Alliander invests €641 million over first half 2023
The energy transition is in full swing. As early as in 2030 around 85% of electricity consumed will come from renewable sources like wind and solar. At the same time, business owners are rapidly making their businesses more sustainable. They are adapting their production processes, which often generates additional demand for electricity. This increasing demand for green electricity and the large supply of this sustainably generated power is placing increasing pressure on the grid and, consequently, more and more places on the grid are facing capacity scarcity.
Walter Bien, CFO: ‘We are working non-stop on maintaining and expanding the energy network. We are fully focused on the mega-renovation of the Netherlands. As part of this, we recently granted Alliander’s largest tender to date. Worth 1.5 billion euros, this contract is for the expansion of the electricity network in parts of the provinces of Gelderland and Noord-Holland. Several other large tenders will follow. However, this doesn’t prevent business owners, who aim to make their businesses more sustainable and require additional electricity to do so, sometimes end up on a waiting list for a long time. This has a major impact on these businesses and is accompanied by uncertainty. Because of this, it is essential that we start using the electricity grid more flexible. Together with business owners, we look at the possibilities for connecting them to the grid so that they can realise their plans and their green ambitions.’
Flexible use
The pressure on the electricity grid will only increase over the coming years. Expanding the grid is not the only solution to address the growing demand: it is also essential that we make optimal use of the available capacity together. As a company, this can be done, for example, by looking at where you can save energy and by making flexible use of the power grid. Spreading consumption out more over the course of the day results in less congestion during peak times. And, as a result, other businesses can be connected sooner. Companies that take a flexible approach to fulfilling their power needs receive compensation from the network operator.
Flexible power consumption is relatively new. Together with business owners, Alliander is looking at the possibilities for companies to put this into practice. We have already seen the first examples of this, like how a commercial greenhouse in the Province of Zuid-Holland recently decided to make its power demand more flexible. The result was that nine other businesses could be offered a connection to the grid right away. Alliander is appealing to businesses with a connection for more than 1 MW to get in touch if they feel they can also make flexible use of their grid connection.
Furthermore, amendments to laws and regulations will continue to be needed to see that the grid can be used even more flexibly. With this in mind, despite the current political situation in the Netherlands, it is important that decision-making on this matter will continue to ensure there is no further delay.
Consumers also affected by the energy transition
Businesses have been suffering from increasingly longer waiting times for a new or larger connection to the power grid for some time already. However, at the beginning of this year it became clear that consumers, too, will increasingly be faced with negative effects of the energy transition as the power grid in residential areas increasingly reaches the limits of its capacity at peak times. This was evident over the past six months through the increase in the number of times consumers were unable to feed their generated solar power into the grid for a short while. The number of complaints about this (over 3,300) tripled compared to the first half of 2022.
Project developers looking to build homes and housing corporations wanting to make their housing stock more energy efficient are also increasingly feeling the effects of the congestion on the electricity grid. These homes often come fully electric, meaning they require around four times more electricity than traditional Dutch homes with a natural gas connection. So, it is important that the network operator will be involved at an early stage in new construction and sustainability plans and know the energy concepts used in these homes. Reducing the demand for electricity per home as much as possible places less demand on the power grid and, as a result, more homes can be connected to that grid.
Half-year results
Alliander’s net profit for the first half of 2023 came in at €109 million, €2 million higher than in the same period last year (2022: €107 million). Operating income for the first six months was up €275 million to €1,370 million (2022: €1,095 million). Total operating expenses came in at €1,185 million, meaning that the past six months have seen an increase of €258 compared to the same period last year (2022: €927 million), mainly due to the higher energy prices and resulting higher costs for purchasing energy to compensate for grid losses. Operating expenses also rose as a result of rising costs payable to TenneT. Operating profit for the first six months of 2023 came in at €185 million (2022: €168 million).
In the first half of 2023, 595 new transformer substations were built, comparable to the first six months of 2022 (593). Where an increase was seen, though, was the amount of cable laid: 1,084 kilometres versus the 918 kilometres laid in the first half of 2022. A total of 68 kilometres of new gas pipeline was laid, primarily to replace existing pipeline and to ensure the gas grid remains safe and reliable (2022: 50km). Total investment was €641 million, up €62 million compared to the first half of last year (2022: €579 million). This was mainly attributable to maintenance and expansion of the gas and power grid.
For more details, see Alliander’s 2023 half-year report.
Disclaimer: This press release has been released following publication of Alliander N.V.’s half-year report and is intended to be read in that context. Conditions included in the half-year report also apply to this press release.