Eneco: How Is Grid Congestion Halting Dutch Construction?

The Netherlands' rapid transition to renewable energy is creating major infrastructural challenges that could threaten economic growth and new housing developments.

As the country leads Europe in solar panel installation per capita and sources over half its electricity from low-carbon methods, its power grid is struggling to manage the influx of decentralised energy, directly impacting the construction sector.

More than a third of Dutch homes are fitted with solar panels and this green transformation has revealed a fundamental mismatch between the country's electricity generation model and its grid infrastructure. This is now causing delays and blockages for major development projects.

Grid congestion halts construction

The problem stems from the grid's original design, which is now outdated.

"The grid was designed in the days when we had just a few very large, mainly gas-fired power plants," explains Kees-Jan Rameau, CEO of Eneco.

"So we built a grid with very big power lines close to those power plants and increasingly smaller power lines as you got more towards the households."

The move to renewables has inverted this power flow.

"Nowadays we're switching to renewables and that means there's a lot of power being injected into the grid in the outskirts of the network where there are only relatively small power lines," says Kees-Jan.

These smaller lines cannot handle the electricity generated by thousands of wind and solar installations. The resulting congestion is now hampering the construction of new homes.

"It has got to the point where even new housing construction in the Netherlands is becoming increasingly difficult because there's just no capacity to connect those new neighbourhoods to the grid," explains Kees-Jan.

Economic bottlenecks for businesses

The infrastructure bottleneck is creating a major economic drag. According to a 2024 report from Boston Consulting Group, grid congestion is costing the Dutch economy up to US$38bn annually.

The government-owned grid operator TenneT reports that 8,000 companies are waiting to feed electricity into the network, while 12,000 others are waiting for permission to use more power. This directly affects commercial construction and expansion projects.

"Often consumers want to install a heat pump or charge their electric vehicle at home, but that requires a much bigger power connection, and increasingly they just cannot get it," Kees-Jan says. The situation for businesses is more severe.

"Often they want to expand their operations, and they just cannot get extra capacity from the grid operators," he adds.

Damien Ernst, Professor of Electrical Engineering at Belgium's Liège University, described the situation bluntly. "They have a grid crisis because they haven't invested enough in their distribution networks in transmission networks, so they are facing bottlenecks everywhere, and it will take years and billions of dollars to solve this," he says.

Costly grid reinforcement projects

In response, TenneT is planning to spend US$235bn on grid reinforcement, which includes laying 100,000km of new cables by 2050.

However, the timeline for these essential upgrades is extensive, offering little short-term relief for the construction industry.

"To strengthen and reinforce the grid, we need to double, triple, sometimes increase tenfold the capacity of the existing grid," explains Eugène Baijings, Head of Utilise Smarter at TenneT.

The timescale for these projects highlights the challenges ahead.

"And it's taking on average about 10 years to do a project like that before it goes live, of which the first eight are legislation and getting the rights to put cables in the ground with all property owners. And only the last two years are the construction period," Eugène says.

The Dutch energy ministry has acknowledged the miscalculation in a statement saying: "In hindsight, the speed at which our electricity consumption has grown might have been collectively underestimated in the past by all parties involved."

In the interim, the government is asking citizens to reduce electricity use during peak hours while energy firms like Eneco are using "virtual power plant" systems to remotely switch off turbines and solar panels to prevent grid overload.