Get priority for a grid connection: batteries as a game changer for logistics real estate

Get priority for a grid connection: batteries as a game changer for logistics real estate

By Frank Heijckmann

We all know that batteries play an important role in the grid congestion challenge. Developers want to build a warehouse, but their grid operator offers too little capacity, or no connection at all. Owners of logistics real estate may want to install a heat pump, and move away from gas, or receive requests from tenants for charging infrastructure for their trucks, while the existing connection is too small.

In all these cases, a well-designed modern energy system provides the answer, with batteries playing a central role. For developers, a robust energy system offers several significant benefits:
‍

1. Faster project delivery;

2. Better returns;

3. A greater chance of obtaining a permit;

4. Fewer planning risks.

‍

And for owners of logistics real estate:

1. Better lettability;

2. Protection of returns;

3. Lower vacancy;

4. More sustainable buildings;

5. Greater alignment between solar PV output and tenant consumption.
‍

It has been clear for some time that, in the logistics real estate sector, a modern energy system is not a cost item but an asset that adds value and makes a building future-ready.

The role of grid operators may appear to be becoming less important, as logistics businesses preparing for the future are increasingly taking matters into their own hands and developing their own energy systems, without being overly dependent on grid operators.

But appearances can be misleading. Grid operators still play a major role in decisions on prioritisation. Who gets priority when it comes to securing a connection? That question matters greatly to both developers and investors. In recent weeks, more clarity has emerged about how this will most likely take shape. And make no mistake, this is a high priority for both government and the grid operators themselves.

Housing construction risks stalling. Defence needs to expand. And businesses across the Netherlands have been saying for years that the country’s competitive position is under threat. There is a great deal at stake. The relevance is clear. The Financieele Dagblad wrote about it roughly two weeks ago, and gradually it is becoming clear what this priority list is likely to look like:

‍

Priority 1: Congestion relievers, such as energy storage;

Priority 2: Safety and essential services, such as hospitals, defence, police, fire services, and similar organisations;

Priority 3: Basic needs and essential social functions, such as housing construction, public transport, educational institutions, waste processing, and similar sectors;

Prioriteit 4: All others, based on order of application.

You could say that if an application for a new connection contributes to reducing grid congestion, it has the greatest chance of receiving the highest priority. But how does that work in practice, and does it create new opportunities for our sector? What are the rules, and how is this assessed? Could a battery become a true project enabler?

‍

The ACM has drawn up a document on this, the ACM code decision “Prioritisation Space for Transport Requests”. It sets out a number of conditions that a battery project must meet in order for an application to fall under Priority 1. These are:

1. Functional requirement: in principle, the battery must charge during off-peak hours and discharge during peak hours. Pure trading on imbalance markets, providing reserve services, or arbitrage alone is not enough.

2. Contractual requirement: n agreement must be concluded with the grid operator covering matters such as the battery’s deployment windows and any sanctions for non-compliance.

3. Technical requirement: a number of technical requirements apply, which in my view are relatively straightforward to meet. There is discussion of a minimum battery size, both in power and in energy content. The grid operators themselves indicate that batteries should be at least 1 MW in power and 4 MWh in energy content.

4. Location requirement: the application must be located geographically in a grid congestion area. If that is not the case, an application can still be made in the traditional way and will be granted accordingly.

5. Evidence requirement: evidence must be provided to the grid operator, such as the technical design, a congestion contribution analysis, and a signed congestion management contract.

It may sound like a significant challenge to meet all these conditions, but my impression is that it is manageable. The required scale also fits well with the needs of developers and investors in our sector. It takes time and preparation, but for professional parties it is not overly complex.

For a long time, one thing has already been clear: anyone with a large electricity connection that is not being fully used can secure it by installing a battery. In effect, the connection is protected, so that higher future demand in the building no longer becomes a problem. At the same time, the use-it-or-lose-it principle is being applied more strictly, allowing more capacity to be redistributed. Unused space disappears, and redistribution becomes unavoidable. We know that game by now.

But now something fundamental is changing. Where new connections or extensions used to mean joining the back of the queue and waiting, opportunities are now beginning to emerge. Not at the back, but at the front. By making smart use of batteries, flexibility is created. We absorb peaks, feed back when the grid needs support, and actively help balance the electricity grid. And that is precisely what makes the difference.

By helping the grid, we help ourselves. The likelihood of obtaining or expanding a large connection increases significantly. What once seemed impossible becomes realistic again. What was stuck starts to move.

The fact that the logistics sector, so often seen as part of the problem, is now proving to be part of the solution is something I honestly did not see coming. But it feels like the start of something bigger: not waiting for capacity, but creating it ourselves.
‍

Would you like to know more about this topic?
Feel free to contact me at Frank.heijckmann@steddion.com

Co-founder, Steddion Energy

‍

Frank Heijckmann is the founder of KiesZon, the largest developer of large-scale rooftop solar projects, and PVO International, a leading wholesaler of solar products for major installers and developers across Europe. After the successful sale of both businesses, Frank now focuses through Steddion on the design, installation, commissioning, and management of modern energy systems in logistics and industrial real estate.

‍

‍