What can the Netherlands expect from variable grid tariffs?

The pressure on the Dutch electricity grid is increasing, leading to congestion in more and more areas. Several measures are expected to provide relief, including the introduction of variable grid tariffs. What can the Netherlands expect from this? We asked Maarten Lafeber, senior strategist at APG.

The grid congestion the Netherlands is currently facing is caused by two simultaneous developments, Lafeber explains. “On the demand side, there is massive electrification: electric vehicles, heat pumps, air conditioners, you name it. At the same time, the supply side has changed. We have become much more dependent on solar and wind power. Together, these two trends are putting pressure on the grid and making supply security more vulnerable, as solar and wind are less predictable. We all see the consequences: waiting lists for connections and projects being put on hold.”

There is no simple solution, the economist emphasizes. “It will require a combination of measures, and pricing, which is what we are discussing here, is an important part of that.”

How do dynamic energy contracts—already available—compare to variable grid tariffs, which may be introduced in a few years?
“With dynamic energy contracts, you pay a price that can change, for example, every 15 minutes, depending on supply and demand at that moment. So that concerns the price of energy itself. Variable grid tariffs, on the other hand, relate to the capacity of the electricity grid. The tariff depends on the time of day, for example morning, afternoon, evening, and night. Depending on when and how much electricity you use, you pay more or less for access to the grid.

That said, dynamic energy prices and variable grid tariffs can sometimes work against each other. For example, if it is very windy during a winter evening between 5:00 and 9:00 p.m., energy may be cheap, but the grid tariff could still be high because it is a peak period. In that case, you get two conflicting price signals. The system will need to handle situations like that carefully.”

What will consumers notice?
“In the past, we had a centralized system with coal- and gas-fired power plants: supply followed demand, and consumers were passive. It didn’t matter when you used electricity. Now we are moving toward a system where demand has to adapt more to supply, and consumers are expected to pay closer attention to when they use electricity.

If you don’t adjust your behavior, you will likely end up paying more than you do now. But if you are flexible—for example by charging your car at night or using appliances at smart times—you can save money. You may even become a kind of ‘trader,’ for instance by using a home battery, choosing the optimal moments to consume or feed electricity back into the grid.

At the same time, the introduction of variable grid tariffs does mean giving up some convenience, because we will need to be more mindful of when we use electricity.”

Will variable grid tariffs have the intended effect?
“I believe they will. We know from other markets that pricing can influence behavior, and that will also happen here. The grid is designed for peak demand. If you can reduce that peak, you immediately create additional capacity on the grid. Pricing can help achieve that, essentially a form of peak pricing.

The goal is to encourage consumers to shift flexible electricity use, such as charging a car or doing laundry, to off-peak hours. It is not the single solution to grid congestion, other measures will still be necessary. Grid congestion is often a local issue, while variable grid tariffs would be applied at a national level.

The key condition is that people understand the price signals. It must be completely transparent when electricity is expensive or cheap. For many people, energy bills are already difficult to understand. If you want people to change their behavior, they need to see what their choices deliver.

A portion of households in the Netherlands will certainly adjust their behavior. We already see dynamic contracts gaining ground. If 20 to 30 percent of households actively respond to these signals, that could already help dampen peak demand. But not everyone will be willing or able to adapt. There will always be a group that does not participate.”

The net metering scheme for homeowners with solar panels was partly funded by renters and others without panels, leading to inequality. Is that a risk here as well?
“Yes, I do see that risk. Looking at earlier subsidies for solar panels or electric vehicles, higher-income households have benefited the most.

With variable grid tariffs or dynamic energy pricing, I expect something similar. People with financial resources, knowledge, and smart technologies, such as home batteries, are better able to respond to these incentives. That creates a risk that they will capture most of the benefits. That is why transparency and education are important. You could also think of targeted support, for example to help households invest in technology. But it will remain difficult to level the playing field completely.”

Is this only about consumers, or does industry also play a role?
“Residential households accounted for ‘only’ about one-fifth of total electricity use in the Netherlands in 2024, according to Statistics Netherlands (CBS). Charging electric vehicles at home falls under domestic transport, which represents 4.1 percent of total consumption. By comparison, the manufacturing sector accounted for around 28 percent of total electricity use, excluding the energy sector.

So industry plays a major role. There is significant potential to plan consumption and, where possible, shift it to different times of the day. Ultimately, everyone will be affected by these tariffs, including businesses.”