Work in progress
The energy transition is moving full speed ahead. Partly due to geopolitical developments, the gas crisis and rising energy prices, the further electrification and decarbonisation of the Netherlands received a massive boost in 2023. The growth in the number of heat pumps, solar panels, e-boilers and charging points for passenger transport and electric trucks continued and will also continue in the next few years. Over 280 million cubic metres of green gas were fed into the network nationwide. At the same time, a lot of attention was also paid to the challenges we face in the transition: developments are outpacing our network expansion and upgrade capabilities. The effects of this include companies not being able to grow and consumers having to wait longer for a connection. Our customers are experiencing adverse effects of the energy transition, and we find this deeply regrettable.
Together with our colleagues, we are doing everything we can every single day to develop and construct a reliable, affordable and sustainable energy system. The energy system of the future. That energy system should facilitate the ambitions of the Netherlands in the field of economic growth, sustainability and mobility. In order to help realise these ambitions and to comply with our social responsibility, we made significant investments last year to ensure that our networks are future-proof by expanding and upgrading them, and we developed smart solutions to continue meeting demand as much as possible. We constructed over 1,300 transformer substations and power stations, around 1,000 high-volume electricity connections, and laid more than 2,500km of electricity cables and 300km of gas pipes. This made last year another record year. Never before have we done so much work, never before have we invested so much in upgrading and expanding our energy infrastructure.
At the same time, we realised even more in 2023 that this still is not enough. Demand for electricity and new or upgraded connections is exceeding what we can currently build, resulting in transmission shortages throughout the country. Access to energy is no longer a given and both companies and households have been facing longer waiting times or were unable to feed the energy they generated into the grid. We know that these downsides will continue to exist for the time being. This means that businesses and consumers will continue to notice the effects of full networks for at least another 10 years. This may have persistently painful consequences for our customers which may not be avoidable. In addition to this, the affordability of energy remained a key topic last year, and was frequently addressed in the broader social discussion about socioeconomic security. The above-average inflation of 3.8% and the anticipated removal of the energy cap had a noticeable impact on our customers.
We have refocused our strategy
Creating a future-proof energy system requires greater focus on implementation. Our aim is to have a solution for every customer in time by 2030. To achieve this, we need to maximise our construction efforts, while also deploying flexible solutions to make optimum use of our existing electricity network, and we need to communicate clearly with our stakeholders and customers about when to expect certain developments. Last year we therefore refocused our strategy.
We are expanding our energy networks
First of all, we will continue to maximise our efforts to expand and upgrade our energy networks in the years to come. We will be laying cables, building transformer substations and constructing new electricity connections. In order to meet increasing demand, the existing network will have to be completely upgraded. We will be boosting our construction capacity significantly by signing long-term partnerships with contractors and suppliers, in which we will give them much more security regarding their work packages. The Liander network expansion programmes in Friesland, Gelderland and Noord-Holland are examples of this. In Friesland and Gelderland, work started last year for the construction and installation of hundreds of kilometres of cables and transformer substations in the years to come. This is a massive task that we are tackling together with the sector. We are also focusing on utilising residual and ambient heat by upscaling heating networks and by increasing our ability to feed in and transmit sustainable gases.
We are focused on making the energy system more flexible
Secondly, we are focused on enabling flexibility, as this enables us to free up available capacity in the existing electricity network. However, depending on the network situation in the years to come, this might not be possible for a prolonged period of time. Enabling flexibilty involves providing incentives (financial or otherwise), encouraging customers to balance supply and demand, for example through storage or heat bufferring. To achieve greater flexibility in the network and, as a result, to help more customers who are waiting for a connection or an upgrade, we are working together with the Dutch Ministry of Economic Affairs and Climate Policy, the Netherlands Authority for Consumers and Markets, and market parties within the National Network Congestion Action Programme. The application of flexible solutions allowed us to help 145 commercial and industrial customers last year. The need for flexible energy usage is also increasing in residential areas. Growing numbers of electric vehicles are causing high peaks in the power grid, for example. Our efforts to tackle this include making smart charging the standard throughout the Netherlands for charging electric vehicles. We have already implemented this in Amsterdam.
We are working continuously on improving our communications with customers
Thirdly, we are improving our communications with customers and stakeholders. We are aware that we will not be able to immediately fulfil all the ambitions and wishes of individual parties in the years to come. We need to work together to find both temporary and sustainable solutions to successfully create the energy system of the future. We are investing continuously in optimising daily customer contacts and we help customers to make choices, for example, using the newly introduced online selection tool. In 2023 we also launched our biggest consumer awareness campaign ever: ‘Met de stroom vooruit’ (Powering ahead).
Our focus on expansion, greater flexibility and communication is in line with the National Implementation Agenda, which we presented in November 2023 together with the other regional network operators. This approach is aimed at building more infrastructure, for example, by working more systematically, working on one district at a time and one region at a time. We are also making energy a determining factor when it comes to spatial planning.
All of this means that we are takingthe necessary steps together and pulling out all the stops. At the same time, we have also noticed that, as an organisation, we are not always aware of how we need to handle the developments and changes associated with the energy transition. Despite all the hard work from our colleagues, we missed several operational and organisational targets this year. So apart from focusing on performance, we are also working hard on creating a culture in which we continue to learn and improve.
Everyone home safely
Safety is always the top priority in our work, and we are actively working to improve our safety culture at all levels. In 2023, we attained level 4 on the KIWA Safety Ladder. Alliander’s Lost Time Injury Frequency was 2.0. We have noticed that the issues with the power grid, waiting times for a connection and visible engineering works in the streets are increasingly resulting in a lack of understanding and aggression towards our employees. This is unacceptable in our view. Our colleagues can turn to the Aggression Help Desk, which opened in 2023, for help and for legal and other support.
Our innovations enable us to work smarter and faster
Accelerating the performance of work and greater efficiency in the organisation also call for a fundamentally different approach to our processes and services. This requires innovations, which we are happy to develop together with other network operators, start-ups, companies and knowledge institutions. Examples of these are the compact connection module that can be used to substantially reduce the connection times for charging points, a plug-and-play medium-voltage network, which is an innovation that significantly speeds up outdoor work as it allows us to interconnect cables faster, and a map that provides real-time insight into the local network situation and loads.
‘The energy transition would be impossible without you’
All of this work requires more highly skilled technical specialists. We have made far-reaching investments in the labour market, training and retention. Last year, we welcomed almost 2,200 new colleagues, including 165 IT specialists and 429 technicians. For this, we successfully introduced our first multimedia recruitment campaign. Together with other network operators and contractors, we also launched the ‘Arbeidsmatchplatform’ (Labour matching platform), which focuses on the skills rather than the most recent work experience of potential candidates, and which we use to increase the number of potential candidates in the whole sector. Sectoral collaboration has been made more concrete, both nationally and regionally. The Engineering, Construction & Energy Action Plan has been initiated. This is a collaboration with FME, Metaalunie, Bouwend Nederland, Techniek Nederland, employers’ association WENB and the sector organisation for mobility BOVAG. On a regional level, we worked closely with educational institutions and municipalities to train and recruit new talent. In the Amsterdam region, we started collaborating with seven energy and water companies to increase our engineering capacity. In 2023, we prepared our organisation for the recruitment of talent from outside the Netherlands and recruited various colleagues from abroad.
Solid financial position
The increasing investments have an impact on our financial position: the results for 2023 are positive, but just like previous years we remain in need of significant funding. In 2023, we once again took steps to keep our financial position solid. In July 2023, the Dutch Trade and Industry Appeals Tribunal (CBb) delivered a positive judgment in the appeal proceedings of the joint network operators against the ACM’s method decisions. This means that the ACM will be making adjustments to ensure that the income of the network operators is more in line with the rising investment expenses. In 2023, an agreement was reached with buyers about the sale of Kenter. The transfer of shares was completed in January 2024. The proceeds from the sale have a positive effect on Alliander’s financial position.
Outlook
Creating a future-proof energy system consisting of electricity, sustainable gases and heat requires full focus on implementation in this phase of the energy transition. The focus we applied in 2023 in our work, aimed at maximum construction of energy networks, greater flexibility and clear communication to customers, will also be a determining factor in 2024. In 2024, the National Implementation Agenda will also be further specified by the joint network operators and the relevant stakeholders, and will play a key role in how we will scale up the implementation further. But we cannot do this alone: we expect the new cabinet to make some firm decisions to accelerate the implementation, which will require continuous consideration of the various interests, both now and in the future. We will require more construction space, shorter spatial planning procedures, enough technicians to carry out the work and regulations that provide maximum support for a flexible energy system. These are crucial preconditions for us to accelerate and continue building the energy system of the future: the foundations of a sustainable and prosperous society.
We would not be able to perform the work on the energy system of the future without our more than 8,800 employees and the many employees at our supply chain partners. This year, they will once again be working day and night, using their skills and commitment for our core task: creating an energy supply that gives everyone access to reliable, affordable and sustainable energy. We are very thankful for that. Without them, the energy transition would be impossible.
Alliander Management Board, 28 February 2024
