Dutch Electricity Demand: Data Centres, EVs and Growth | Fleur Greetham, AFRY

Sorry, there's going to be some facts and figures, I'm getting old, I forget my numbers, so I need my notes, so apologies people. Anyway, it's really great to be here. I've been some time since we've spoken at a Montel conference, so it's nice to be back. You get the English lady, I'm very sorry, but I do know a lot about the Netherlands, so it's all good. So, for the next 20 minutes, I'm going to speak to you about demand and data centres and where the growth will be. The good thing is, we also agree with the government to some degree, there will be growth, so for all the developers and those trying to do PPAs, there will still be some money, so it's fantastic. Although I was curious about 28 gigawatts of best by 2040. Wow, that's a big number. Although if everybody has an electric car, fab, you'll meet it, super. Good, let's get going. I'm a consultant and I have to sell our company, so I'll do that really quickly, sorry. So, I am from AFRI Management Consulting, we are part of the AFRI Group. The AFRI Group serves three industries, so industry, energy, transport and places. Within that, Management Consulting serves all three areas, but principally we are serving energy clients. This is why we're here. And we do five different main areas. A lot of you will know us for our price projections. We're well known in the market. We're bankable, fantastic. And we're well known for M&A and due diligence. I can personally say I'm very pleased to be able to say you've got Borsola running for a bit longer, because we advise the government on that one, so that's always good. But we also do operational digital transformation. We help on sustainability. And we do do strategic advice as well. So, we are kind of supporting your strategy departments, trying to work out where best to spend all of your taxpayers' money. Good. Some nice, lovely facts about where we are and how many people. I think people always get surprised at how many people AFRI has. I think we're quite small, and then they realise we're actually bigger than some of the organisations here. So, we are quite big. Good. You can all get your phones out. You can zap on the old QR code for our AFRI reports. We cover a lot of different countries, over 50 globally, but we do cover the whole of Europe, and obviously we do cover the Netherlands. I have been projecting the price of electricity in the Netherlands for nearly 20 years, so I've done it for a very long time. But it's great in terms of that we have a lot of data analysis. We don't just cover wholesale. We cover a lot of different areas, and we do support a lot of batteries. There's a lot of batteries and a lot of co-location. We seem to be very busy doing that kind of work, which is fabulous. We also provide imbalance. We've just recently produced our next biomethane. So, if you're thinking about the gas and the green gas side of things, we produce that too. But there's lots of different reports. So, feel free to take the picture of the QR code and investigate what we do. Good. And hopefully some of you will see your logos here. Fantastic. If you don't, come and talk to me. We'll make sure we get you added on there. So, it's all good in terms of who we serve. But it's a lot of huge variety of different people. And you're all keeping us fabulously busy. So, thank you. Chaos creates consultancy. I love it. Right. Let's go back to the topic of the presentation. It wouldn't be remiss of me if I kind of have a look backwards first to provide some context going forwards. So, I think the first question, obviously, is where has growth been or not been? And the interesting fact, I think, for all of us is that, actually, if you look at the overall level, demand growth hasn't really changed. It's actually been quite static. But, actually, the drivers around that are starting to shift. And you can definitely see a material kind of change from 2001. Now, obviously, we all understand why. We had the Ukraine invasion. We basically saw the retreat of industrials. I do remember going to a Euroelectric conference a few years ago going, everybody's so happy that we've solved the Ukraine crisis. I did it by having to tell my staff to go home. That's not really solving the problem. And it's worth bearing that in mind sometimes. We're all really happy sometimes about high prices. But we, the consumers, feel the pain of it. So, just remember that. Anyway, so, industrial demand obviously decreased. And it's decreased by about 14% over the years since 2021. And that's production lost. That's not just efficiency gains. So, that does mean some industries are effectively closing their doors and handing back the keys. And that will have an impact for you if you're trying to secure PPAs, especially for all the new offshore wind parks that we're wanting to build. They need contracts. So, we need to make sure that number is going in the right direction, not the wrong direction. The good thing is we are seeing an increase in residential. We are seeing an increase in data centers, what you've brought me here for. And we are seeing some uptake in EVs. It's actually really good to see the Netherlands as a front runner in terms of kind of consumers acquiring more and more electric vehicles. So, there are some good stories here. But the other thing that's quite interesting as well is that actually behind the meter, there is a lot of generation, onsite generation, that's being built and that's serving demand. So, actually, around 11 terawatt hours is being built to kind of serve demand behind the meter. And around 6 terawatt hours is kind of serving services and industry. So, actually, when you're doing all these measurements and you're measuring at, say, the meter, you've got to kind of bear in mind that there's a lot happening behind the meter and that's serving demand. And if you're governments and tenants and things and you're looking just at what's being read on the meter, there's other stuff going on. So, you've got to be bearing into mind what is the whole system doing, where are we moving to and how can we service that demand. Obviously, we want to look at data centers. I always find that really kind of fascinating in terms of the growth. I mean, it has been quite sizable. So, now, data centers equates to around about 5% of total demand in the Netherlands. That creates to about 2 million household usage. So, it is quite sizable and it's baseload. They have to run. You can't have a situation where a data center basically is intermittent. That isn't going to work. You won't be able to use your phones 24-7. They have to service at a baseload. So, this is interesting in terms of the growth that we've really, really seen. And you could say maybe this is the panacea because, as we've seen, the hydrogen bubble has disappeared. So, maybe the data centers is the one that is basically maybe coming to solve the problem. I would say it's not quite because there are some certain policies that are switching that slightly. And we need to kind of watch out for those and make sure that we're pushing everything in the right direction if we want this decarbonization. And that data sovereignty is the issue to continue. But some interesting things in terms of what's going on here. And we can also see that actually when you start looking at where the data centers are spread, it's actually quite lumpy. There's only around, so, about 45 data centers or sites basically are covering around 90% of total demand for all data centers. So, it's actually quite sizable hyperscalers and big data centers that are covering most of the demand. It's not spread across lots of different sites. It's just quite concentrated. But there are changes happening. We've had a ban, so, no longer can you basically build hyperscalers apart from either in Eamshavn or Agriport. So, you can't do that anymore. You're not allowed to build or extend any data centers around the Amsterdam area, which obviously is where most of the concentration is. So, that's on hold. So, actually, what you're seeing is those existing sites are more densifying. They're basically adding capacity to the existing sites rather than developing more and more sites. So, there are kind of a contradiction here in terms of some policies are pushing for more data centers and basically demand growth, whereas others are trying to control it a bit. So, you are having basically, I suppose, a struggle here in terms of where is this going to go. Hopefully in the right way, and I think it will go in the right way, because everybody's concerned about data sovereignty and everything else in terms of the gene. In the political sense, I think that would be the overriding driver here. Okay. So, the next question is, where do we think demand will be in the next 10 years? But I thought I'd give a bit of an engagement, and I can drink my water at the same time. So, I thought we'd have a bit of a Mentimeter, and I'd like to hear your thoughts. So, Mentimeter is here on the side. We will switch over in a moment, and it's going to see which statement do you adhere to the best. Data centers will transform electricity demand in the Netherlands. There will be the panacea. Grid constraints will prevent much demand growth from data centers. Or the biggest story may be demand outside data centers. If we could switch. It's only one question. Ah, I thought I pressed it. Sorry, now I'm joking. Is it working? Is it working? We press play before. Oh, goody. That works. Oh, it's quite long. Sorry. Should we come back to it? And I'll keep going to my presentation while I sit here and joke. Okay, let's go to the next slide, please. Is that working? Yep. Good. Okay, we'll come back to the results in a bit. Sorry, people. I hoped it would work. It should work. Okay, so in terms of where we think demand growth will be, we can see the biggest lump is going to be electric vehicles. There is still the need, basically, for all new car sales by 2030 to be electric vehicles in Netherlands. There's still that target. That's kind of five years before what the EU wants. So that is why we kind of foresee that actually EVs will be the biggest chunk in terms of growth. It's quite a sizable chunk. After that, actually, we do see data centers contributing quite a sizable chunk of new demand. Industrial heat and heat pumps will provide it, but actually there's a bit of split of the timing. So in terms of industrial heat, we don't think that will really kind of take place until after 2030. Heat pumps and people dealing with basically the soldering, basically reducing, we kind of see more of the heat pumps and everything else, concerns, what we have had in terms of the Ukraine crisis and the heat bills. That, we think, will kind of happen a bit earlier in time. Okay, so as I was saying, data centers, basically, you know, it's going to contribute quite a sizable amount of growth. But there are some factors we need to consider to make sure that that actually happens. As I'm saying, I'm just projection here. I'm not crystal ball gazing. I'm not saying this will happen. And I think there are some considerations that we need to think about in order for that data center demand growth to actually transpire. Because there are some regulations and there are some policies that are turning in terms of it might be that it might not happen as we project. The first one is around the spatial laws and policies. So, as I was saying, already, you can't build hyperscalers outside Nullemir or Ameshaven and you have the bands in Amsterdam. But other some of the regional regions are kind of implementing in terms of data center and how much they allow in data center sites. For example, North and South Holland basically have limitations on how much data center buildings they will allow for. So, we have to look out and make sure that we've got government policy but also regional policy tying up together. We have the ACM priority framework. So, we've gone from the first come, first served. If you have a connection space, we'll serve you. Thank you very much. To actually now this movement to whereby it's, is it a societal need or not? Data centers are not considered a societal need or a preferential societal need. So, if there's space on the grid, the data center won't be the first one who to be picked. It will be other sites. And that can be seen as having quite a negative impact because data centers, obviously, they want to build it. They want connections. But they want them immediate. And if you're basically seeing that there is a base space in the grid, but you can't build it, you might go and consider going elsewhere. A positive, though, is the energy law because we do have the cable pooling. So, that does facilitate if we want to build grids behind the meter. Basically, we can have that. And although we haven't seen any of those yet, we are starting to see energy hubs. So, they're starting to develop where basically they're being built around data centers. And then you're using potentially the waste heat to heat homes. And you've got the kind of electricity shared usage. So, some positives. There is a push. So, we do have these measurement obligations. So, that's making sure that energy, the data centers are efficient as possible. So, there is a need here. But obviously, that will require more transparency in terms of how much electricity, how much water, and how much you're using. And then finally, this is quite an interesting one. So, there was a connection court ruling in terms of Tenet and how they applied it. So, effectively, there are a number of now data centers that if they think that they have the ruling in terms of that they have the sites. So, we've had a number of data center sites whereby in 2021, they thought they had got their site and their connection and everything else. And because the Tenet court ruling basically was upheld, so they can say, you are not priority, we can defer you, we are allowed to do it under the court system, it meant that now they can't connect until 2033, 35. That's a long way. So, there are these considerations that we need to think about if we want to see this data center growth. It's not all a positive story. So, we need to think about the spatial laws, we need to think about the different priority frameworks, the different energy laws, and the Tenet connection agreements. Not just data centers. As I showed you in my chart, there are other demand areas. So, EV and transport, that's quite an interesting story. We have seen a huge growth, but in road transport. Rail transport has actually been quite static. So, we have seen an incredible increase. And obviously, that drive and that push for EVs, especially as we're hurting on the pump price, I think we will see a lot more in terms of movement towards the electric vehicle space. And obviously, we've got the policy overlying that on top. But again, there are a number of different kind of policy decisions, I suppose you could say, that might be playing into that and playing out of it. So, the taxable benefit of company cars is ending. You still have a lower tax for an electric vehicle versus a petrol run one. But that tax dispensation is kind of ending. And actually, where you're seeing kind of more the growth in electric vehicles is your last mile vans. So, whereby you've got zero emissions zones in cities. That's helping push kind of the van drivers and everything else to be the electric vehicles. And also, we're seeing the heavy goods trucks starting to be electric and the electric buses. And trams obviously have been that for many, many years. We've got a number of taxis, which hit some of the heavier vehicles. We've got exemptions. We have got emission-free new sales, which is fantastic. But as I was saying, we've got the zero emissions zones, which is helping promote some of the van drivers and everything else. And then we've got the home situation, the residential situation. Obviously, with the end of soldering, but when we had soldering and you had kind of the net tax benefit, we saw a lot of solar panels being built on roofs. Now, having soldering ending in 2027, so the end of this year. So, are we going to see those who've got the solar panels now starting to build batteries in their homes? Yes, probably, and some people are already starting to do that, together with your electric vehicle. So, you're having your own little home hub. And that's creating an interesting drive in terms of, to some degree, we're kind of creating this extra demand, but in some degree, we're taking it off because we're creating our own little home hubs to kind of deal with that. Last slide, and then I'll be done. I always find this quite interesting in terms of where would demand be during the day? So, one of the interesting things about, say, for example, with the increase in temperature, obviously, we've had a really, really hot summer. I don't know about some of you, but I'm now waiting for my air conditioning units still. They're not going to be with me until next year. But what's interesting about that is you have them installed. The solar generation is running during the day, but most people are out. And actually, when they're running their air conditioning units, it's later on in the evening when they're trying to cool their houses down. That's shifting the demand patterns during the summer months, which we wouldn't have seen before. So, there is a bit of a change in terms of that. There's a change in terms of how people are running their own demand, and there's changes in terms of how we're going to run demand in the future. So, a number of key takeaways. Dutch electricity demand is entering a new growth phase, as I showed you, led by data centers, EVs, and electrification of heat. Data centers, we believe, will be an important growth, but not the only or necessarily the largest one. As I showed you, up to 2035, we probably still believe that EVs will contribute the most. Grid access, rather than demand appetite, I think will determine how much data center growth is realized, at least in the short to mid-time. And the transition will change when electricity is consumed, not just by how much is consumed. So, we're thinking about two items. Thank you. Fleur, fantastic. Thank you. I realize we're running a bit late, and I don't want to keep you off on your lunch. I'm really hungry, Fleur. Stop talking. But just a quick question from me. I've seen certain... Data centers are certainly the focus of a lot of policy and policy makers across Europe. For example, in Spain, 80% of the electricity that are used has to become... That's the plan, anyway. It has to come from renewable sources. Do you see something like that happening in the Netherlands? In terms of pushing for renewables? Yeah. I think you... I mean, obviously, we've got the government here, so maybe you're better in terms of policy. But I also see that the data center and the big tech companies, they're having to push for that anyway, because otherwise they're getting the negative press, but it's how they're dealing with it. I always find it quite fascinating that you've kind of got, say, the Googles who are trying to do the 24-7 matching with basically building renewables and making sure their demand is covered, versus maybe the Amazons of the world who are effectively doing it more by certificates. So I think there will be a drive not only from policy, but maybe more from what we as a consumer demand of the tech companies that we're buying our services from. I think there will be a bit of a push and a pull. Absolutely. So we'll be watching that closely in the years to come. Perfect. I want to... If you have any questions, please apply.