New connection with German grid benefits Dutch consumers

With the construction of a new connection between the Dutch and German grids, it will become even easier to supply electricity on the Dutch market. 

That is the conclusion of the informal opinion that the Netherlands Authority for Consumers and Markets (ACM) issued at the request of TenneT, the Dutch transmission system operator for electricity. TenneT had asked ACM to issue this informal opinion to answer the question of whether it is allowed to fund the planned investment in an interconnector near the Dutch town of Doetichem and the German town of Wesel from auction revenues.

Interconnectors connect the powers grids of different countries in Europe. The Netherlands currently has 7 interconnectors, which connect the Dutch grid with those of Germany, Belgium, Norway, and Great Britain.

Henk Don, Member of the Board of ACM, comments: ‘These interconnectors connect markets of four different countries with one another, and result in increased price convergence in these countries. We welcome Tennet´s investment plans, because it will result in consumers benefiting from more competitive prices for electricity.’

Through these interconnectors, energy suppliers are able to buy electricity internationally. In order to do so, they need to have capacity on the interconnectors, otherwise they are not allowed to transport their purchased electricity over the interconnectors. If demand for interconnector capacity exceeds supply, TenneT, as the transmission system operator, will auction the scarce capacity. It wishes to use these auction revenues to finance the construction of the new interconnector, which is estimated to cost EUR 100 million, according to TenneT. Completion of the project is projected for late 2015 or early 2016.

ACM has the statutory task to see to it that the auction revenues are spent as wisely as possible. It does so by testing the expenditures against the conditions set by European regulations.