The Potential of Community Energy Storage for Grid Congestion and Prosumer Profitability in the Netherlands’ Residential Solar Market

Abstract

With the phasing out of the Net Energy Metering (NEM) scheme, the energy market is shifting towards alternative solutions like independent energy storage, already successful in countries like Belgium and Germany.
However, a single solution dominating the market is unlikely due to continuous innovation and the limitations of individual battery systems for prosumers and Distribution System Operators (DSOs). Community energy storage (CES) emerges as a promising alternative but lacks a defined business model, particularly for Dutch residential communities.
This study delves into the implementation of centralized community energy storage systems to boost prosumer profitability and mitigate grid congestion in the Dutch solar residential market, in the wake of the NEM scheme phase-out. Community energy storage applications are identified, along with their respective potential business models. The optimal application, in terms of prosumer profitability and grid relief, is selected, and its associated business model is developed using the Morphological business model designed for energy communities. Furthermore, a practical approach for integration is proposed, based on regulatory and market constraints, to enhance the potential for large-scale emergence. This approach includes defining key roles and responsibilities of stakeholders within the community and the corresponding allocation of value. Subsequently, a technical system design topology is outlined for each defined community. This system design delves into engineering details to analyze the energy interaction possibilities between consumers and the grid, along with the corresponding financial implications. Accordingly, the CES application’s performance is simulated and evaluated both technically and financially. The potential is presented by simulating the interactions between the community, the grid, and the optimal battery system. This optimal interaction arises from an optimization problem formulated to provide the optimal battery size and its corresponding energy profiles that minimize the total community cost. Finally, an energy distribution mechanism is carried out through conditional decision making to evaluate the cost and profitability allocation among consumers within the community.
The findings highlights the optimal application of CES, combining energy sharing with energy arbitrage, which significantly enhances the value of prosumers’ surplus PV energy, outperforming standard tariffs and avoiding grid feedback charges. This approach also provides consumers with access to more affordable shared community energy, while aiding DSOs in alleviating grid congestion and improving infrastructure capacity. The study suggests that the most effective strategy for widespread CES adoption involves collaboration between housing cooperatives and Energy Service Companies (ESCOs). Financially, this model entails
community managers overseeing initial investments, complemented by household contributions via usagebased or fixed service fees. The business model’s success is influenced by the type of grid connection, with Behind-The-Meter (BTM) offering flexibility but lacking standardization, and Front-of-The-Meter (FTM) encountering challenges related to community energy taxation. Modelling the optimal operation for both BTM and FTM connections demonstrates a significant decrease of energy costs and contribution to grid relief, highlighting load smoothing and peak shaving as key benefits. The research concludes that centralized CES systems can substantially elevate prosumer profitability and reduce grid congestion, leading to considerable energy savings and enhanced grid performance in the Dutch solar residential market.
To support the expansion of Community Energy Storage (CES) systems and energy communities, policymakers are advised to revise energy taxation policies and create frameworks aiding community grid formation, including simplifying regulations and offering incentives for residential initiatives. Researchers should adopt a multidisciplinary approach to explore regulatory, technical, economic, social, and environmental impacts on CES, focusing on regulatory effects, grid dynamics, cost-benefit models, community engagement, and environmental benefits. Industry stakeholders, such as Distribution System Operators, energy providers, Energy Service Companies, and housing cooperatives, should apply these research insights to develop and implement CES systems, fostering partnerships to address challenges and innovate in energy solutions, particularly in the evolving landscape post-Net Energy Metering, to enhance the role of community storage in sustainable energy systems.