Dilemmas and lessons learned

Every day, Alliander faces dilemmas that influence the way we plan and are able to carry out our work. Moreover, certain incidents, developments and events can have unforeseen consequences for our day-to-day work. By being aware of this and learning from it, we can continue to improve our company. In this chapter, we present a few of the main dilemmas and events we had to deal with in 2024.

Dilemmas

Sailing closer to the wind

Demand for electricity and new or upgraded connections is exceeding what we can currently build. Transmission scarcity is and will thus remain an urgent problem for a long time to come. The social cost of this is immense. We can free up more capacity in our grids if we ‘sail closer to the wind’ by deliberately taking more risks in our asset management. This creates opportunities for connecting new parties faster in places where this is technically possible in the entire chain. At the same time, there will be a greater risk of outages and (long-term) non-availability. With a reliability score of more than 99.99%, we have a strong position internationally, but that does not mean that reliability can be lowered by several percentage points. For example, 1% less reliability due to outages means an average of 3.6 days without power or gas. On the one hand, we want to free up as much capacity as possible in our grids to meet the ever-increasing demand for energy, while at the same time continuing to respect safety and quality limits. 

Customisation versus speed

Companies are actively searching for innovative answers to congestion issues, for example, through the use of energy hubs. But these solutions often clash with rules that were established several years ago and do not always match new challenges. We then try to deliver customised infrastructure to the extent needed to move initiatives forward, but, in turn, this leads to a further dilemma: customisation in individual cases requires significant time and commitment of resources, which are needed elsewhere to speed up expansion and upgrading of the grids. The question is how we can best split our efforts between supporting specific solutions on the one hand, and pushing through works for building future structural capacity (faster) on the other.

Affordability

In 2024, calculations by Netbeheer Nederland show that an average household's energy bill will break down as follows: about 62% for gas and electricity, 20% for taxes and surcharges, and 18% for network management costs (including meter rental). This applies broadly to most small consumers, including households, stores, small community organisations and some small SMEs. As network operators, we are investing heavily in expanding and upgrading energy networks that are needed for the energy transition. This automatically results in higher costs. We control those costs as much as possible by building efficiently, limiting the demand for transmission capacity (for example, by linking energy supply and demand locally as much as possible) and by making better use of grids (for example, through more flexible use of the grid). In addition, we are looking at using the tariffs to distribute costs (more) fairly. Despite this, the tariffs will continue to rise in the future. Our dilemma here is how we can meet the increasing demand for transmission capacity, while keeping the system as a whole affordable for everyone.

When collective and individual interests differ

The major challenges facing the Netherlands call for clear choices regarding where and when spatial developments take place and which energy carrier is best suited to them, on a national, provincial and municipal level. This is because the policy goals can only be achieved in a structured and therefore efficient manner if: (i) space is provided in a coherent and timely manner for matters such as the housing challenge, the energy transition and the climate challenge, (ii) clear choices are made regarding the socially most logical energy carriers per district, area and sector, and (iii) the time frames for improving sustainability are clarified. Such an approach requires firm choices to be made based on collective interests, but in practice these may clash with individual interests or wishes. Individuals may object to the installation of new cable connections on their land. Local residents may take issue with the construction of a substation or transformer unit in their neighbourhood. Or district residents may protest against the energy carriers planned for their district. In the absence of clear rules for this, we need to choose the lesser of two evils: (i) opt for the most collectively desirable option, with the risk of individuals or groups trying to obstruct or stop the process through political or legal channels, or (ii) continue to seek local consensus and then, (too) long after the target date, achieve a suboptimal result after prolonged negotiations. 

What have we learned?

Implementation of large-scale projects in a highly volatile context

A key lesson from 2024 is that our assumptions in projects we implement with contractors can quickly be overtaken by reality. In 2024, we launched yet more projects and got more done, but unfortunately we were less successful in completing projects on schedule. There were several reasons for this. For example, we are currently working hard to expand and upgrade the electricity grid in Friesland and northern Flevoland. This is necessary to ensure that customers can count on a reliable power grid in the future. Unfortunately we realised last year that we will not be able to complete this huge expansion project within the planned time frame. For both Liander and the partners involved, this was the first project to be developed on such a large scale. Simultaneously starting up multiple subprojects put too much pressure on the implementing organisation. In addition, the scope of the work was greater than expected. These experiences highlight the need to further improve our schedule reliability, but also the need for continuous learning and reflection to effectively deal with the complexity of the task and the volatile context in which we execute it.

Challenges of a growing organisation

Meeting our challenges requires strong growth in our organisation. We are successfully attracting the people we need. On average, we welcome more than 200 new colleagues every month; this is a great recruitment result. At the same time, all these new people need to be onboarded, be familiarised with our work and find their way around the organisation. This demands a lot from both new and existing colleagues, and represents a challenge for the organisation, even more so because an increasing number of them have less than two years of experience working for Alliander. However, not growing – resulting in us not being able to scale up our work – is not a viable alternative. An important lesson is that growth at this scale really does have an impact on the organisation. Adequately managing absorption of this growth (onboarding, productivity, quality, etc.), in combination with adopting new ways of working and new technologies, is challenging. So the various organisational units are now focusing specifically on this issue, helped by a newly developed experience index, which gives them a better understanding of the risks associated with rapid growth.

Energy-conscious and grid-friendly behaviour

By improving our consultations with customers, promoting collaboration and innovating more, we are acting to flatten and reduce the ever increasing demand for transmission. We also offer congestion management and flex products to get more out of existing and new grids. A key lesson from 2024 is that much energy usage is anchored in daily routines of businesses and households, and that energy – and the demand for transmission capacity – is an abstract commodity for many. We also see that offering flex products has not yet led to that much more flexibility in the system. This makes it clear, on the one hand, that promoting energy-conscious or grid-friendly behaviour is complex and challenging and, on the other, that there are still many (efficiency) gains to be made. So we see this as an encouragement to work even harder to secure the cooperation of our customers and other stakeholders, and really move this forward together.