Trends and developments

Alliander has a massive social impact because of its energy networks and activities. This means we need to respond appropriately to global and national developments. It is highly important for us to understand which factors affect our work, both in the short and the long term, allowing us to anticipate matters and refine our strategy if required.

Worldwide effects on society and the energy system

The energy transition in the Netherlands is not an isolated process, but takes place within a context of global trends and developments. Both the energy transition and the energy system that is currently being created have a profound effect on society. Below is a list of the key global trends and social developments that have the biggest impact on us:

  • International collaboration is becoming increasingly unstable and regional. As a result, the EU and its Member States are focusing more on independence and sovereignty when it comes to matters such as energy supply and raw materials.

  • Energy prices are rising, which negatively affects the competitiveness of the energy-intensive industry. This requires clear choices on which energy-intensive basic industry suits the definitive climate-neutral blueprint. 

  • Increasing costs in a broad sense due to economic developments and rising energy prices in particular put pressure on the affordability of household energy bills. This also increases the group of households without a focus on or financial scope for investments to improve the sustainability of their homes. 

  • There are vulnerable dependencies in international supply chains. Interruptions have an immediate impact and lead to greater regionalisation of production, so companies have to purchase materials more locally and at the same time need to safeguard the flow of required materials. Growing global scarcity of raw materials in the energy supply chain is expected to increase the vulnerability further. 

  • Society is electrifying and the use of renewable energy sources is increasing. This increases the need for flexibility in the energy system, requiring us to predict and respond to energy demands better in order to keep the system balanced.

  • High energy prices contribute to electrification among consumers and companies, showing how sensitive the behaviour of consumers and companies is to price incentives and subsidies.

  • Society is becoming more urban and cities are becoming denser. Scarcity of  space complicates and slows down the construction of infrastructure and the transition to greener heating solutions in urban areas.

  • New technologies like AI are being adopted rapidly. Application of these technologies will lead to new working methods, further optimisation and new types of collaboration.

Congestion issues enter a new phase

Access to the power grid was put under even more pressure in 2023 as a result of a steep rise in electrification. In October, high-voltage network operator TenneT published the results of the congestion management study for the Flevopolder, Gelderland, Utrecht and the port of Rotterdam. The study revealed that there is not enough capacity to help customers on the waiting list. For Noord-Holland, Overijssel and the south-western part of Groningen, TenneT also announced that there is no more room for new companies and institutions or for organisations that want to expand. Friesland is also getting close to the limits of its available capacity. 

Steep rise in electrification among consumers and companies

The energy transition is driving a huge transformation of the energy system, and this means we are generating and using more and more electricity. In 2023, the number of newly installed heat pumps rose to 170,000, a 60% increase compared to 2022. Starting in 2026, hybrid heat pumps will become mandatory when replacing central heating boilers, driving these numbers higher to as much as 240,000-300,000 heat pumps per year. There are currently 500,000 charging points in the Netherlands, and this figure is expected to increase to 2 million in 2030, which translates to hundreds of new charging points being added per day. Many companies are also moving away from natural gas and asking for (upgraded) connections to the power grid. We are seeing a significant acceleration among companies, with 1,800 of our largest customers indicating that they want to increase their electrification by 50% compared to their plans from two years ago.

Maps showing regional transmission scarcity 

Capacity shortages on the grid when using electricity
Capacity shortages on the grid when feeding in electricity

In late 2023, the Dutch network operators have received requests for upgraded or new electricity connections representing over 105 gigawatts (GW), or more than 150 times the capacity of the electricity network in Amsterdam. These include requests for large-scale batteries (75 GW) as well as industry, companies, data centres, hydrogen plants and new residential areas. By way of comparison: current peak demand of all companies and consumers in the whole of the Netherlands is about 20 gigawatts.

At the same time, heat and gases are also part of the energy system of the future. Having the correct mix of energy carriers with adequate infrastructures is highly important to safeguard affordability, feasibility and reliability. One complicating factor here is that, for the time being, no sustainable gases will be available on a large scale, so electrification is also taking place in locations where collective heating solutions or sustainable gases would be a better alternative to fossil fuels. This puts extra pressure on the expansion and upgrading of electricity networks, which also increases the risk of divestments and inefficient use of workers and resources. Intensive collaboration with partners in terms of spatial planning and timing is therefore essential. 

Congestion is the new normal

The ever increasing rate at which companies are asking for additional transmission capacity exceeds the rate at which network operators can expand the power grid. Unfortunately, the investments worth billions and additional measures are insufficient, leading to a further increase in connection lead times. Whereas longer connection lead times were already an issue for companies, the scarcity is now also impacting consumers increasingly often. This also means that greater demand for electricity, for things like new construction or to improve existing buildings, will not always fit into the power grid just like that. The congestion is expected to last for years. 

Shortages are chronic, focus on existing technicians and resources

Structural scarcity will have an impact on efforts to change the system to enable a sustainable future. There are not enough technicians to carry out the work and there is not enough space for the required transformer substations and power stations. Materials such as cables, pipelines and transformers are not sufficiently available at the right time in order to perform all the work.

Staff shortages

Due to the ageing population and growing demand for skilled workers, there are persistent staff shortages in the engineering, construction and energy sectors, especially for technical and IT positions. The demand for labour is fuelled by investments in expansions and continues to grow due to housing development and climate challenges. Based on the net intensification in the coalition agreement, a calculation was made of what this means for the additional labour demand. Currently there are about 60,000 vacancies in the technical sectors and the shortages will hardly drop until the end of 2030. In the entire energy sector, thousands of additional technicians and IT experts will be required over the next few years, with our aim for 2024 being to recruit at least 1,400 IT experts and technicians. Due to the ageing population, a lot of experience is lost and the influx of new, inexperienced colleagues is insufficient. Without measures, the energy transition is at risk of stranding.

Not enough space

Space is scarce in the Netherlands, both in the cities and in rural areas. As the sustainability process speeds up, more space will be needed to fit the required infrastructure into the public space. As a society we should create this space, and we should get better at explaining to people who are getting a substation or medium-voltage transformer substation ‘in their back gardens’ why these measures are necessary and what the impact would be if we do not do this.

Lack of materials

In recent years, geopolitical developments have resulted in the interruption of international supply chains. Access to global markets is reducing, which puts the availability of raw materials under pressure. Shortages of raw materials and the imposition of lockdowns and sanctions have made it more difficult to purchase enough cables, meters and transformers. Their transport has also become more complex and many production lines are currently at maximum capacity.
Furthermore, the long-term outlook is that the world’s reserves of certain raw materials will become an obstacle for meeting the global climate objectives. The energy transition will increase demand for these raw materials significantly, but current supplies are not rising fast enough. We anticipate longer delivery times and price increases for raw materials required in the supply chain for manufacturing cables and installations. Examples of these are iridium, lithium, rare earth metals and cobalt, but also copper and possibly aluminium.

Changing views of citizens and public opinion

In society we are seeing various changes to the views of citizens and in public opinion, which affect the task we are required to perform and the work that we do. 

  • Confidence in institutions is dropping due to various crises (the housing shortage, socioeconomic security, inflow and reception of asylum seekers, the childcare allowance scandal, repair of damage due to gas extraction in Groningen, etc.). In 2023, this development resulted in election victories for the BBB (Farmer-Citizen Movement) in the Provincial Council elections and for the PVV (Party for Freedom) and NSC (New Social Contract) in the elections for the House of Representatives. 

  • We are seeing a hardening of views in society. Concerns and misunderstandings sometimes turn to hate and aggression, also against people who work to serve society. Almost 1 in 5 people in the Netherlands believe that the government is functioning so badly that it would be better just to tear down the ‘whole system’, and 1 in 20 believe that violence would be acceptable to achieve this. Last year, a manifesto against aggression and violence was prepared to put an end to aggression and violence. 

  • Individual cases are plastered all over the media (including social media) and are then viewed as the norm. The algorithms behind social media lead to faster propagation of messages that are sensational, radical or emotional. 

How is Alliander responding to these trends and developments?

Last year, the trends, developments and issues in the world led to a reappraisal of our strategy. Our strategy describes how we as a company deal with the challenges of the changing energy system. The current acceleration puts increased pressure on the organisation, and waiting times for connections have lengthened. This is why we are focusing on a multi-track approach with Alliander’s revised strategy.