sector. The government (Ministry of Economic Affairs and Climate, ACM), the energy suppliers (E-NL, Vattenfall, Eneco, Essent, Engie, Greenchoice), consumer organizations (Vereniging eigen huis, Consumentenbond, Aedes) and other stakeholders are involved.