Renewable energy and climate goals remain a hot topic in the Netherlands. Landmark cases such as Milieudefensie/Shell demonstrate this as well (cf. our insight here). Driven by stringent climate goals and favourable subsidy schemes, the Netherlands has seen a sharp increase in renewable energy installations.
Whilst well intended, a downside is the severe strain placed on the aging grid infrastructure. The result is periodic capacity bottlenecks and interconnection delays. The mixed signals reported by various news outlets regarding the opportunities and unavailability of the grid capacity in the Netherlands are a testament of the challenges in the energy sector. With further electrification and the advent of large-scale green hydrogen production (cf. our insight here LINK), grid challenges have become more pressing than ever, with over 12,000 companies now waiting for a new or expanded electricity connection. This is also one of the key findings of the second Progress Report of the National Grid Congestion Action Programme (LAN), published in March 2025. The report further confirms that the Dutch government, in coordination with grid operators, regulators and market stakeholders, is working on more than 100 targeted actions to address congestion and avoid a systemic failure.
Grid congestion management
Dutch transmission system operator TenneT and regional distribution system operators reportedly rolled out congestion management measures to alleviate short-term bottlenecks, including dynamic pricing and incentives to decrease peak hour traffic. Furthermore, the Authority for Consumers & Markets (ACM), tasked with overseeing the compliance of certain energy and grid congestion regulations with national and EU competition rules, has publicly reported it established measures as well against grid congestion. These measures are intended to motivate large-scale users to moderate or halt the utilisation of the grid during peak hours, although the effects may not be that impactful.
Challenges through battery storage and hydrogen projects
Battery storage and hydrogen electrolysis facilities impose further challenges on the Dutch grid.
A core element of the LAN strategy involves encouraging flexible electricity use by businesses and institutions. While battery energy storage system projects (BESS) in the Netherlands is still a relatively new and small industry, it becomes increasingly necessary. 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. In a further recent attempt reduce 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. As a consequence, selected batteries can be connected to the grid more easily. Reportedly, applications for these flexible contracts were for more than 70 GW, mainly from large-scale battery parks. Demand which far exceeds the available capacity.
In relation to the country’s hydrogen strategy, Dutch transmission system operator TenneT has raised concerns that the previous government's decision to prioritise the development of hydrogen pipelines over a planned 6GW high-voltage direct-current (HVDC) cable in the "Delta Rhine Corridor" (DRC) could significantly delay the electrification of Dutch industry. According to TenneT, this may also add annual costs of about EUR 400 million to address ongoing grid congestion issues.
Key considerations
Grid-related delays that may impact commercial timelines should not surprise project developers in the Netherlands. To accommodate, contracting parties should consider clear force majeure or liability provisions that account for capacity constraints, interconnection queuing, and possible changes in congestion management rules. Risk allocation may determine whether developers or counterparties bear the brunt of cost overruns and delays.
Furthermore, securing grid connections timely has become increasingly complex. Early-stage coordination system operations, coupled with forward-looking permitting strategies, helps mitigate the risk of future curtailment or protracted wait times. Thorough review of land-use permits, environmental impact assessments and building approvals is essential, as local authorities may impose stricter conditions to limit further strain on the network.
We also notice investors and lenders scrutinize potential exposure to grid constraints — both in terms of project viability and revenue stability. We see more and more that funding agreements feature conditions (precedent) tied to grid connection milestones and robust coverage of force majeure events. Additionally, step-in rights and security packages may be structured to protect financiers’ interests if capacity restrictions threaten the commercial operation dates.
Outlook
As the Netherlands accelerates its energy transition, tension between ambitious renewable targets and existing grid capacity will intensify. Nonetheless, legislative and infrastructural reforms are in progress to manage these pressures, providing both challenges and new opportunities for market participants. By prioritising diligent legal drafting and proactive regulatory compliance, developers, investors, and operators can best position themselves to thrive in this evolving Dutch energy landscape.
