First come, first served undesirable
The Netherlands is on lockstep. As the nitrogen crisis continues, grid congestion is the next bump in the road for the major housing challenge. Whereas the problems on the electricity grid initially seemed limited to large consumers, grid operators are increasingly having to sell "no" to housing developers. The project then appears on the queue, behind previously submitted applications. This 'first come, first served' principle goes so far that even applications from vital functions such as hospitals or congestion relievers (which ensure that congestion is reduced) have to join the back of the queue. The socially undesirable outcomes of this (valuable transport capacity goes first to a cinema, for example, instead of the hospital) prompted the ACM to draw up a social prioritization framework. This works as follows.
Prioritization in three categories
The ACM has inventoried various social functions that could be given priority. For the record: this concerns priority in the allocation of transmission capacity and therefore not priority in connection to the grid, for which, incidentally, recently amended deadlines have been set (Art. 8.11 (small consumers, in force) and 8.13 (large consumers, in force January 1, 2025) of the Electricity Grid Code). Those functions the ACM classified into three prioritization categories. The first category, with the highest priority, concerns 'congestion relievers': parties that ensure that transmission capacity actually increases, for example a large battery park. The second category concerns 'safety' and sees, for example, fire, police and acute health care, as well as water management. The third category concerns 'basic needs', including education and - of interest to developers - housing needs. Application of the prioritization framework for housing construction means that released transport capacity is allocated first to the (highest) prioritized projects and only then to non-prioritized functions, such as non-residential construction.
Priority for housing development
Firstly, what matters is when the prioritized category for residential construction exists. (Table 3 of Appendix 22 to) the Grid Code defines that priority may include:
"A party serving residential needs with residential facilities with a maximum throughput of 3x35A, including community facilities directly linked to residential needs and other small-scale, inseparable activities."
It follows from the explanation of the amendment that even centralized facilities can be included (e.g. CHP), even if this exceeds the maximum throughput value:
"Individual connections should be requested with a view to domestic use and not because of commercial or professional activities. The ACM notes that collective facilities directly linked to residential construction, such as elevators, central lighting and heating of central space are considered part of the residential need to be realized, even if this requires a connection larger than 3x35A."
Most housing projects that are not overly complex will meet the conditions for prioritization given this description, including individual connections per dwelling (woz property) and any larger connection for the elevator and the like.
Priority for other (commercial) functions in residential development?
Interestingly, the commercial plinth could potentially be "co-prioritized" as "small-scale, inseparable activities," again according to the explanation:
"A housing project in which other functions are also realized, such as a plinth with a library and a number of stores in high-rise buildings, may also fall under the residential function. The condition for this is that it is a subordinate and small-scale function in relation to the residential function and that the housing project demonstrably cannot be realized without that link with another function."
For more complex housing projects that also include other functions, this can offer an opening. However, it must be demonstrated that one cannot exist without the other.
Conditions for priority
(Table 4 of Appendix 22 to) the Grid Code also defines the data necessary to qualify for priority, the most important of which are:
- A granted environmental permit;
- A board statement with:
- A rationale for the need for the required transportation capacity;
- A rationale for the need to have it available in the near future;
- a rationale showing that the project will actually start soon after the transmission capacity is awarded;
- a piece of evidence that unambiguously shows that the connection between the residential need and the small-scale other function is necessary for the realization of the residential project and/or the connection with a throughput value greater than 3x35A is necessary for the realization of the collective facility.
The requirement of a granted environmental permit is unfortunate, as connection and transport are usually requested much earlier and should be requested given the long lead times. The question is how strictly this requirement will be applied. An application for an environmental permit may also suffice, for example in combination with a statement from the Municipal Executive that it intends to grant the requested permit. Justifying the need will not be a problem for most developers. This one almost speaks for itself. The link between residential construction and the other functions may have to be substantiated financially, or, for example, on the basis of ownership positions and statements by the parties involved that residential construction may only take place if the subordinate function is also realized. It is expected that this condition will be viewed most critically.
Application of prioritization framework mandatory
Network operators are required to apply the prioritization framework in congestion areas - practically all of the Netherlands. Because this measure takes effect on October 1, it is important to prepare now for a request for prioritization. After all: priority is only granted upon request. The intention is then to determine the order of prioritized parties on the basis of when they submitted a transmission request to the grid operator (to this end, Art. 7.0b paragraph 4 of the Grid Code will be amended).
Prioritization: bright spot for developers?
The prioritization framework actually seems to offer opportunities for housing developers to prioritize their project with sufficient electricity. The possibility of prioritizing other functions to a limited extent is of great importance, especially for inner-city developments, although a grid operator will be critical of the size of that function and its linkage to residential development. Finally, it remains the case that prioritization only makes sense if there is some transport capacity to be allocated. If there is actual physical grid congestion, no transmission capacity will be available for a prioritized project. You will, however, be in the lead if grid capacity is expanded. In short, certainly a ray of hope, but in this reduced form.
