Alarming ESNL Report: Major Dutch Batteries Barely Financeable Due to Explosive Rise in Grid Tariffs and Transport Chaos

Large-scale battery parks are becoming an increasingly significant component of the Netherlands’ renewable energy project pipeline. However, the gap between planning and realization remains substantial: only a limited number of projects progress to the construction phase. The high grid tariffs for batteries, combined with uncertain transmission conditions and the absence of long-term contracts, collectively create a financing barrier that most projects cannot overcome. Research by the ESNL indicates that the bottleneck lies not in the technology itself, but in the surrounding conditions.

Business case sensitive

For this study, ESNL spoke with 11 banks, public and private financiers, and financial service providers. Their assessment is unanimous: battery energy storage systems (BESS) can be well financed, but not based solely on market forecasts. Financiers primarily focus on the quality and predictability of cash flow.

A long-term tolling contract—where a buyer “leases” the battery for a fixed fee and assumes the trading risks—with a creditworthy counterparty offers the greatest certainty and enables a higher share of debt financing. Floor contracts, which provide a guaranteed minimum compensation, serve as a middle ground. Fully merchant projects remain possible, but require more conservative assumptions, access to multiple markets, a strong optimizer, and larger financial buffers.

Revenue stacking—combining income from frequency markets, imbalance trading, day-ahead, intraday, and congestion management—is essential for this. However, this also makes the business case sensitive: these revenue sources can shift over time or become saturated, and financiers must be able to model all of them.

Only one scenario is feasible

ESNL also conducted a quantitative analysis, running four sample cases for a representative standalone four-hour battery with a capacity of 200 megawatts and 800 megawatt-hours; both merchant and tolling models, with and without time-bound transmission rights (TBR). Under TBR, users have transmission rights for at least 85 percent of the time, in exchange for a significantly lower grid tariff. Of the four variants, only the combination of TBR and a very high toll meets the bankability requirements – the threshold for financeability in project finance. However, ESNL notes that this scenario is only “limitedly realistic.” Merchant scenarios yield a business case that is not financeable. Tolling without TBR is outright loss-making.

The comparison with Germany further underscores how decisive lower grid tariffs are: with comparable revenues, a lower tariff makes the difference for the business case. ESNL members expect lower revenues than the P50 scenario in the study, making the actual situation even more unfavorable. The problem is structural: revenues are falling or remaining stable, while grid costs are rising at an accelerating pace.

11 recommendations

The National Energy System Plan (NPE) assumes 28 gigawatts of battery capacity and 110 gigawatt-hours of storage capacity by 2040. According to ESNL, this is only achievable if battery projects are actually financed. To this end, the industry association has formulated 11 recommendations for the government and grid operators. The Integrated Policy Agenda for Energy Storage is a first step, but it is not sufficient on its own to ensure bankability.

First, ESNL calls for a multi-year path to be established for grid tariffs, transmission fees, and subsidies, with ongoing projects protected against interim policy changes. Furthermore, the organization advocates for a reform of the tariff treatment of bidirectional storage: under the current system, a battery is taxed during both charging and discharging as if it were both an end consumer and a producer, whereas treatment as a producer would be more logical.

Flexibility contracts and public guarantees

Standardized bankable transport and congestion contracts are needed across all grid operators, including a predictable lower bound for available transport capacity and a maximum curtailment duration, is the next recommendation. Transparent grid data by location and quarter-hour must enable risk modeling, allowing financiers to model congestion scenarios. In addition, ESNL calls for long-term, stackable revenue streams through flexibility tenders, congestion contracts, and a capacity mechanism, as well as targeted use of public guarantees for risks that the market cannot bear—such as the development phase and early commercial projects involving new technologies.

Standalone battery parks must not be overlooked in this context. Co-location of batteries with wind or solar parks naturally becomes easier, as ESNL notes that such projects do not rely solely on market revenues. However, standalone batteries can independently switch between markets and be deployed at locations with the highest system value. For a flexible and affordable energy system, this freely deployable capacity is indispensable, the industry association concludes.