Understanding flexibility in the Dutch electricity market and its adoption
An analysis of the barriers through the lens of Transaction Cost Economics
W. Donkervoort (TU Delft - Technology, Policy and Management)
L.J. Vries – Graduation committee member (TU Delft - Energy and Industry)
A. Correlje – Graduation committee member (TU Delft - Economics of Technology and Innovation)
S. Chauhan – Mentor (TU Delft - Energy and Industry)
More Info
expand_more
Other than for strictly personal use, it is not permitted to download, forward or distribute the text or part of it, without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license such as Creative Commons.
Abstract
The transition towards a decarbonised electricity system presents significant challenges for the Dutch electricity market, particularly regarding the integration of renewable energy sources and the mitigation of grid congestion. Flexibility is increasingly recognised as a crucial tool for optimising grid utilisation, reducing reliance on infrastructure expansion, and enabling the integration of new energy users. However, despite its technical feasibility, the adoption of flexibility measures remains limited due to a combination of regulatory, market, and behavioural barriers.
This study examines the factors influencing the decision-making of large electricity consumers in the Netherlands regarding the adoption and utilisation of flexibility options. Using Transaction Cost Economics (TCE) as a theoretical framework, the research identifies key barriers, including high transaction costs, regulatory uncertainty, contractual complexity, and economic disincentives. A qualitative methodology was applied, incorporating a literature review, policy analysis, and semi-structured interviews with industry experts.
The findings reveal that flexibility adoption is constrained by two primary challenges: some stakeholders are willing but unable to provide flexibility due to external constraints such as grid congestion and infrastructure limitations, while others are able but unwilling due to financial concerns, operational risks, and misaligned incentives. High transaction costs—resulting from information asymmetry, contractual uncertainties, and market inefficiencies—significantly hinder participation in flexibility markets.
To address these barriers, this research proposes a series of policy and market interventions. These include expanding knowledge and awareness initiatives, improving regulatory frameworks to incentivise flexibility, strengthening the role of system operators, and reforming financial incentives to reduce transaction costs. By aligning policy objectives with market needs, the Dutch electricity system can move towards a more flexible, efficient, and resilient grid, supporting the energy transition while ensuring system stability and economic viability for its users