Alliander invests €797 million over first half of 2024
Walter Bien, Alliander’s CFO: ‘At the start of the year, we announced that congestion on the power grid will remain for at least another 10 years. This congestion means that many companies face a wait for a new or higher-capacity connection. Businesses will, as a result, not be able to realise their business plan or only much later. We genuinely regret this and are doing everything we can to create more capacity on the power grid as quickly as possible. We have, for example, installed or refitted over 800 transformer substations and put nearly 900 kilometres of new cable into the ground in the first half of the year. At the same time, we are engaging with businesses to see if they can be more flexible in how they use the power grid and change the way they use it. This is already paying off in the form of more space on the grid that other businesses can use to get the connection they need sooner than initially anticipated. One fine example is the group contract we sealed with a number of companies in the port of Amsterdam. It enabled us to get as many as 29 customers from the waiting list connected to the power grid in one go.’
Different use
By encouraging flexible use of the power grid, Alliander is trying to get more out of the grid. Flexible use is, however, not an option for everyone, which is why we are going to need more options over the coming years. Alliander has, for example, gotten together with national grid operator TenneT and various local and regional governments to explore what would be needed to prevent the power grids in Gelderland province and the southern part of Flevoland province from getting overloaded. This is necessary to be able to keep building houses and make existing houses sustainable in these areas. The results of this study were presented recently. A considerable part of the measures is geared towards fostering responsible use of the power grid we already have, such as through smart charging and house building that takes the power grid into account. Alliander has already seen this work in practice. Smart charging, for example, has already gained further shape in Amsterdam where a previously launched pilot has been scaled up. And Alliander is teaming up with BalansWijk to design house building concepts that depend as little as possible on the current power grid.
Delays
The limits to the rate at which large-scale power grid construction and upgrades can be increased became noticeable in practice in the first half year. Due to a range of factors, projects were completed later than planned. In early February, damp was found in a certain type of medium-voltage station, leading to delivery of these stations being delayed and schedules having to be adjusted. In late June, it became clear that the large-scale grid expansion project NuLelie will be delayed, meaning that companies and perhaps residential construction projects in Friesland province and the Noordoostpolder area will have to reckon with the possibility of a longer wait for a new or higher-capacity connection. The delay is primarily down to the work being more complex than initially thought.
Collaboration
Needless to say, Alliander is doing everything it can to prevent delays and to increase the work rate. After all, power grid expansion is crucial for Dutch society and economic growth. One way we are stepping up the work rate is through the ‘neighbourhood approach’ that sees us upgrade power grids in neighbourhoods in an efficient way. This saves time because only one single plan has to be made with the local authorities for the whole neighbourhood.
This kind of collaboration is crucial on many fronts to keep upping the pace. Together with provincial and local authorities to make faster and clearer choices about where power stations can be built, where transformer substations will fit in, and where district heating networks are to be constructed. Alliander is also teaming up with the national government to harness all the labour potential and make engineering degrees more attractive.
Half-year results
Alliander’s net profit for the first half of 2024 came in at €879 million, €770 million higher than in the same period last year (2023: €109 million). This strong profit hike is mainly related to the one-off revenue from the sale of Kenter (€757 million) that was formally concluded in January. Operating income for the first six months was up €945 million to €2,315 million partly thanks to this sale (2023: €1,370 million). Total operating expenses came in at €1,352 million, meaning that the past six months have seen an increase of €167 compared to the same period last year (2023: €1,185 million), partly on the back of the rise in employee benefit expenses that comes with a growing workforce, the pay increase under the collective labour agreement, and higher tariffs charged by network operator TenneT. Operating profit for the first six months of 2024 came in at €963 million (2023: €185 million).
In the first half of 2024, 845 transformer substations were built new or refitted (2023: 1,031). A total of 870 kilometres of cable was laid (2023: 1,084km). A total of 72 kilometres of new gas pipeline was installed, primarily to replace existing pipeline and to ensure the gas grid remains safe and reliable (2023: 68km). Total investment, mainly attributable to maintenance and expansion of the gas and power grid, was €797 million, up €156 million compared to the first half of 2023 (2023: €641 million), meaning we invested more compared to the first half of 2023. Investments were up mainly due to the great amount of work needed to overhaul the energy system. Much of that work is currently in progress or in preparation and therefore not yet visible in the presented ‘work completed’ figures.