Financial developments in 2024

The growing demand for electricity, in combination with the projected decline in gas connections, means that we need to significantly adapt our energy infrastructure and expand it. In recent years, we have seen significant growth in our work package and the work performed as a result: investments in 2024 amounted to €1.8 billion, almost double the amount of €1 billion invested in 2021. Compared to last year, the increase is also significant, equating to growth of more than 25%. We expect increasing demand to require higher investments in the years to come as well.

In line with previous years, we once again had to deal with considerable price rises in 2024 as a consequence of the scarcity of technical staff, higher prices charged by external contractors and higher costs for materials. In addition, transmission costs rose from about €450 million in 2023 to more than €800 million in 2024. On the other hand, the cost of grid losses fell from over €300 million during all of 2023 to just under €250 million in 2024. The main cause was the drop in the energy prices at which grid losses are monetised. Furthermore, both in-company and hired staff costs increased by €140 million due to the addition of almost 1,000 FTEs as a result of the growing work package.

In consultation with the industry regulator, the ACM, a number of cost types are being discounted in our tariffs at a faster rate. This specifically involved the transmission costs in 2024. Partly because of this, our net revenue in 2024 for the electricity transmission and connection service increased by €400 million compared to last year.

The shares of group company Kenter BV were sold to a consortium of ABP and OMERS Infrastructure on 31 January 2024. Total revenue amounted to €919 million, including a book profit of €757 million. 

As a result of the aforementioned developments, the net result in 2024 was €976 million (2023: €267 million), with the sale of Kenter accounting entirely for the substantial increase.

Based on the regulatory framework, the increase in investments, which rose from €1.4 billion in 2023 to €1.8 billion in 2024, is incorporated in the tariffs over an average period of 40 years. Despite the increased profit, this leads to considerable funding shortfalls every year. Thanks to the proceeds from the sale of Kenter, net debt increased by virtually nothing this year. Due to the planned repayment of ECP and a bond loan, Alliander issued a new loan for a nominal amount of €750 million under the EMTN programme in November 2024. Furthermore, in anticipation of the expected redemption of the €500 million subordinated perpetual bond in 2025, a loan for the same nominal amount was issued in June 2024.

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. In addition to our key objective of working cost-efficiently to keep the energy system affordable, a framework agreement with the State was put in place in 2023. It describes conditions under which the State will contribute capital to the network company’s equity, making it a shareholder of the network company.

Discussions are also ongoing with the ACM about a possible changed regulatory system from 2027. The emphasis here is on the implementation of an appropriate future regulatory method consistent with the energy transition.

Also in 2024, we reached agreement with the Dutch Tax Administration regarding application of the discretionary depreciation scheme for the 2023 financial year. Based on this scheme, Alliander has deducted a one-time amount of €400 million from the fiscal profit for 2023. The immediate tax benefit amounts to €103 million. The use of this facility results in lower future depreciation, meaning that the tax benefit is clawed back during the depreciation period of the assets in question. Another effect here is an improved interest position for Alliander.

Alliander’s financial policy is explained in further detail later on 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 items are followed by taxation and the regulatory developments. The chapter ends with a look ahead at the results expected for 2025.