Opinion of the Alliander stakeholder panel

Dear reader,

As in previous years, Alliander again organised a stakeholder panel to evaluate the annual report. As members of this panel and representatives of the outside world, we provide feedback on the draft annual report. We are delighted that Alliander considers it important to have stakeholders preview the report content at an early stage, thereby giving them the opportunity of making valuable contributions to the final version of the report based on their expertise and backgrounds. In our view, this allows the organisation to gear the report even more closely to the wishes and needs of the stakeholders and society at large. 

Review of Alliander’s role in the energy transition

During our discussion, we were comprehensively informed about the complex challenges associated with making the Netherlands more sustainable. The current energy network is a major limiting factor, along with a disrupted supply chain, economic recession, a lack of space, the scarcity of professional specialists and a new political landscape. The weather-dependent energy system is becoming more decentralised, with each house as a potential energy-generating power station. We are seeing a mass shift toward electrification, driven in part by the inflated gas prices that have prevailed since the start of the war in Ukraine. That one third of the streets in the Netherlands will have to be dug up is a daunting prospect and, as a stakeholder panel, we appreciate the magnitude of the operational tasks facing Alliander. We understand that not everything can be done at once and that this requires difficult choices. We reflected on this together at some length. As a panel, we unfortunately have no ready-made solutions at hand. But we do advise the organisation to keep looking at what energy is used for. This does not mean that we question the validity of the usage of energy. But we do see that network operators are being pressured - perhaps incorrectly - to shape and implement the energy transition in a way that matches the world as it is today. As a society, we need to think more about what kind of world we want to live in and what is the role energy plays in that world. Are the changes we desire also the changes that are truly necessary? Efforts to increase energy awareness and re-evaluation of ingrained ideas about our needs may lead to opportunities for smart innovation and scenarios that are indeed possible within the given context and constraints. However, there is a caveat: creativity must not be allowed to slow the process down. In our view, network operators, governments, partners and customers have a shared responsibility here. We have to do it together and we must be honest in our approach. It would be nice if this aspect could be discussed in the report as well.

Energy affordability and accessibility

Energy affordability and the energy transition were further aspects which we talked about in the context of the draft annual report. Part of the cost of the energy transition will appear on people’s energy bills. But what are the societal costs if we fail to implement the transition? How do we factor in environmental costs, such as carbon emissions? We must pay an economically realistic price for energy, which is more than the amount we paid in the past. But what does that mean for households struggling to make ends meet? Last year, the Dutch government subsidised a price cap to avoid the worst scenarios. Nevertheless, a growing middle-income group is at risk of energy poverty, sometimes because they are not as well-informed about how to obtain support and are harder to reach. As well as being a network operator, Alliander is a major employer. We urge Alliander to grow appropriately in the transition by focusing more on its social role as an employer, and to report on this aspect. Employees sometimes find themselves in the same situation as customers. The world inside the company reflects the world outside.

Labour market

Millions of workers and professional specialists would be needed in various sectors in the coming years. This also applies to engineering. Alliander has been working intensively for many years to maintain its own employee base and increase labour productivity. This requires innovation, which in turn requires technical skills. A greater emphasis on mandatory technical schooling helps all sectors, but how does that relate to the personal freedom of choice regarding the area in which one you want to develop and grow? And here again, how does this relate to the way we want to live as a society? People often choose their profession based on the values they stand for and what matters to them. Engineering is not an end in itself, but rather a means to create something else that is valuable. What are the benefits of a new energy network? If you don’t like engineering, you are less likely to make this choice. However, a change of perspective could potentially motivate more people. The fact that actors in the energy sector operate in a fragmented manner in the same market is not helpful. Furthermore, we see benefits in the idea of circular labour migration, where people work in the Netherlands for a number of years and then return to their country of origin, having a positive effect both here and in their home country. Similarly, we see benefits in schooling and training abroad and more intensive interdisciplinary collaboration to spark creativity. But is that really a task for Alliander? Looking for new approaches must also not be allowed to delay continous infrastructure development. The theme of the annual report is ‘Work in progress’ for good reason.

Alliander’s dilemmas

Like last year, the stakeholder panel took time to reflect on the dilemmas in Alliander’s annual report. We recognise and endorse the topics discussed, which make it sufficiently clear the difficult role Alliander has to play and how limited its influence is in the regulated sector. Having said that, it could however in some casesbe more concise or concrete . Take the ‘values’ dilemma, for example; exactly where the problem lies is not clear here. And isn’t this more about collective versus individual interests, which is a core problem of all sustainability transitions. The dilemma regarding the planet’s limits is important but this is a concern rather than a dilemma. It also lies outside Alliander’s direct sphere of influence. In connection with the dilemma regarding affordability, we feel that greater emphasis should be given to Alliander’s policy of acting in a socially responsible manner in the event of payment problems. The dilemma regarding area-based or demand-based is not a dilemma in our view. Both can and must co-exist. Is that really a dilemma? A dilemma regarding labour market issues - mandatory schooling, labour migration in the light of current public sentiment - would also fit nicely in the list. We advise Alliander to let the details of the dilemmas speak increasingly for themselves.

Other recommendations from the panel

The annual report as a communication tool

Although the report could be shorter, in general, the text is fluently written and pleasant to read. However, the target audience for whom this annual report is written is not clear to the panel. We recommend making the report more appealing by trying to significantly reduce its scope. In addition, we would recommend bringing the report more in line with other communication tools issued by Alliander: highly visual, snappy, attractive.

Energy system versus energy infrastructure

According to the text, Alliander’s ambitions focus in many cases on the energy system as a whole. This is a case of the organisation expressing ambitions that it cannot completely achieve. It acts as a ‘trusted adviser’ rather than a decider or decision maker.

Attention for its social impact as an employer

In the draft report, there is a clear focus on Alliander’s external social impact as an employer, but less attention is given to its social impact as an employer in the context of the organisation internally. If there are any impact analyses in this respect, we would certainly highlight the outcomes more clearly.

Significance of materiality and impact

The discussion on materiality and the impact analyses are interesting and a valuable addition to the report. However, the significance of these topics in the report and the effect that materiality and impact have on the strategic process are unclear.

A final word

Alliander’s reporting is of a high quality, which is confirmed by the fact that the 2022 report was awarded Financieel Dagblad’s Sijthoff prize and the Dutch government’s Kristal prize in 2023. We hope that our contribution will help to maintain this high level of transparency. We would like to thank Alliander for its positive attitude towards its stakeholders, for giving us the opportunity to give meaningful feedback on the draft version of the annual report and for the substantive dialogue with the Management Board.

On behalf of the stakeholder panel,

Stephanie Bauchant – policy adviser on debt counselling and assistance | City of Amsterdam
Samira Ibrahim – researcher into climate risks and climate change adaptation | PBL Netherlands Environmental Assessment Agency and freelancer for Platform Energiebewustzijn
Harold Lever – chair of research group Underground Networks | Bouwend Nederland
Dick Ligthart – director green, social & sustainability bonds | ABN AMRO
Erik Jansen – lecturer in social sustainability practices | HAN University of Applied Sciences

The stakeholder panel

The stakeholder panel that assists us with the annual report is a part of our ongoing stakeholder dialogue. We shared a draft version of the 2023 annual report with the panel members in December. It was discussed during an online meeting held on 21 December 2023, which was attended by the CFO Walter Bien and the COO Marlies Visser. The feedback was used to improve this report, and will also serve to further enhance the quality of our reporting. The stakeholder panel is independent. Perhaps you, too, would like to talk to us about the annual report or the issues confronting Alliander. We are open to dialogue and regularly organise roundtable sessions with our stakeholders. Please contact us on communicatie@alliander.com.

Response from the Management Board

The Management Board thanks the Stakeholder Panel for their analysis and all the reflections on our challenges. We have looked closely at the panel members’ opinions on the draft annual report. Following that assessment, we included as much of the advice as possible in the final version of our annual report.

Demand for energy 

The panel advocates that we should attend more on ‘what the energy is used for’ and think more deeply about what kind of world we live in and what is desirable. We have acted on this recommendation. Attention has been given to this in the section entitled ‘Our impact on society’. Congestion in the energy network also makes this debate increasingly relevant. In the ‘Our network’ section, we have written about new connection standards, energy-related spatial planning and the increasing importance of societal priorities. In other words, if we are no longer able to do everything, what takes precedence? This question is unavoidable and our role here is limited to charting out the consequences of the choices. The democratically elected government bodies are responsible for determining the social roadmap. You also highlight the importance of ‘energy awareness’ in this context. Through our ‘reduce demand’ pillar, presented in the ‘Our strategy’ section, we emphasise our readiness to work more often with all parties in the supply chain to investigate how to reduce demand for transmission capacity. We have added a paragraph on the actions we took in this respect in 2023.

Social entrepreneurship

Your call to Alliander to intensify social entrepreneurship makes excellent sense against the backdrop of rising energy tariffs on the one hand and, on the other hand, the threat of energy poverty and the emergence of more and more ‘working poor’. In the ‘Creditworthy company’ section, we address the conflict between the need for increasing investment due to the energy transition and the outdated regulatory framework for tariff setting; we will no longer be able to recover our costs fully in the long run. This is indeed an area where concerns about the social impact of energy poverty should be mentioned and we have changed the text accordingly. In this context, we will consider the effect of national government policy aimed at preventing disconnections, which we wholeheartedly support. We have also included a mention of our pilot projects that use energy data to help at-risk groups in a timely manner. One is currently ongoing in the municipality of Amsterdam and another will soon start in Arnhem. Finally, you rightly point out that Alliander also has a responsibility to its own employees. We have noted this concrete suggestion and will include it in our next report.

Workers

We do not see the scarcity of workers as a real dilemma and therefore we have not included this recommendation in this issue. We will need all possible approaches to increase the availability of technical personnel, however the actual avenues open to us depend strongly on political choices.

Impact and strategy

You also indicate that we could be clearer about how impact and materiality affect our strategy. In the ‘Our impact on society’ section, we indicate that we are developing ‘management by impact’. We are working with other network operators in the sector to put this in place. We will report on this in more detail in the 2024 report.

The annual report as a communication tool

Finally, thank you for your recommendation urging us to use the annual report more as a communication tool. The fact that you see this potential in our annual report and feel that we could act to unlock it is a great compliment. At the same time, we are also bound by official reporting guidelines and the associated codes. We are prepared to commit to investigating how we can further improve accessibility in the text and graphics, specially via our online version.