Alliander’s investments continue their upward trend
It was a turbulent year. The war between Russia and Ukraine makes the energy transition even more urgent. In addition, the European Commission stepped up its climate ambitions and the Dutch government announced its sustainability plans for the built environment. Together, these developments are resulting in an upsurge in electricity demand, increasing the urgency to adapt the energy networks and ready them for the near future. Working on the changing energy grid is a colossal task, one that will require even more intensive cooperation with all parties who have a role to play. Unfortunately, businesses — and increasingly consumers too — sometimes still need to wait before they can be connected to the grid or expand their connection. This is partly caused by a shortage of technical staff, but it is also due to a shortage of materials like smart electricity meters, cables and transformers.
Walter Bien, CFO: “Working on the energy transition is more urgent than ever. We will therefore continue to work incessantly on an evolving energy system and the infrastructure required for this. This is also clear from the results of the first six months. We laid more than 900 kilometres of cables and installed almost 600 transformer substations. Financing our work remains a major challenge. Increasing the climate ambitions means extra work, while surging material prices and rising energy prices are increasing expenditure. I am therefore pleased that the Dutch government has recently indicated that it is exploring a capital injection and, with this, the State becoming a shareholder in the network companies. This is crucial for the success of the energy and climate transition in our country.”
Half-year results
Alliander’s net profit for the first half of 2022 came in at €107 million, €12 million less than in the same period last year (2021: €119 million). Operating income for the first six months was up €14 million to €1,095 million (2021: €1,081 million). Over the last six months, total operating expenses increased by €15 million compared to the first six months of 2021, 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. Offsetting this to some extent was the ending of the ‘sufferance tax’ (municipal tax on encroachments on or above public land). Operating profit for the first six months of 2022 came in at €168 million (2021: €169 million).
In the first half of 2022, 593 new transformer substations were built, 77 more than in the same period in 2021 (+15%). We also laid 918 kilometres of cable, 131 kilometres (+17%) more than in the same period last year. Partly as a result of this, total investment, mainly in the power grid, was up €114 million to €579 million (up 25% compared to the first six months of 2021).
Changing energy system
Alliander is continuing unabated in its task of preparing the energy system for the future. The energy system is changing, with an ever-increasing volume of renewable sources, like wind turbines and solar panels, in the mix. The result is that electricity is increasingly being produced locally and the supply of energy is becoming ever more dependent on the weather. This means we need to do more than just strengthen and expand the current energy grid: to get the most out of the grid, it needs to be used differently too.
For example, in various areas we have launched pilots for smart charging of electric vehicles (EV), which aim to reduce the impact of the EV charging load on the power grid. In the first six months of this year, steps were also taken in Lochem, in the Dutch province of Gelderland, to enable ten homes to switch from natural gas to hydrogen later this year.
These pilots contribute to a more efficient use of the energy grid and thereby reduce the need for expansion and replacement. Alliander works continuously with customers and market parties on such smart and innovative solutions. As a result, the energy grid is adapting to the changing needs of the Energy Transition for years to come.