Balancing the Dutch power grid: how does it work?

The balance between electricity supply and demand in the Netherlands is becoming increasingly unpredictable, partly due to the growing use of renewable energy sources and fluctuating consumption. This makes it difficult to align production with consumption. We refer to this as grid balancing.

Producers, suppliers, and business consumers trade their energy on energy markets—such as the futures and day-ahead markets—based on projected energy supply and demand. But these estimates do not always match reality. An example of when supply and demand do match is on a sunny day when a lot of solar energy is produced while there is also high demand. Of course, that is by no means always the case. It is therefore important to resolve any imbalance, because the power grid only functions at a continuous voltage of 50 hertz.

How do we solve this?

To prevent unwanted energy exchange with neighboring countries and keep the grid in balance, Tennet monitors frequency and balance and, if necessary, activates flexible energy reserves. To this end, Tennet contracts balancing reserves from market participants that have flexible capacity. This can be achieved, for example, by switching generation assets on and off or by using batteries. Tennet has various tools at its disposal, depending on the type and duration of the imbalance, to manage these resources.

Primary Reserve Capital

The fastest-responding balancing reserve is the Primary Reserve Capacity. Installations connected directly to the grid quickly and automatically compensate for small imbalances, ensuring that the grid frequency remains constant. Because the connected installations measure the frequency themselves, they will switch on and off automatically in the event of a deviation from that grid frequency (50 Hz). Therefore, no control signal from the grid operator is required for the Primary Reserve Capacity.

Control capacity

If the total imbalance in the grid is significant or lasts too long, TenneT activates the balancing power. Balancing power allows the grid operator to supply or withdraw additional power and to control this process with precision. This enables most fluctuations to be absorbed. To do this, the grid operator sends a signal every four seconds to the suppliers of balancing power, who must respond quickly and accurately in accordance with their contracts. This is one of the most complex balancing reserve instruments

Extended power outages

If the imbalance persists for too long for any reason, the grid operator will activate a third type of balancing reserve. This is the Reserve and Emergency Capacity, which can be deployed for a longer period. Once activated, that capacity must be supplied continuously until the end of the activation period. Market participants can make Reserve Capacity available through open bidding, while Emergency Capacity is contracted in advance. Offering Reserve Capacity can therefore be attractive to market participants who can provide capacity during specific time blocks.

Market participants receive a fixed fee per MW as compensation for making balancing reserves available, and in some cases an activation fee per MWh. The price is determined by the market, where bids are ranked in order of merit. Tennet then selects the lowest-cost bids until the desired volume is reached.