A closed distribution system must take part in congestion management. In a ruling of 2 June 2026 the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, CBb) upheld the code decisions of the Authority for Consumers and Markets (ACM) that extended the obligation to offer congestion management services to the operators of closed systems. The obligation is directed at the operator in its capacity as a consumer on the public grid, it does not pass through to the businesses connected to the private grid, and it reaches only as far as what is factually possible and compatible with the safe operation of that grid.
For operators of business parks, industrial estates, port areas and chemical clusters that run their own internal electricity grid, this settles a question that had been open since the ACM amended the congestion management rules in the electricity code. It also leaves a practical problem in place: the flexibility the grid operator wants is not held by the system operator but by the companies connected to it. This article sets out what the ruling decides, what it expressly does not decide, and what a closed system operator should arrange now.
What a closed distribution system is
A closed distribution system is a private electricity grid within a defined site, such as an industrial estate, a port or chemical complex or a business park. The companies on the site are not connected directly to the public grid but to the internal grid of the system operator, and the site as a whole draws electricity from the public grid at one or more connection points.
The legal basis changed at the start of this year. Since 1 January 2026 the Energiewet has applied, replacing the Elektriciteitswet 1998 and the Gaswet, and it recasts the concept. Where the Elektriciteitswet worked with an exemption for a gesloten distributiesysteem, the Energiewet uses the broader term closed system (gesloten systeem) and provides for recognition by the ACM under Article 3.7(1). A closed system can be a distribution system or, for electricity, a transmission system up to a voltage level of 150 kilovolts, which brings a number of higher-voltage private grids within the concept for the first time.
The substantive conditions have been stable for years and follow the European directive. The processes of the users on the site must be integrated for specific technical or safety reasons, or the system must principally distribute electricity for the owner’s own use; the system must not supply household customers, apart from a small number of people employed on the site; and the operator must not be a public grid operator or belong to the same group as one. Recognition matters because a recognised closed system is exempt from a series of obligations that bind public grid operators, including parts of the tariff regulation and of the electricity code, now the Systeemcode elektriciteit 2026.
That partial exemption was exactly what was at stake. The question was whether an obligation designed for consumers on the public grid could be imposed on a party whose protected position rests on not being an ordinary grid user at all.
What congestion management requires
Congestion management is the set of measures a grid operator uses to make better use of scarce transport capacity on a part of the grid that is full. Instead of physically reinforcing the grid, which takes years, the grid operator contracts with consumers and producers who are prepared to draw or feed in less than their contract allows during the hours when the constraint bites, in return for payment. The capacity that is freed up can then be allocated to other users.
The Netcode elektriciteit, recast as the Systeemcode elektriciteit 2026 when the Energiewet took effect on 1 January 2026, turned this from a voluntary market into a duty. Large consumers above a threshold of contracted transport capacity in a congestion area must offer the flexibility they have, and the code attaches a financial consequence to a failure to offer, expressed as an amount per megawatt of contracted transport capacity for each settlement period in which the obligation is not met, and as a daily amount per megawatt where a capacity limitation applies. The ACM sets those amounts in the code, so the current version of that code determines what is at stake.
Applied to a closed system, the duty runs into an obvious difficulty. The system operator owns cables, switchgear and transformers. It does not own the processes that can be turned up or down. Whatever flexibility exists on the site belongs to the connected companies, and the operator can only offer it if those companies agree to make it available.
The dispute before the CBb
The joint grid operators proposed extending the congestion management obligation to the operators of closed systems, and the ACM adopted that proposal in two code decisions amending the Netcode elektriciteit. Under the amended code the operator of a closed system is treated, for this purpose, as an ordinary large consumer at its connection to the public grid, and must therefore make arrangements with the parties connected behind that connection so that it can perform.
The industry association VEMW appealed to the CBb on three grounds. It argued that the obligation is incompatible with the statutory system, because it uses the closed system operator as a conduit to reach parties that the legislature deliberately placed outside the ordinary regime. It argued that the obligation is unworkable, because the operator cannot compel its connected companies to provide flexibility and cannot be held to a result it has no means of delivering. And it argued that the obligation endangers the safe operation of the private grid, because an internal grid on a chemical or port site is designed around continuous processes rather than around flexible switching.
What the Tribunal decided on 2 June 2026
The appeal was dismissed as unfounded and the amended Netcode stands. The reasoning, however, narrows the obligation considerably, and it is the reasoning rather than the outcome that operators should read.
On the statutory system, the Tribunal held that the obligations are addressed exclusively to the operator of the closed system in its role as a consumer on the public grid. They create no duty for the companies connected behind that connection, who remain outside the congestion management regime and cannot be compelled by the code to offer anything. The special position of the closed system is therefore left intact, and the fact that the operator depends in practice on its connected parties does not make the obligation unlawful.
On workability, the Tribunal held that this is not an absolute duty to deliver flexible capacity. The operator must contribute within the limits of what is factually possible for it. Where a contribution is genuinely impossible, the code requires the operator to report that to the grid operator in writing with reasons, and where the impossibility is made out no financial consequence attaches. The Tribunal regarded the requirement to give reasons as both reasonable and necessary, because without an explanation the grid operator has no way of testing whether the stated impossibility is real.
On safety, the Tribunal confirmed that the core task of any system operator is to operate its grid safely and reliably, and that this task takes precedence. An operator of a closed system does not have to cooperate in congestion management where doing so would compromise the safety or reliability of its own grid, and the Tribunal accepted that this can be a weighty reason to decline even where connected companies would in principle be willing to make flexibility available. Here too the position must be substantiated in writing.
What the ruling does not decide
Reading the judgment as a straightforward defeat for private grids misses its practical content. Three things follow from it that operate in the operator’s favour.
First, the obligation is an obligation of effort within the bounds of what is possible, not an obligation of result. An operator that has genuinely tried to arrange flexibility with its connected parties and has failed is not in breach merely because no capacity was offered.
Second, the connected companies acquire no obligation from the code. Any duty they come under has to be created contractually, in the connection and transport agreements or the site regulations that govern their relationship with the operator. That is a negotiation, and existing contracts will in most cases not contain it.
Third, the written substantiation is the operative safeguard. Both the impossibility exception and the safety exception depend on the operator explaining itself in writing and in time. An operator that simply does not respond to a request from the grid operator has no defence at all, whatever the underlying facts. The record is what converts a genuine constraint into a legal position.
What a closed system operator should arrange now
Start with an inventory of the flexibility that actually exists on the site. Which connected companies have processes that can be shifted in time, which have their own generation, storage or emergency capacity, and what does each of them stand to lose by reducing consumption during peak hours. Without that picture, an operator cannot say anything credible either to the grid operator or to a court.
Then look at the contracts. Because the code creates no duty for connected parties, the operator needs a contractual basis to call on their flexibility and to pass on both the payment received and any financial consequence of non-performance. That means revisiting the internal connection and transport agreements, and dealing squarely with the allocation of the congestion revenues, the allocation of the code penalties, the notice a company is entitled to before it is asked to reduce, and what happens when two connected parties are asked at the same time. These clauses do not exist in most current site documentation and cannot be improvised when the first request arrives.
Set up the reporting line before it is needed. Decide who inside the organisation receives a request from the grid operator, who assesses whether a contribution is possible, on what technical basis a safety objection is formulated, and who signs the written response. Keep the underlying analysis, because the substantiation will be tested against it.
Finally, review the recognition itself. The transition to the Energiewet has changed the terminology and the scope of the closed system concept, and operators whose position rested on an exemption under the Elektriciteitswet 1998 should confirm how their status now stands under Article 3.7 of the Energiewet and what obligations follow from it. A grid that has grown, taken on new users or added a higher-voltage section may no longer sit where the original decision placed it.
How this fits the wider congestion picture
The ruling is one step in a broader movement in which the regulator draws more categories of grid user into solving congestion rather than waiting for reinforcement. Alongside the congestion management obligation, the code now provides for transport rights that are deliberately less than firm: time-bound contracts under which capacity is available only outside agreed peak hours, and capacity limitation contracts under which a user accepts a cap in return for access it could not otherwise obtain. For a site that cannot get a heavier connection at all, those instruments are frequently the only route to expansion.
The direction of travel is therefore consistent: capacity is allocated to those who are prepared to be flexible about when they use it, and the obligations attached to a connection increasingly follow from the code rather than from the individual contract. Operators of private grids, who have historically stood somewhat apart from that regime, should assume that the distance is narrowing rather than widening.
Do you have questions about what this ruling means for your site, or about the arrangements you need to make with your connected parties? Our energy law lawyers advise operators of closed systems and the companies connected to them on congestion management, connection and transport agreements and recognition under the Energiewet.
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. Under the Energiewet, which has applied since 1 January 2026, such a grid is recognised by the ACM as a closed system, 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 Systeemcode elektriciteit 2026 provides for two separate amounts, depending on the type of obligation: a sum per MW of contracted transport capacity for every imbalance settlement period in which the obligation is not met, and a higher daily sum per MW in the case of capacity limitation. The current version of that code determines the amounts. 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.
Advice on closed systems and congestion management
Law & More advises operators of closed systems, the companies connected to them and parties seeking access to a congested grid. We assist with recognition and its consequences under the Energiewet, with the drafting of connection, transport and flexibility arrangements on private sites, with responses and written substantiations to a grid operator, and with objections and appeals against decisions of the ACM and of grid operators.
If your site is affected by grid congestion, or you have received a request to offer congestion management services, you are welcome to contact us to discuss what the code requires of you and what it does not.
