‘In the energy transition, focus on affordability and feasibility in addition to support’

18 February 2021
Despite the COVID-19 crisis, Alliander connected more customers, laid more cables and invested more in the power grid in 2020 compared to 2019. This puts the network company on course to structurally increase its work rate. This is desperately needed as the company’s work package is growing rapidly. Maarten Otto, Alliander’s CEO: "The energy transition requires huge investments in the energy grid. To keep implementation feasible and costs manageable, it is important to design the energy system of the future as efficiently as possible. The Regional Energy Strategies are an important first step in this respect."

“To keep the energy supply affordable and the targets set under the Dutch Climate Agreement feasible, Alliander calls on the energy regions to not only shape their actions based on local support, but also to consider the societal costs and time to completion,” says Otto. 

Need for efficient choices

In the 30 Dutch energy regions, municipalities and provinces are making plans to generate regional green electricity, particularly at wind and solar farms. In their draft plans, the ‘regional energy strategies’ (RES), these regions have drafted their plans mainly with a view to local support.

Otto: “The assumption is that many people would rather have a field of solar panels than a wind turbine in their area. As a result, the regions are four times more likely to choose solar farms over wind turbines. We also see that wind and solar farms often do not yet share a connection to the grid and are not located close to residential areas and industrial parks where the sustainable energy generated is consumed. This means the network operators have to lay many more cables and build many more power stations, requiring many hundreds of millions of euros extra in public funds, as well as many hectares of scarce land for the additional stations. Moreover, less efficient choices result in much longer construction times for the required energy infrastructure than necessary, which puts pressure on achieving the climate goals on time. Based on the ambitions of the energy regions, we have drawn up alternative plan designs in which the efficiency of the energy infrastructure is paramount. In these it can be seen that, compared to the draft RES plans, the integration of wind turbines and large-scale solar farms can reduce the related drain on the public purse by 60%, save 60% in space, and cut the required work by 50%. We call on the RES regions to look beyond local support alone when elaborating their final plans.”

The impact of COVID-19

COVID-19 has had an enormous impact on society, and on Alliander too. From the start of the COVID-19 crisis, we have done everything we can to ensure that our employees can do their work in a safe and healthy manner. We have adapted to the situation and shown flexibility to help our customers as well as possible. This is essential, because without energy everything would come to a standstill. It has become clear that energy and the internet have taken on a whole new meaning due to all the working from home.  

For a period after the outbreak of the pandemic, home service by the service technicians of network operator Liander (part of Alliander) was suspended. On the other hand, Liander connected 7% more large business customers to the energy grid than in 2019, and work on power stations and cable connections also continued uninterrupted. In 2020, a total of 1,201 kilometres of medium-voltage cable was laid, an increase of 415 kilometres compared to the same period in 2019 (+53%). On top of that, 960 new medium-voltage substations were built, 344 more than in 2019 (+56%). We are also focusing on maintenance, reliability and development of the gas grid with a view to the future.  

Results in 2020

Walter Bien, CFO: “Alliander’s profit after tax came to €224 million in 2020, compared to €253 million in 2019. Profit excluding incidental items for 2020 worked out at €221 million, down €46 million on 2019. Over the past year, costs increased by €145 million compared to 2019. Part of this can be attributed to the higher tariffs that Tennet charges; however, the costs of our higher production and the impact of COVID-19 on operations also contributed to this increase. Income was down in several areas, due in part to the COVID-19 pandemic. Some of our large business customers, for example, have reduced their power consumption since the start of the outbreak. Given that they are on pay-per-use contracts for the use of our network, our income in this segment fell.” 

  • Net profit for 2020: €224 million (2019: €253 million)  
  • Operating income in 2020: €2,055 million (2019: €1,970 million) 
  • Total operating expenses in 2020 €1,736 million (2019: €1,591 million) 

Additional financing capacity needed

In recent years, Alliander’s annual investments reached €890 millionand are expected to increase even further. The energy transition and the continuing demand for more capacity on the electricity grid require further investments in the energy network. In addition to integrating the wind and solar farms in the energy regions, in the coming years in the Netherlands, we will also have to deal with a massive transition to electricity in transport and mobility, industry switching from natural gas to electricity and hydrogen, the digitalisation of society, which also requires a lot of electricity, and the construction of nearly 1 million sustainable homes that use 3 to 4 times more electricity than homes with a natural gas connection, some of which will be connected to district heating networks.  

Bien: “Alliander has a healthy financial position and wants to maintain this sound position moving forward to the future, which is why measures are needed to create financing capacity for the required investments. We are currently in talks with our shareholders and we are investigating which form of capital injection is the best fit. Alliander expects to be able to make concrete agreements in 2021.”

For more details, see Alliander’s 2020 annual report.