The end of the marginal cost model in the Netherlands

In this paper a transparent and objective overview is given of the current situation and the foreseen future of the Dutch electricity market is discussed. This is complemented by cases highlighting the ‘missing money problem’, with suggestions to modify the current market design and behaviour seen/expected in the market and its impacts.

Cost of energy modelling

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Today’s situation in the energy business is a complex one. Whereas the well-functioning of the Dutch power sector still strongly relies on a number of large generation companies, current market circumstances are dim: on the one side, enormous investments in renewable generation are expected, on the other side the expected profitability of incumbent parties is low as producers have great difficulty to recover their costs. From a long term system reliability and stability point of view, the power system is in danger, as investments in a right balance of both generation and flexible adequacy are not ensured.

Marginal cost model Netherlands