The Dutch electricity grid is full. In more and more places, businesses can no longer simply obtain a heavier connection, and grid operators are looking for ways to use the existing capacity as smartly as possible. One of those ways is congestion management: the grid operator pays consumers and producers a fee when, at busy times, they temporarily draw or generate less electricity than their contract allows. This creates breathing room on the grid.
The question at the heart of a recent ruling by the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, 2 June 2026) is whether that obligation may also be imposed on owners of a closed distribution system. For many large business parks, industrial complexes and port and chemical sites this is a relevant question, because they often manage their own internal electricity grid.
What is a closed distribution system?
A closed distribution system, or CDS for short, is a private electricity grid within, for example, an industrial estate or business park. The companies on that site are not connected directly to the public grid, but to the internal grid of the closed distribution system operator. This is not an ordinary grid operator: a closed distribution system benefits from an exemption under the Energy Act (Elektriciteitswet 1998), and the rules of the Grid Code (Netcode) apply to it only to a limited extent. The CDS itself, as a whole, draws electricity from the public grid and distributes it internally.
What was the case about?
The joint grid operators proposed extending the congestion management obligation to CDS operators. The ACM (the Dutch Authority for Consumers and Markets) adopted that proposal and amended the Grid Code in two decisions. The tricky part is that a closed distribution system operator itself has hardly anything to offer: its network consists of cables and transformers, not of installations that can flexibly supply more or less electricity. That flexibility lies with the companies connected to the closed distribution system. The new rules therefore require the closed distribution system operator to make arrangements with its connected parties so that it can nonetheless meet its obligation. Failure to comply moreover carries financial penalties: an amount per megawatt of contracted transport capacity for every period in which the obligation is not met.
Industry association VEMW took the matter to the Tribunal with three objections: the rules would conflict with the statutory system, they would be unworkable, and they would endanger the safety of the grid.
What did the Tribunal rule?
On all three points, the Tribunal sided with the ACM.
On the statutory system, the Tribunal ruled that the obligations are directed exclusively at the closed distribution system operator in its role as a consumer on the public grid. They do not pass through to the companies connected to the closed distribution system, and therefore impose nothing on those companies either. The ACM thereby does not encroach on the special, protected position of the closed distribution system. The fact that a closed distribution system depends on its connected parties does not change this.
On workability, the Tribunal found that the obligation is not an absolute obligation. The Grid Code contains an exception: if a closed distribution system operator is in fact unable to make a contribution, it must report this in writing and with supporting reasons to the grid operator. If supply is genuinely impossible, no financial penalty is due either. The Tribunal considers it reasonable and logical that a closed distribution system operator must be able to explain why it cannot supply, because otherwise the grid operator cannot check whether the stated reason is correct.
On the safety and reliability of the grid, the Tribunal pointed to the core task of every grid operator to manage its grid safely and reliably. That task remains paramount. A CDS operator does not have to cooperate with congestion management if doing so would endanger the safety of its grid, provided it substantiates this in writing.
The conclusion: the appeal is unfounded and the amended Grid Code stands.
What does this mean in practice?
For companies with a closed distribution system, the message is that they cannot avoid congestion management, but that the obligation is surrounded by safeguards. It is wise to map out now what flexibility is available within the site and what arrangements with the connected parties are needed for this. Equally important is properly documenting situations in which participation is in fact impossible or would affect the safety of the grid: it is precisely that written substantiation which is the key to avoiding a financial penalty.
The ruling fits within a broader trend in which the regulator increasingly involves more parties in solving grid congestion. Anyone who manages their own grid would do well to assess in good time what this means in concrete terms for their own organisation.
Do you have questions about the consequences of this ruling for your situation, or about the arrangements you should make with your connected parties? Our energy law lawyers are happy to think along with you.
Frequently asked questions
What is a closed distribution system (CDS)?
A CDS is a private electricity grid within, for example, an industrial estate, a port or chemical site, or a business park. The companies on that site are not connected directly to the public grid, but to the internal grid of the closed distribution system operator. A CDS benefits from an exemption under the Energy Act, which means the rules of the Grid Code apply to it only to a limited extent.
What is congestion management?
Congestion management is a way to make better use of the scarce transport capacity on a full electricity grid. The grid operator pays consumers and producers a fee when, at busy times, they temporarily draw or generate less electricity than their contract allows. This creates room on the grid without it having to be physically expanded.
Is my CDS required to take part in congestion management?
Yes. Under the amended Grid Code, which the Tribunal upheld, a CDS operator can be required to contribute to resolving congestion. Because a CDS has no flexibility of its own, that obligation means the operator must make arrangements with the companies connected to its grid.
What if my CDS genuinely cannot provide any flexibility?
The obligation is not an absolute one. If a CDS operator is in fact unable to make a contribution, it must report this in writing and with supporting reasons to the grid operator. If supply is genuinely impossible, no financial penalty is due. The substantiation is crucial here: without an explanation, the grid operator cannot assess whether the reason is legitimate.
What financial penalties apply in the event of non-compliance?
The Grid Code provides for two amounts, depending on the type of obligation: € 1.25 per MW of contracted transport capacity for every imbalance settlement period in which the obligation is not met, and € 120 per MW per day in the case of capacity limitation. These penalties are not due where there is force majeure or where it has been shown that a contribution is in fact impossible.
Does the obligation also apply to the companies connected to my CDS?
No. The Tribunal expressly ruled that the obligations are directed exclusively at the CDS operator in its role as a consumer on the public grid. They impose nothing directly on the parties connected to the CDS. In practice, however, the CDS operator will have to make arrangements with them in order to meet its own obligation.
Can I refuse if the safety of my grid is at risk?
The core task of every grid operator to manage its grid safely and reliably remains paramount. A CDS operator does not have to cooperate with congestion management if doing so would endanger the safety and reliability of its grid, provided it substantiates this in writing.
What should I do now as a CDS operator?
It is wise to map out what flexibility is available within the site and what arrangements with the connected parties are needed for this. In addition, carefully record in writing any situations in which participation is in fact impossible or affects safety. It is precisely that substantiation which determines whether you can avoid a financial penalty.
