The Netherlands Authority for Consumers and Markets (ACM) is in favor of two initiatives where competitors work together. ACM says that these initiatives help make the energy sector more sustainable, and that they are not at odds with competition rules. The first initiative concerns the joint purchase of electricity from a wind farm by businesses and organizations. The other initiative is about distribution system operators agreeing to use a uniform price for CO2 in calculation models for grid investments. In its assessments of these initiatives, ACM followed its ‘draft guidelines regarding sustainability agreements’, and gives clarity to the organizers of these initiatives.
Martijn Snoep, Chairman of the Board of ACM, explains: “Businesses are allowed to join forces in order to realize sustainability goals. The Dutch Competition Act does offer such opportunities. We are happy to help businesses that have questions about such collaborations. Various organizations have already approached us with initiatives that contribute to the transition towards sustainable energy and other sustainability goals. We welcome that.”
Businesses are allowed to purchase wind energy jointly
VEMW is an association for business energy users and business water users. VEMW wants its members to be able to conclude collectively a contract with the future developers of the off-shore wind farm Hollandse Kust West. In that way, their electricity rate for green energy will be fixed for several years, and the businesses involved subsequently promote the generation of sustainable energy. Having long-term supply contracts is also favorable for wind-farm developers. VEMW has asked ACM whether this initiative is compatible with the Dutch Competition Act.
What is ACM’s opinion?
This collaboration allows members of VEMW (not just the larger companies, but also specifically the smaller ones) to procure green energy straight from the producer. As such, they help realize the agreed upon climate goals even more, and they promote the creation of wind farms.
This initiative concerns one specific wind farm that still needs to be put out to tender. Businesses and wind-farm developers will continue to have options to buy and sell sustainable energy elsewhere. That is why the initiative is not at odds with competition rules.
System operators are allowed to collaborate to reduce CO2-emissions
In 2021, system operators wanted to agree with each other about using a price of, initially, 50 euros per ton of CO2 when making purchase and investment decisions. In that way, it becomes more appealing to make investments that result in fewer CO2 emissions. After all, the lower the CO2 emissions are, the lower the costs. ACM assessed this proposed initiative in the fall of 2021. The system operators have, in the meantime, raised their calculation price to 100 euros.
What is ACM’s opinion?
A price of 50 euros per ton of CO2 does not result in an appreciable effect on costs and, by extension, on the system operators’ tariffs. That may be different with higher prices for CO2. However, ACM concludes that, also with a higher price for CO2, the sustainability gains outweigh the potential costs for users. All energy users benefit from the agreement if CO2 emissions are reduced. In addition, ACM sees that cooperation is necessary to realize this benefit, and that sufficient competition will remain. That is why this collaboration falls under the exemption of the cartel prohibition, meaning that the system operators are allowed to collaborate in this area.
ACM and sustainability
ACM finds it important that businesses in the energy sector help realize a sustainable economy that meets the climate goals. Other sectors of the Dutch economy can also help in that effort. ACM invites all businesses to submit their plans to ACM so that we can help find out whether those plans are compatible with the Dutch Competition Act. In that way, ACM ensures that market work well for people and businesses, now and in the future.