Developments in 2023

The overhaul of the energy system due to the growing demand for electricity involves a significant expansion of our energy infrastructure. In recent years this had resulted in considerable growth of our work package: investments were €1.4 billion in 2023, representing a 15% increase compared to the year before. We expect increasing demand to require much higher investments as well in the years to come.

Furthermore, we once again had to deal with considerable price rises due to a lack of technical personnel, due to price rises at external contractors and for materials, and due to TenneT’s rising purchase costs. The higher energy prices, partly as a result of the war in Ukraine, also led to increased costs of network losses for us in 2023, which totalled more than €300 million.

By way of compensation, part of the increased costs were factored into our tariffs faster in consultation with the regulator ACM. This mainly concerns the costs of network losses and TenneT’s purchase costs. As a result, our net revenue increased by more than €500 million in 2023 compared to last year, as a result of which we generated a net profit of €267 million for 2023 despite the higher costs (2022: €198 million).

Based on the regulatory framework, compensation for the significantly increasing annual investments is incorporated in the tariffs over an average period of 40 years. Despite the increased profit, this leads to considerable funding shortfalls. In 2023 net debt increased by almost €600 million, totalling over €3.8 billion at the end of 2023. As a means of absorbing the funding shortfall for 2023, Alliander issued a green bond with a face value of €500 million in June 2023.

In the long term, the annual funding shortfall cannot be financed exclusively with borrowed capital. Reinforcing the networks companies’ equity is a crucial precondition for being able to continue making the necessary investments and to avoid even more pressure on investments in the gas and electricity networks. Apart from our key objective of working cost-efficiently to keep the energy system affordable, negotiations were started with the State in 2022 about strengthening our equity. As a result of this, a Framework Agreement has been drawn up. This agreement, which forms the basis for a possible participation agreement between the State and the network company, describes the conditions under which the State will contribute capital to the network company’s equity, making it a shareholder of the network company. Among other things, these conditions relate to the time required for an accession request and to governance. With the accession of the State to Stedin, the Framework Agreement entered into force in 2023.

The shares of group company Kenter BV were sold to a consortium of ABP and OMERS Infrastructure on 31 January 2024. The proceeds of this totalled almost €1 billion. 

Alliander’s financial policy is explained in further detail in this chapter. The financial results will also be presented, as well as Alliander’s position regarding matters such as cash flows and financing. These sections are followed by taxation, regulatory developments and requirements based on EU taxonomy. The chapter ends with a look ahead at the results expected for 2024.