Decentralised developments offer major potential for reducing grid investment

One important decentralised development is the local matching of energy supply and demand. Aligning consumption and production in both space and time reduces the volume of electricity that must be transported through the grid and limits associated transmission losses. When this also reduces peak loads, it can considerably lower the need for investment in grid reinforcement.

Based on the policy study “Financing the Electricity Infrastructure”, TNO estimates that decentralised developments could reduce investment requirements by €4.5 to €24.5 billion in the period 2025–2040.

In late 2025, at the request of the Ministry of Climate and Green Growth, TNO examined the potential savings in electricity grid investments resulting from decentralised developments. The importance of these developments was highlighted in the Parliamentary Letter on Decentralised Developments.

The Interdepartmental Policy Study (IBO) Financing the Electricity Infrastructure calculated that €195 billion must be invested in electricity infrastructure between 2024 and 2040, of which €107 billion concerns onshore infrastructure. A portion of this can be avoided through targeted interventions that stimulate decentralised developments.

Targeted interventions stimulate decentralised developments and reduce costs

Most decentralised developments with significant savings potential relate to end users, both small scale and industrial. Key interventions that support decentralised developments include:

• Steering the location of supply and demand, e.g. through energy communities, energy hubs with new types of connection agreements, or through location dependent tariffs and subsidies.
• Encouraging the use of flexibility in the built environment, including smart and bidirectional charging of electric vehicles and the smart control of heat pumps and home batteries.
• Valuing flexibility on industrial estates, including industrial demand response, power to heat, power to X, and energy storage.
• Stimulating heat networks and thermal energy storage, reducing peak loads on the electricity grid.

Beyond reducing the need for grid reinforcement, decentralised developments offer many additional benefits. In practice, companies and residents primarily focus on fitting their activities within the available grid capacity. Their main driver is therefore not so much reducing net usage, but managing grid congestion.

Decentralised solutions are also essential for enabling economic growth, accelerating housing development, meeting climate targets, facilitating sustainable initiatives and reducing energy costs. Local or regional initiatives tend to have greater societal support in terms of costs and spatial impacts. Finally, decentralised developments can contribute to greater system resilience and strategic autonomy.

Conditions required to enable decentralised developments

For these interventions to succeed and deliver the projected savings, several conditions must be met. This starts with the technical, economic and legal foundations needed for scaling up, such as viable business models, standards for energy management systems and innovative contractual arrangements.

Additional conditions include the collaborative structures necessary for coordinated and systemic approaches, as well as addressing shortages of technicians, installers and other essential experts. Finally, it is vital to reduce the burden on users and provide certainty to investors through clear, consistent and long term policy and regulation.

Three main recommendations

1. Stimulate interventions that support decentralised developments by addressing the required enabling conditions. The savings potential is substantial, and decentralised solutions contribute to multiple societal objectives.
2. Ensure transparency regarding the distribution of societal costs and benefits. Interventions reduce costs, but they also require investments - often from different parties.
3. Continue to identify additional interventions and maintain oversight of their effects. Make it easier to assess impacts and monitor real world outcomes.