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Necessity of additional incentives for investments in energy networks must be demonstrated

18-11-2014

Energy network operators throughout Europe need to make considerable investments in their networks in the next few years. These are needed to complete the transition to sustainable energy and to realize the European internal market. In order to be certain that operators invest in these networks sufficiently and swiftly, the European Commission has drawn up rules, which the Netherlands Authority for Consumers and Markets (ACM) has adapted to the Dutch situation. These rules stipulate what information network operators must provide in order for ACM to be able to assess whether these investments carry a higher risk. This is because such investments can be given additional incentives to make sure they are carried out. One such example is that the costs that network operators incur can be compensated earlier. Henk Don, Member of the Board of ACM, explains: “Many investments are the kind of investment that network operators can be expected to make. An additional incentive must therefore be really necessary. Network operators must be able to demonstrate the necessity. In addition, investments in new cables for electricity or gas pipelines must be made as efficiently as possible.”

Major investment projects

In the Netherlands, plans for large, important investments must be submitted to the Minister of Economic Affairs, while ACM gives advice about their use and necessity. Once a project has been completed, ACM assesses whether the project was carried out efficiently, after which the efficient costs can be incorporated into the transmission tariffs for consumers and businesses. In the next few years, considerable investments are expected to be made in key energy networks. Dutch transmission system operator TenneT will launch a new cable for electricity between the Netherlands and Denmark, called the Cobra cable. Other projects include investments in the interconnection point near the border town of Doetinchem, and, of course, the connections with the planned offshore wind farm. GTS, the transmission system operator for natural gas, plans to invest in improved connections with Germany and Belgium. Henk Don adds: “We are heading towards a single European market, and such a market can only function properly if everyone’s energy networks are in order. We are on the right track here in the Netherlands. If necessary, countries must be able to fall back on each other for their electricity and natural gas needs.”