Benelux Power Markets: Congestion, Batteries and Transparency – Panel Discussion

So I'm no expert but these gentlemen are so hopefully we'll tap into the expertise and knowledge. I mean if we look at what's happening in the Netherlands, I'm gonna start with you John Paul. Could you describe it as a kind of microcosm of what's happening in the energy transition generally? Yeah, I think you could. I mean, I think Netherlands is a very good example of what can go right in the energy transition. So massive development of renewables for example is, yeah, something that you could say is a success. On the other hand, it's also a brilliant example of what can go wrong in the energy transition. And as an example, you could say the massive success of renewables. Because they're also causing congestion. So basically, yeah, it is, and because it's a small country, it gets congested pretty quickly. Not only just on the grid, but also on the road we found. And it is, yeah, the dynamics of the politics in Netherlands are quite binary. So that makes it a very interesting case if you want to see or test ideas for the rest of Europe. Yeah, absolutely. Absolutely. I mean, I think, Andre, and turning to the other Dutchman on the panel here, what's your view here about the sort of, you know, a microcosm of the challenges, but also the positive sides of the massive rollout of renewables that needs to happen? Yeah. So if you, ooh, the challenges. Oh, it's all the time. And that's a bit of a challenge that we are moving in different paths. So sometimes after the Ukraine war started, I really thought like our renewables that will accelerate very fast. But currently a lot of plans are getting delayed and delayed. So that's not making it easy. If you look, for example, at the other hand, like batteries, they were also looking at those huge amounts of renewables to have a positive case with a lot of low prices. And that's now also, well, batteries are a bit faster now than offshore wind, for example. So it's a bit like moving panes, like which one is faster than the other one. And that's a difficulty in the transition. And we always make a joke, JP and I, during Corona time, we went to eWorld. So that was 2021, I guess, and 2022. Yeah. And then we said the solution to everything is hydrogen. And, well, Phil Hewitt, one of our colleagues can say it very nice with his English accent. But currently hydrogen is, it's very difficult. There are a lot of battery developers maybe here in the room. Financing and battery case is not an easy job, but it's doable. If we then start to think about hydrogen, then that's really, really, really difficult. But still, I believe that that should be a solution also for, yeah, in the energy transition. Absolutely, Andre. I don't know whether that bubble has, would you say, it's not completely burst, but it's certainly very deflated, that hydrogen bubble, I think. But certainly where you have the hydrogen, when it's co-located with industry, potentially that's where it makes most sense at the moment. Vincent, you live in Germany, just across the border here. When you look at the Benelux market from outside, what's your perception? Maybe I can now use two examples. The first one would be the way to tackle redispatch. Completely different. In Germany, the approach followed here is to pay. So we have impressive volumes. There was actual reports yesterday from Benetzer. Yeah, the volumes. Benetzer being the German regulator. The volume has been decreasing, but the costs are increasing. So for 2013 compared to 2015. And here, this is a cost-based approach, whereas in the Netherlands, the Goldpacks have a redispatch market, which is quite fun of it. This is one way of having different approaches. Also, an interesting thing would be the containment, so the negative prices. So this year, we have seen less amount of negative prices in Netherlands and Belgium in 2016 and 2025, and less containment. But Germany here is an exemption because there were less negative hours, but more containment. And this is due to hard work, which has been done in Germany by the regulators, the TSOs, and also the German ministry, really pushing for power plants, marketers to be able to curtail, like to have concrete feasibility to do this. And I think it's a really key topic because we keep adding PV, PV, PV. And if you look at Germany, there are some really big imbalances in the system, and this need to get tackled at some points. Otherwise, the initial will not work. Yeah. I mean, you can't just keep building. I mean, as much as we love renewables, but you can't just keep building it without having any organisational system placed to take them on board and to deal with some of the issues that you mentioned there, Vincent. Absolutely. JP, I mean, I know we've discussed about this many times, and I've called it kind of the three Cs of the energy transition. So congestion, curtailment, and cannibalisation. I mean, these are the key areas. And how far has the Netherlands gone to solve some of those problems? If at all. No, I'm sure it has. No, I think we're thinking about maybe starting to solve issues. No, that's not completely fair. I think the time-dependent transmission tariffs are a good step in the direction of making a start at the potential solution. That's enough conditionals, I think. So time-dependent connection, time-dependent transmission, time-dependent connection, those will help. Another thing that's, I don't know if that's actually gone through yet or if they're just talking about it, but the prioritisation of the waiting lists for connections. So what can definitely help is prioritising the things that reduce congestion, like storage, for example, in strategic places. But I don't know if that ruling has been... Or data centres? Yeah. Sorry? Or data centres? Yes. Well, data centres is a bit controversial because they consume power and consuming power is... Yeah, that's the power that people will actually want to flow to their companies that can't expend. So it is a very binary discussion. You're either for or against. And you see a lot of... Yeah, it's a recurring theme. So there's a lot of flip-flopping going around in policy. And yeah, it makes it interesting. But also for an investor, it's very difficult. Because as an investor, you want security that once you've decided to build, you can actually start building. And yeah, if the policy doesn't stabilise, then investors will price in the policy risk. And that's what you don't want if you want to stimulate investment. And that's huge at the moment. Vincent mentioned the curtailment and negative prices. Have we seen a sharp drop-off in the Netherlands? And what are the main reasons for that? We have seen a decrease of commercial curtailment, at least. So people responding to negative prices. Because if there's no negative prices, you can't respond to it. And part of that is because of the summer. So we had a very hot summer. We had low river levels in France, which meant that France was exporting less power because they couldn't run the nuclear at full power. We had a shortage of water in Norway. Huge prices in Norway. People, yeah. Consumers not responding to the price incentive because their prices were frozen. Which is also... Norgenspris, the Norway price. Yes. So a lot of power would come from Norway in the evenings, but that didn't arrive. And then we had the river levels and the hydro storages that were empty in Europe. So we had very high prices, power prices in Europe that cut down curtailment. But it also had other effects like the gas storage is not filling. And it's the Benelux Energy Day. So we shouldn't forget the summer outage or the summer maintenance of the nuclear plant in Belgium, which was like last year. I think similar period in August was like two and a half gigawatts still online. And now they are offline. That was this summer for the first time. So let's see if they... Across the board in France, they weren't so lucky. Well, yeah. Anyway, probably indeed Belgium had quite high prices during solar hours even, especially when it was very hot. So, yeah, they needed to import indeed. Yeah. Absolutely. I mean, even France with its problems with the nuclear fleet, they were exporting, you know, at night. They haven't... So we can definitely see also this. We can value this effect as well better in 2029 again when the power plants are back online in Belgium. Okay. That's a... Yeah. I think a lot might change by then, Andre. But let's... I like your tone of optimism here. So, Andre, you know, in terms of what we're talking about, and especially these three Cs, you know, batteries are best. Is that the answer? Is that what's required? More of that? More sensible location, et cetera? Is that... First of all, batteries would definitely... Will be a solution for curtailment. So, first of all, if volume gets curtailed, yeah, it makes sense to charge it. And still that the renewables will produce. Yeah. And then, of course, we still have the evening prices or the morning spikes where gas-fired power plants are needed. So they will definitely help in those peaks to discharge. That's the natural behavior charge when it's low prices and discharge when it's high. But, yeah, it can only happen to a certain effect. Because on the one hand, you want to push out gas out of the merit order. But if batteries would completely push them out, there is no spread anymore. So that could also... Yeah. Then you are talking about cannibalization. So when's the real cannibalization happening? No, yeah. I already said you write like a doctor, so I can't read it. But, no, but that's the real cannibalization when, yeah, if we really push gas out of the merit order. And that's the tipping point, isn't it? That's something to be very, very aware of when... Very, yeah. ...what happens. I mean, so, yeah, because you've talked, you know, we've talked a bit about the products out there. There's more prices. And in terms of capitalizing on the spreads and the morning, evening spreads on there, can you tell us a little bit more about that? I don't know how much is in so much in the Netherlands. It's more an IPEX product, more in Germany, right? But, yeah. Yeah. So in terms of battery trading, a lot has been happening. Okay. We are keeping in starting new capacities. It's clearly a hot topic and a trend. In terms of products, we have seen several evolution happening. First, in July, IPEX product has been publishing an index called top to bottom. So TB204, numbers of hours. And it's... Depending on the duration of the battery, right? TB2 is for two hours and four. Yeah. Makes sense, yeah. That's the first step. So to have this index set out there to actually measure how big is the spread within day. That's one thing. Second thing, which has also been happening is, it's quite recent, September 21st, IPEX launched a new product. So a future is on this with the underlying index I just mentioned. It's not, sadly speaking, it's not yet in Benelux. This is in France and Germany and UK. This will be quite interesting because here there were some, let's say, a bit of fights with Nordpool. Nordpool does not really believe in this product. So it will be a question maybe back to you in a bit. So because this product can be used to hedge the revenues of batteries, but the batteries are split between different markets. So the actual question is, can this produce, how is the correlation between this top to bottom strain and overall revenues? I mean, this could be a question for Andre Leitholm. But one final point is that in the S-TAC, so I think all the market coupling. S-TAC new? It's the market. It's just now there have been some consultation. The way the orders, the products are designed is evolving as well to call for the batteries to be able to bid. So in the past, batteries could loop so-called loop orders, which were, let's say, doing their job. It's fine, but they had some caveats. And now on a market coupling, so it's not only Apex, all the poor changes. They're working on new storage orders, which are, let's say, more complex, but can allow all the technical parameters to be directly fed in to the algorithm to be more precise. And this is still in consultation. And on 22nd of October, so the market coupling steering committee will give some more details about this consultation. And what's been the market reaction to that? I know we're talking about products that are outside the Benelux region, but still it's very important for players in this area as well. So for the Apex Index and S-TAC, it is as well in Benelux. And yeah, I think it's quite interesting trend for innovative products. But at the end, yeah, we'll see if it gets picked up, it gets enough liquidity. And so now it's bringing instruments for the people in this room to better market the assets. Absolutely. Before I turn to JP and talk about a little bit different topic. Andrei, would you like to comment on what, is this something, a move from the exchanges that are looking specifically at the, you know, the role of batteries in these markets and how they can be best optimized and traded? Is that something you would welcome? So this SD movement, yeah. In essence, now, if you create, let's say, a strategy for the day ahead with those loop orders, you still need to have a good forecast to know exactly which volumes to put where. And then, yeah, if the solution will work in the end. Obviously, Vincent's not representative. He's just talking about. Now, if the solution will work in the end, yeah, you put in your parameters and you get back an optimal dispatch schedule, which would be good for the batteries, I think. But yeah, it could also reduce, for example, quarter hourly spreads within the hours. So if it's good for someone that has flexibility, I don't know. But it will definitely be good for consumers, et cetera. Oh, I see a question. Absolutely. Brilliant. So we'll have a question from the floor. Please state your name and your company, please. It's Ilker Rondhuis from Powerfield. Is the index for the TBX, is that a hourly or is that a quarter hourly thing? So the way it's defined, it's actually a bit funny because it's for if the TB2, it's eight maximum and minimum quarter hours. TB for the 16th. So it doesn't have to be subsequent. So any other questions from the floor? Well, we have these big brains of the market here on the stage. I'd like, JP, to talk a little bit about the issue of transparency. I know it's a bit of a headache in this region and elsewhere as well. But certainly the amount of behind the meter solar, the mass amounts of distributors that are coming in. Is that a problem? What can be done about it? Yeah. So let's divide the Benelux into regions. One is Belgium and the other is not Belgium. I think ILIA, the Belgian TSO, has things pretty much under control. I think the data quality of solar wind data is acceptable. The forecasts are pretty good. They publish when they turn offshore wind off for congestion reasons. So that's all pretty good. Now, the part that's not Belgium, that's a bit different. So there's no official public source of reliable solar data in Netherlands. So we have the National Energy Dashboard, which is a calculation. We have ENSOE, which publishes a maximum production of 500 megawatts of solar for the Netherlands. I guess we sort of should have around 27 to 30 gigawatts of solar, but I'm not completely sure. And I think nobody knows. Does Tendon know? No. No, okay. Yeah. So that is one issue. And considering 27 to 30 gigawatts of solar and an average demand of about 14, yeah, that's a bit skewed. Then we have demand. So demand numbers are reported by Tenet. It's a very weird shape when they report it. And then after 30 days, they overwrite it with something that looks realistic. The market can't work with that. And nobody knows what's in the number, what's in the first number or what's in the second number. So there's no transparency. No, there's not good transparency data, but there's also no transparency of what people are being transparent about. What can you do about it? So this is an issue. So I've started, when I started the Dutch product for Montel in 2017, Tenet was actually publishing a fuel mix that had about 3,000 megawatts of generation in. So we've come a long way. There's a lot of work that has been done. A lot of good work has been done. But, yeah, the final 30% that we're still missing, and it is really 30%, yeah, that needs more work. And it will probably need more modeling work because you can't build a register that you haven't built from day one. So there's still quite a bit left to be done. There's quite a bit left to be done, yes. And, I mean, there's ways of overcoming it, but you will never have, or you can't reach the level of transparency that Belgium has in Netherlands without doing some major work. And, yeah, changing data 30 days after it's been first published and then just flipping the numbers. Sorry, that's not very useful. It's suboptimal to put it mildly. Yeah, and it gets worse. But, Andre, we'll talk about that. Okay, we'll talk about that. We'll come with you in a minute, Andre. But I just want to add to that. So transparency, you have many dimensions. So one I'm more focused on is balancing data. And here, I have a different view because I've gone to different countries. Here, for the balancing data, I would say, 10,000 and LIA are really transparent if you're compared to other countries. A lot of immunity data is actually best practice. I want to, so good job. So this is one thing. And I also wanted to rebound. We touched Luxembourg in a patch. We also have colleagues in the room. So, yeah, Luxembourg is actually still attached in the same bidding zone as Germany. They didn't make it in 2018 to have this own bidding zone. And it's actually managed by Ampro. And I just want to, yes, due to the separation of the countries, just to put the fact... I think that's a very important point. Thank you, Vincent. So, you know, we're not forgetting the Luxembourgers here. I think that's very important. They're part of the equation, part of the market. Important. Andre, there are other issues. I know you're going to more detail about this tomorrow. But if you can give us some little teasers about what the issues are about transparency and the world of batteries. Yeah, exactly. So it's exactly the point that Jean-Paul was already talking about. It's demand that is not transparent at all. But also batteries are not really transparent. So if I look, for example, at the EEX transparency website, I have to look, I have to search for batteries. So they don't have a separate category. It's published in a category other. I think I have seen only a couple of RWE. So in that sense, the transparency is not really there. And we have to, yeah, LinkedIn is a nice source of knowing like how many batteries are installed. But depending also on the people doing an announcement on LinkedIn or the developers. So that's one thing. But what's now really the issue in the end is that we are used to a kind of pricing mechanism. The merit order that we are used to and that we are understanding where demand was kind of fixed. Well, we know it is a kind of shape and not really important, not very flexible, let's say, the demand. And now with introduction of the batteries, also behind the meter, the home batteries, the solar panels, the EV, the heat pumps. We get a lot of things behind the meter that are flexible. And not driving market prices. And they are driving market prices because we are, but also curtailment of solar and wind. They are responding more and more to the prices. So we get a bit of a chicken and an egg situation where demand is responding to prices and prices are responding to demand. Well, what's the truth in the end? We know it already with imbalanced prices. So what would have happened if I would have charged or discharged more? Well, that similar phenomena will also be pushed more and more to that day ahead market because we get huge and huge volumes of batteries and flexible demand starting to have an effect on the price. Yeah, and then again, coming back to transparency, I think there is a solution. We have smart meters. You have apps, but you know exactly what your solar panels are producing. So if we want to move again to the similar transparency for bigger power plants, we need to open up these sources and make it publicly available. And not that it sticks to an aggregator or people having a choice to make it transparent or not. Because I think that's very much the case, isn't it? Where the Netherlands is a microcosm. If you're seeing that problem here, batteries are going to be the answer across Europe. And this problem needs to happen. Yeah, it's on the one hand a Dutch problem. But I think the problem is arising all over Europe. GB is a different story because there is a lot of transparency available over there. But I think for everyone, for the consumers in the end, more transparency would be good. I mean, it raises the stakes in terms of complexity, of course, but we have ways of dealing with that complexity, I think. JP? Yeah, I was just thinking there's also a market design problem because what you see in dynamic tariffs is that people get charged what they consume based on a day ahead price that was set yesterday. So what you're going to see is behavior that's also going to be affecting the intraday market based on what the day ahead market was yesterday. And this is, yeah, the chicken and egg story that Andre was mentioning. But market products will have to adapt to that because if you own a large portfolio of retail customers that all have a home battery, and I know some suppliers might have that, yeah, then you're going to have to either force them to fit a certain profile with that battery, or you're going to have to charge risk premiums, because otherwise you're exposed to a massive volatility. And luckily for Dutch suppliers, there aren't many home batteries yet. But with the, yeah, you can see the adverts in every paper on television, on, yeah, if you follow social media, everywhere, home batteries. And with the stopping of the net metering regime for solar next year, this is going to become a very interesting factor. In a sense, there are some home batteries on there when the electric vehicles, but, yeah, yeah. But they're not on the same. Well, the electric vehicle for me is the ultimate home battery. If you can bidirectionally charge it, it's probably the cheapest way. Yeah. Before I go to the, oh, we're running out of time here. It's a fascinating discussion as always, discussion as always, gentlemen. Any questions for the panel before I turn to the last question? Yes, over here, please state your name and organization. Thank you. Jörg Dijven for the Green Choice. I was wondering, Jean-Paul, you were talking about the difference between the Belgian and the non-Belgian transparency on solar and wind. And I've had a chat with the non-Belgian grid operator about this some time ago. And one of the things they mentioned, and I thought it might be a good argument, so I'm wondering about your perspective. Is that, they say, we want to be transparent about the things that we actually know that are correct. Well, as you mentioned, not everything published is entirely correct from day one. So how do you look at that? Is this actually a TSO responsibility to be transparent? Or is this an opportunity for a company like Montel to bring this transparency to the market? Obviously, it's an opportunity for us. So we have models that basically fill all the gaps for the Dutch market. But this isn't ideal. So everywhere else in Europe, and I mean literally everywhere else, I don't care if it's Greece, Romania, Bulgaria, they have better transparency data than Tenet. The demand numbers make sense. The solar, the wind makes sense. Yes, they don't measure everything themselves. There's a lot of distributed generation in the Netherlands. And in that sense, we are relatively unique. But yeah, if you want to facilitate the market, and that's the job of a TSO, then you should have good data. And I don't really care how you get it. But I think you can rest assured there will be at the forefront. We have been at the forefront of pushing for transparency for 25 years, as long as I've been in the company. So I think certainly pushing for remit before remit happened. Well, apparently, Richard is talking to the regulator this afternoon. Yes, I'll bring it up. I'll bring it up. I will bring it up. Absolutely. It's certainly a big topic on my list. I just want to close, really, gentlemen. Does that answer your question? I just wanted to close, really, by talking about the winter ahead. And maybe not so much a big issue for Benelux, but certainly for the whole European market, for the globe, really. You know, we've got the Ukraine war ongoing and really taking several different turns. We've got the Straits of Amuse remain closed. We've got, you mentioned the drought and the heat wave issues. Water levels are still not there in certain parts of Europe, especially Norway, Danube. And then we've got the gas storage in Germany, which remains very low. So if I can start with you, Vincent, put you on the spot. What are your outlook? What would you say? Which direction would prices go in the winter? I'm not trading anymore. Okay, no. It's a difficult situation, for sure. Really interesting. So for a slight line, yeah, one should be prepared for extreme prices. As I said, many drivers, high gas prices, really low hydro. So in dunkelflaute events, a period of time without winds, evening pink can be quite expensive. So in Germany, but also in all Europe. So yeah, it's likely to happen, but I'm not sure it will happen. That's why you still have also some downside risk. You get a mild winter. Yeah, so it's definitely something to follow up upon in the next days. Long-term weather data and yeah, in the short term, day-head intraday is going to be interesting winter for sure. A bit of a rollercoaster ride. André, what are your views? Yeah, depends always on where you are. So if you are an asset owner, you are begging for a very cold winter. But if you are a consumer, it's the other way around. But December, probably January will be very important because then if it's getting cold and storage is getting low, there's a huge upward risk for gas prices. So yeah, and then we will see very, very high prices. Yeah, that's the risk, especially even though there is talk of El Nino, which will maybe result in a mild winter, but we could see some cold snaps. J.P., I'm going to finish off with you. Yeah. But the reason why gas storage is low is because the summer prices were high, which meant it wasn't interesting to save your gas for the winter because the winter prices were lower. And that doesn't make sense to buy expensive gas and then put it in storage and sell it cheaper later. So that was a logical consequence of the summer. One thing we shouldn't forget, and I agree with all the sensitivity analysis, and if it gets very cold very quickly, it could get very expensive. One thing we shouldn't forget is that compared to 2021, 2022, gas demand has decreased by 18% across Europe, 18%. So the gas level that we have in storage now actually gets us through a lot more days, a lot more cold days than the levels that we had in 2021, 2022. So that moderates the outlook a little bit. That being said, yeah, if it gets cold very quickly, then it's going to get very exciting. Absolutely, absolutely. And we'll be at the forefront of it, both on the news side and certainly on the analysis and data side at Montel. So gentlemen, thank you very much indeed. Please join me in giving them a warm round of applause. Thank you. Thank you, guys.