In 2018 Alliander continued to invest heavily in the reinforcement and expansion of the energy networks. Execution was weighed down due to higher demand for connections to, and capacity of, the electricity grid and the shortage of qualified engineers across the Netherlands. The network company delivered a solid financial performance with a higher revenue and profit. This is evident from the annual report that was published today.
Ingrid Thijssen, CEO of Alliander: “2018 was a year in which Alliander delivered a solid financial performance, but faced operational challenges as well. The economy grew rapidly and the energy transition gathered further pace. This resulted in a huge workload that proved difficult to handle at times. In the past year too, we hired extra engineers while continuing to implement operational efficiencies. In addition, we introduced innovations to prevent otherwise necessary work. In the coming years it will be vital to work in unison with municipal and provincial authorities to ensure the timely completion of a local energy supply for the long term and without unnecessary costs to society.”
Safety comes first when working on energy networks. This applies to our colleagues, but also to customers and employees of our contractors. Fortunately, the number of work accidents leading to absenteeism remained at the low level of 2017. We deeply regret the injuries that two subcontractor engineers sustained while working for us in September in Amsterdam, as well as the injury that a bystander suffered during an interruption near Frederiksplein, also in Amsterdam.
Revenue, profit and capital expenditure
Alliander’s total operating income increased by € 228 million to € 2,068 million in 2018 (2017: € 1,840 million). This includes the one-off effect of the sale of subsidiary Allego (€ 105 million). Profit after tax excluding incidental items rose to € 261 million (2017: € 206 million). Capital expenditure continued to increase. In 2018 Alliander invested a total of € 731 million (2017: € 666 million). The cost of maintenance and interruptions worked out at € 283 million (2017: € 243 million).
Increase in customer outage duration
The reliability of supply of the networks remained as high as ever at 99.997%. That said, the average duration that our customers went without power increased in 2018 to 30.6 minutes (2017: 20.9 minutes). The outage duration was largely caused by several major outages, most notably the large-scale power outage on 9 March in Amsterdam. The investigation traced the cause to a malfunction in the safety system of the Frederiksplein electricity distribution station. A monitoring device now continuously checks the proper operation of this safety system to prevent a recurrence.
More engineers and innovation
The Netherlands has a chronic shortage of engineers, and Alliander is no exception. In 2018 the network company pulled out all the stops to recruit suitable new engineers and started to reach out to new groups, including migrants with residency status as well as workers from other sectors and secondary school leavers with a non-technical background. Thanks to this approach, 294 vacancies for technicians and engineers, among other roles, were filled. The company trains these recruits to become qualified professionals by offering short in-depth courses. To this end, Alliander opened a special practice facility in 2018 in Leeuwarden where groups of technicians receive simultaneous training.
Alliander is also introducing innovations to prevent work on the network. One such initiative concerned the launch of the first flexibility market in Nijmegen-Noord, which prevented the costly operation of laying an extra cable. Another involved the use of smarter solar field connections so that network expansions are not necessary. In 2018 Alliander also worked with authorities in, for instance, Amsterdam and the province of Gelderland to promote ‘smart charging’ for electric cars. This also keeps labour-intensive and expensive network expansions to a minimum. All these smart solutions save labour as well as social costs.
Partnerships with municipal and provincial authorities to ensure timely completion of long-term energy supply
In 2018 the renewable energy fed into the grid in Alliander’s service area was sufficient to power over one million households. The number of businesses and households feeding renewable energy into the grid jumped by more than 40% in 2018. The energy transition is spurring on a proliferation of electric cars, heat pumps, heating networks, batteries, hydrogen usage, solar panels and wind turbines. These developments are having a major impact on the electricity and natural gas grids. The energy system will become increasingly interconnected. For this reason, it will be vital to forge partnerships with municipal and provincial authorities to ensure the timely completion of a local energy supply for the long term, so that we can complete the energy infrastructure on time and avoid unnecessary costs to Dutch society.