Electricity Rationing Signals Broader Crisis

The Netherlands has begun rationing electricity in an effort to alleviate mounting pressure on its overburdened power grid, revealing a growing infrastructure strain that is likely to ripple across Europe. This development emerges as demand for electricity continues to surge, driven by decarbonization targets, data center expansion, and the electrification of transport and industry.

  • Tens of thousands of businesses and public institutions across the Netherlands are currently on waiting lists for power connections.
  • Network operators have attributed the delays to insufficient investment in cables and substations, with some areas expected to remain without additional capacity until the mid-2030s.
  • Despite ongoing grid upgrades, existing infrastructure has struggled to keep pace with the country’s rapid transition from natural gas to renewable energy.

The Netherlands, having ended production at the Groningen gas field in 2023, experienced a sharp acceleration in green electrification. Over 2.6 million households now use rooftop solar panels, and industry has ramped up efforts to shift away from fossil fuels following the 2022 energy crisis.

Lost Investments, Lost Growth

However, the lack of timely investment in grid infrastructure has left regions such as Brainport, home to high-tech firms including ASML, unable to meet growing power demands. Local leaders have warned that economic investment is already being lost due to the grid bottlenecks.

  • To mitigate congestion, grid operators have introduced time-based contracts offering discounted electricity rates during off-peak hours. Large industrial users have been encouraged to reduce consumption during peak times in exchange for lower tariffs.
  • Public campaigns have also been launched urging consumers to adjust their energy usage to avoid the 4pm to 9pm high-demand window.

Even so, these measures remain short-term solutions. Tennet, the national grid operator, has forecasted a need for €200 billion in investment by 2040. With a portion potentially covered by the sale of its German grid operations, the remainder will fall on consumers through rising tariffs, which are expected to increase annually by up to 4.7% until 2034.

Europe-Wide Issues

Across Europe, similar pressures are being felt. Analysts have highlighted that other countries are approaching comparable levels of grid stress. Experts from energy and consultancy firms have reported wait times of up to eight years for grid connections. The International Energy Agency has estimated that over 1,500 gigawatts of global clean energy projects have been stalled due to grid constraints, and a $700 billion investment is required to align infrastructure with green energy goals.

  • The proliferation of data centers, particularly those used to support artificial intelligence (AI) applications, has emerged as a significant driver of power demand.
  • The construction of AI-focused facilities has accelerated, with some European countries now receiving hundreds of applications per year for major grid connections—far surpassing historical norms. Large-scale requests, sometimes exceeding 100 megawatts, are placing additional pressure on outdated transmission systems.

To adapt, some data center operators have begun developing independent backup ecosystems, including battery storage, microgrids, and on-site generation. However, grid access remains a fundamental obstacle. Energy experts have pointed to the need for forward-looking regulatory frameworks that would enable “anticipatory” investment in electricity infrastructure based on projected technology adoption trends.

Sovereignty

Despite these innovations, the mismatch between energy transition ambitions and grid readiness poses a critical threat to Europe’s economic and technological competitiveness. As electricity remains the backbone of decarbonisation and digital transformation, delays in grid expansion are expected to act as a serious brake on future growth.

  • Without urgent, large-scale investment and regulatory acceleration, this infrastructure bottleneck risks derailing Europe’s aspirations to retain its industrial backbone.
  • The inability to guarantee stable and timely power access may impede efforts to build domestic data centers, expand industrial capacity, and foster homegrown technological and industrial sovereignty.

Disclaimer

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Photo by Fré Sonneveld / Unsplash.