This article examines the structure of the Dutch energy market, focusing on renewables and BESS (battery energy storage systems) and identifying opportunities and challenges in battery monetization and decarbonization with exclusive insights from local asset developer S4 Energy.
Like many other countries, the Netherlands aims to achieve net zero emissions by 2050. In the first half of 2024, renewables made up more than 50% of the domestic energy production, with 32.3 billion kWh reported. Wind, especially offshore, is the main source, followed by solar and biomass. At the same time, electricity production from coal dropped by 35% compared to 2023.
Source: CBS Statistics Netherlands
Source: CBS Statistics Netherlands
The domestic total energy supply paints a different picture, with oil and natural gas still making up the majority of the mix in 2023 – a combined 77%. While a portion of this is used directly, most of it gets converted into electricity or fuels for end consumers.
Source: IEA
BESS in the Netherlands is a new and small but increasingly necessary industry. A striking growth in battery capacity began in 2021 when the total installed capacity rose by 65% compared to the previous year. This number doubled in 2022 and then tripled in 2023, reaching 621 MWh.
Source: graph by enspired based on DNE Research National Smart Storage Trend Report 24/25
To address the need for more storage brought on by the rapid renewable buildout, Dutch grid operators developed mid (KA), high (ND), and low (IA) deployment scenarios for the further rollout of BESS technology. Specifically for grid-scale and co-located solar, these range from 5.2 GW to 12.7 GW by 2030 and from 8 GW to 19.5 GW by 2035. In theory, this sounds promising, but the Netherlands faces a complex challenge on this trajectory that is more pronounced than in other European countries: grid congestion.
Source: graph by TenneT based on Netbeheer Nederland Scenario Investment Plans 2024
Support for flexible assets that can help counter this problem comes from the TSO (Transmission System Operator) directly. In a recent move to ease grid congestion, TenneT has decided to allocate 9 GW via off-peak capacity contracts, incentivizing heavy energy consumers to shift their usage to times of low demand. This means that selected batteries can be connected to the grid more easily. So far, more than 70 GW, mainly from large-scale battery parks, have applied for the new contracts, which far exceeds the available capacity.
The Dutch electricity sector is governed by legal frameworks defining various key roles and responsibilities. These include generators, consumers, and suppliers as well as TSOs and DSOs (Distribution System Operators). Additionally, BRPs (Balancing Responsible Parties), BSPs (Balancing Service Providers), and CSPs (Congestion Service Providers) contribute vital functions that allow the grid to stay in balance and respond to irregularities.
As the national TSO, TenneT manages the Netherlands’ interconnectors to other countries, monitors the balance between supply and demand, and coordinates the adjustment of electricity offtake and feed-in with responsible parties. In short, TenneT is in charge of keeping the domestic high-voltage grid at a stable frequency of 50 Hertz at all times.
The Netherlands is one of the most densely populated countries in the world and exhibits a relatively strong concentration of decentralized energy sources across its land area. Due to a high electricity demand for home-charged EVs (electric vehicles), air conditioning, and heat pumps, PV (photovoltaic) roof installations continue to gain traction – 2.55 GW of residential solar capacity was added in 2023 alone. The local grid is struggling to accommodate the heavy influx of renewables, and ensuing congestion issues are causing problems for the Dutch society at large. (Source: Netherlands Experiencing Sustainable Solar PV Growth, Says IEA PVPS) As energy-intensive industries and other players, including households, encounter long waiting lists for new grid connections, they are also faced with the prospect of rising electricity and feed-in costs.
Ongoing grid congestion makes it difficult to scale up renewable production at the pace needed to reach climate targets. Batteries, both BTM and grid-scale FTM (front-of-the-meter), play an important role in mitigating such challenges and offer a sustainable solution to future-proof the Netherlands’ electricity system. But how can it integrate more batteries if the grid struggles to handle the current load? As a provider of flexibility, BESS both prevents and solves grid congestion, while renewables inherently cause grid instability due to the natural inconsistency between generation and demand. The recent opening of PICASSO* helps the integration of these renewables by leveraging the balancing ability of neighboring markets.
* Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation
Source: TenneT
Source: Rabobank
Wholesales
The Dutch wholesale market consists of three submarkets:
Forward and futures market
Day-ahead market (spot market)
Intraday market (spot market)
Ancillary services
Ancillary services in the Netherlands comprise the balancing markets FCR, aFRR, and mFRR as well as the imbalance and congestion markets.
Source: Rabobank
FCR (Frequency Containment Reserve)
aFRR (automatic Frequency Restoration Reserve)
Source: TenneT
mFRR (manual Frequency Restoration Reserve)
Imbalance market
Source: TenneT
Congestion market
The Netherlands joined PICASSO, Europe’s cross-border balancing platform for aFRR, in October 2024. Following this, the Dutch energy market saw a significant reduction in imbalance price volatility and a decrease in peak imbalance prices. However, imbalance prices can be amplified if both the Netherlands and neighboring countries are facing energy shortages. In the chart below, you can see an occurrence of this linked to Dunkelflaute events between December 11-12.
Source: EnAppSys
Additionally, since aFRR bids were priced lower than in neighboring countries, the Dutch market recorded an increase in aFRR bid activations. For BESS, the rise in activations creates an opportunity for more sophisticated revenue diversification strategies, the need for which is becoming increasingly evident as PICASSO’s full impact on the Netherlands continues to unfold.
The Netherlands is an emerging market for battery storage but, due to the lack of saturation, also a highly exploitable one. In early 2025, enspired, together with Flexcity and S4 Energy, reached an exciting milestone by taking the country’s first 4-hour BESS live in a cross-market optimization setup. The 10 MW battery is located in the Rilland municipality of Zeeland, and owner S4 Energy was looking for a partner that could transparently enable the asset’s market participation on a fully merchant basis across all revenue streams. enspired’s platform ticked all those boxes, and local player Flexcity contributes key expertise in market knowledge, ancillary services, and congestion management.
We spoke with Dominique Becker, Chief Commercial Officer at S4 Energy, about the project and leveraging the full spectrum of the Dutch power market*.
*Please note that interview answers were slightly shortened and refined for linguistic fluency and clarity.
What makes the Netherlands an interesting market for battery projects?
There is a cocktail of things that make that happen. For instance, the TSO is very aware of the fact that flexible assets like batteries are of great added value. We have a huge mix of renewables coming in, both from land and sea with wind and solar, and we have a very open market structure that enables flexibility to utilize the upside to the fullest.
Why is now the right time to invest in energy storage in the Netherlands?
Because you are ahead of the market and have that first mover advantage that allows you to make the very most of the flexible assets you deploy. Grid operators and energy markets need the services BESS can offer. The reason why we are going in with the 4-hour battery storage right now is because we envisage that there is going to be a market shift where we change from ancillary services to a full-stack energy market in a few years’ time. And we want to be ready to capture every moment and every upside of it.
How did Picasso change the shape of the power markets in the Netherlands?
In Q1 of 2025, that is too early to tell, but what we can already see happening is some dampening in the volatility of the markets. Grid providers are dealing with imbalances directly, and taking that volatility out of the market gives it a little bit of a downside effect.
What are the key success factors for a battery project in the Netherlands in 2025?
In my opinion, those would be the obvious three: land, permit, grid connection. But also: knowledge of the markets and access to capital. If you have those five in place, you have a successful project.
Do you want to maximize revenues for your BESS located in the Netherlands or elsewhere in Europe?
Sources:
Rap - Regulatory Assistance Project