Report by the Board of Management

Main grid is already 'smart'

Besides large-scale renewable power generation - as with offshore wind farms and imported hydropower - there is also a trend towards small-scale local production. Over the past years there has been an explosive growth in the use of combined heat and power units (CHPs) by parties such as horticulture businesses in the Westland region. Capacity there quadrupled from 150 MW in 2004 to more than 600 MW in 2008, while the local demand for electricity did not increase. This growth, combined with the introduction of wind turbines and new electricity stations in the Maasvlakte industrial area, is causing a shortage of capacity in the transmission grid during peak hours. Pending the introduction of a national congestion management system, a pilot project started in the Westland region at the end of December 2008. This regional congestion management system was set up in association with regional grid operators, market parties, the Ministry of Economic Affairs and the Office of Energy Regulation. After the system has been incorporated into legislation, it will be possible to use congestion management nationwide. It should be noted that congestion management remains a temporary measure, because the goal is ultimately to expand capacity. In this context politicians have placed the prioritisation of renewable energy high on the agenda; we are studying how this would work in practice under the present market system.

There are strong supply and demand dynamics in an energy landscape where electricity will increasingly be generated locally, for example by each individual household or residential district. This requires sufficient balancing capabilities and flexibility. A robust main transmission grid is crucially important in this respect. Balance differences must be evened out by means of these 'electricity highways', for instance by offering access to backup capacity in periods when there is no wind. TenneT is examining various possibilities for storing electricity. We are also looking at options for controlling the supply and demand of market parties. In doing so TenneT is looking far into the future. What will be the effect if, say, the Netherlands switches to electrically powered vehicles that are recharged mainly at night? Together these would form an enormous buffer capacity. And could electric cars also be deployed as vehicles for supplying electricity back to the grid when they are not being used?

The concept of 'smart grids' is playing an increasing role in discussions about these developments. Smart grids are electricity grids that can respond intelligently to the dynamics of local supply and demand patterns. The smart grid concept, which includes smart energy meters, is mainly relevant to the distribution side of the energy supply system. TenneT's main transmission grid and operational systems are already 'smart' to a large degree and are well-suited to the required flexibility and the advent of intelligent distribution grids. Together with external parties we are continually searching for improvements and innovative solutions. With the expansions and upgrades planned for the coming years, we will be able to connect large power stations, CHP units, wind turbines and other sustainable sources of energy to the grid in an efficient manner, and to import and export electricity efficiently. In short: we are already investing in a robust, flexible and smart grid. For TenneT the future started a long time ago.

J.M. Kroon MBA
President and Chief Executive Officer