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Give the market the opportunity to function properly in the energy transition

Give the market the opportunity to function properly in the energy transition. That will result in  innovation and competitive prices. Market participants must be able to make optimal use of the grid. Distribution system operators (DSOs) must facilitate them by focusing on their core task: providing access to the grid, and transmitting power at efficient costs. Also, network companies (which DSOs are a part of) must limit their activities. That is how the Netherlands Authority for Consumers and Markets (ACM) wants to prevent DSOs from being exposed to irresponsible commercial risks, and to prevent market participants from being put at a disadvantage. For example, energy saving services and the services of aggregators (parties that match supply and demand of energy) should be left to the market, according to ACM.

With this vision, ACM supports the division of roles laid down in the Progress of the Energy Transition bill (VET). This has been revealed by the written contribution of ACM for the roundtable discussion about VET, which will be held in the Dutch House of Representatives on 17 January 2017. ACM is in favor of the bill being passed quickly by the House.

DSOs can temporarily get more latitude

New markets that emerge as a result of the energy transition do not always function properly, because many new products and services are still in the development stage, and because of innovations that succeed each other rapidly. In those cases, it can be beneficial to offer DSOs temporarily more latitude, but only if there is a direct link with the DSO’s core task. VET offers DSOs such latitude through temporary statutory tasks and experiments. In addition, VET makes clear what activities network companies are allowed to do, and what activities not. ACM supports this line of thought, provided that the latitude that DSOs receive is described clearly, and that the activities of the DSOs do not disrupt the market process. 

Storage, energy-saving services, and aggregators as examples

In its written contribution, ACM explains what the considerations should be for deciding whether an activity should be done by a DSO, a network company, or the market. ACM has applied these considerations to a few practical examples. For instance, energy-saving services and the tasks of aggregators should be left to the market. According to ACM, this also applies to electricity storage, for which multiple initiatives are taken in the market. Such initiatives should not be frustrated.

VET is easier to implement and to enforce than existing legislation

ACM had already previously tested the feasibility and enforceability of VET. According to ACM, the stricter definition of the activities of network companies is an improvement over the existing legislation. It offers market participants a clear idea of where they can expect competition from network companies. With that information, market participants are able to make better business decisions. Moreover, the stricter definition offers ACM better opportunities to take action against undesirable activities of network companies.

Sustainable energy supply that is also affordable and secure

ACM supports the transition towards a sustainable energy supply. The supply also needs to be affordable and secure. ACM ensures that DSOs are able to recoup the investments in sustainability, insofar such investments are efficient. ACM ensures that the energy market functions as efficiently as possible by regulating DSOs and supporting competition on the market.

ACM’s message to DSOs is: focus on your core task, and, therewith, facilitate the market. Innovative market participants must be able to make optimal use of the grid. The focus of network companies should also be on system operation and related activities. Consumers, of which more and more are also becoming producers, should have options, and should be able to see the wood for the trees. ACM enables consumers to make well-informed decisions, and protects them where necessary.