As the energy transition picks up steam, supply of locally generated renewable energy and demand for electricity grow. The electricity networks that transmit all that energy will, therefore, have to be upgraded and expanded so that we can keep connecting wind turbines, solar panels, EV charging stations, and heat pumps in the future. Alliander is fully committed to playing its part in further decarbonising the energy supply, which will see us do the same amount of work in the next ten years as has been done in the past forty. Over the coming years, Alliander is set to invest roughly €1.2 billion a year in its energy networks, twice the amount of the annual investments in recent years.
Alliander is currently in a healthy financial position. However, investing in the energy transition while maintaining the healthy financial position mean that Alliander’s equity needs reinforcement. Having sufficient equity is key in maintaining the kind of solid credit rating that we need to be able to continue to borrow at attractive rates in the capital market. Together with Alliander’s major shareholders, we have explored ways to bolster equity over the past year.
Given the substantial investments faced by Alliander, the conclusion that emerged from talks with the major shareholders was that a reverse convertible hybrid bond loan amounting to €600 million would be the best way to proceed. Such a loan already counts for 50% as equity in the credit rating. Alliander would also be entitled, in due course, to convert all or part of the loan into shares under certain conditions. “We are confident that this way of bolstering our equity offers our shareholders a financially attractive proposition. In this way, Alliander and its shareholders are further giving substance to the investments needed for the energy transition,” says Alliander CFO Walter Bien about the equity boost requested.
Alliander has taken various steps to be able to meet future financial challenges. Besides the request for additional funding submitted to shareholders, Alliander continues to work on an agile, effective and cost-efficient organisation. Internal operations have been restructured and there is a continued focus on both cutting costs and increasing productivity. Aside from that, we are in talks with the Netherlands Authority for Consumers & Markets (ACM) and the Dutch government ministries of Economic Affairs and Climate Policy (EZK) and Finance about possible solutions to the broader financing challenges within the sector.
Over the coming months, shareholders will individually consider whether or not to participate in the reverse convertible hybrid bond loan, which is expected to formally be issued in December 2021.
Alliander’s financial policy
Alliander’s financial policy is and will continue to be focused on maintaining at least a solid A rating. In order to be better able to leverage the financial headroom available as a result, we have made a few adjustments. For details of these adjustments, see https://www.alliander.com/en/investors/financial-policy/
Alliander is an energy network company. With our workforce of 7,000 highly skilled specialists, we maintain and innovate the energy network. We also come up with and implement innovative solutions to complex energy issues, as we work together to future-proof the energy grid in a large part of the Netherlands. As an independent party, we give customers and authorities the kind of insights that help them develop their energy supply. We are driven by the social importance of keeping energy reliable, affordable and accessible for everyone. Network operator Liander, which is an Alliander subsidiary, has been statutorily tasked with managing and further developing the gas and electricity network. The other Alliander units contribute by providing products and services that help create a future-proof energy network. With our knowledge and skills, we are helping the Netherlands make the right choices in the energy transition.