Foreword by the Management Board
For Alliander, 2021 was a year of transition. We have worked hard to uprate and expand our networks. Our focus now lies on accelerating our pace. We are simplifying, optimising and digitalising our work to further increase productivity. These are basic prerequisites for creating the energy network of the future.
At the same time, maintaining a dependable supply of electricity and gas to our customers remains extremely important. Every day, our employees channel their efforts into preventing and resolving malfunctions. And they have been successful: there were fewer outages in 2021 than in the previous year. Safety is a top priority for us in this regard. Our motto - ‘everyone safely home’ - applies to every single colleague, customer, supply chain partner and local resident. The fact that all operational units (Qirion, Maintenance & Outages, Private Customers and Business Customers, Reconstruction & Energy Networks) have achieved rung 3 on the Safety Ladder is proof of our commitment to this. Even so, we were unable to prevent 69 accidents. We are making progress, but are not yet where we want to be.
Our task becomes more complex every year
One of the targets set in the Climate Agreement is that the Netherlands must emit 49% less CO2 by 2030 than we did in 1990. The European 'Fit for 55' programme has further tightened this target to 55% and the new Dutch government, which has ambitious plans in the area of climate and energy, has committed to 60% less CO2. These objectives are incorporated in Regional Energy Strategies (RES), Cluster Energy Strategies (CES, industry), the Transition Visions for Heating, the Transition Vision for the National Charging Infrastructure (NAL), and other programmes. These new plans and developments are significantly increasing our work package, to a much greater degree than we predicted in 2020.
The need for a substantial expansion of our energy network became very apparent this year; bottlenecks in the electricity grid arose in more and more places in the Netherlands. The demand for electricity is soaring as a result of economic growth, further digitalisation in society, the transition to electric mobility, the construction of homes that do not use natural gas and initiatives to make the energy supply more sustainable. Specifically in industry, the data centre sector, residential construction and mobility, we see that demand is not only growing rapidly, this development is also happening much earlier than we expected based on our discussions with those sectors.
As a result of this increasing demand, the electricity grid in our service area is close to maximum capacity in many places. This is noticeable for consumers, who are unable to feed their solar power back into the grid on some days. Entrepreneurs with plans to move into premises in a business park, and renewable energy producers that want to build large-scale solar roofs or solar farms in fields, also face transmission restrictions in some cases. We find this deeply regrettable. After all, we stand for an energy supply system where everyone has access to reliable, affordable and sustainable energy on equal terms. We want businesses and consumers that apply for a connection to our network to get the capacity and energy they need. We are seeing that is by no means self-evident at the present time.
We are investing more in the energy network
To make this possible, we are working hard to expand and uprate our grids and deploying smart solutions to make full use of the existing infrastructure. In 2021, we successfully processed a significantly larger work package. We achieved over 47,000 new customer connections and nearly 125,000 feed-in connections.
We invested €1,014 million in 2021, mostly in the energy network. That amount has never been so high. In the coming years, much more money will be needed for a future-proof energy network. With this in mind, we and our shareholders looked last year at ways of strengthening our equity in the short term, to ensure that we can continue to borrow money on the capital market on favourable terms. This resulted in our shareholders providing a €600 million convertible loan. In addition to this contribution, more steps are required to find a long-term solution to our financing needs. For example, exploratory talks are ongoing between network operators, the shareholders and the Dutch national government about whether and how central government can help regional network companies access the capital they need.
We are also critically examining our own costs and expenditure. In 2018, we started to make structural cost savings. By 2021, these savings had already reached €160 million on an annual basis. The Authority for Consumers and Markets (ACM) monitors our tariffs and makes sure the rates we charge our customers are reasonable. It also requires us to operate efficiently. That process includes a review of the costs incurred by all regional network operators. The average of all those costs is taken as a benchmark. Liander was above the benchmark in recent years. But we are now at the benchmark thanks to the cost-saving programme and other measures. This is a good result that we have achieved with all our colleagues, and it means that we can invest more money in our networks.
We work proactively to accelerate progress
Our social mission is clear: our production must increase sharply in the period up to 2025 in order to meet the increasing level of demand. We are working extremely hard to achieve this every day. This challenge requires us to think bigger and deliver faster. We need to approach our work differently. Not only is the energy system in transition; we are too. To accelerate progress, we are adapting our organisation with the aim of becoming more agile, responsive and cost-efficient. We have continued our commitment to leadership development and we work together in a smarter manner. To further increase productivity, we have strengthened our strategy for delivering more work. Elements of that approach include making even better use of the capacity available in the market, by outsourcing large work packages and bringing tender processes to completion more quickly. Modular construction also has a role to play here, as it allows us to build power stations more quickly. In addition, we are working on the digitalisation of our current grid so that we can use it more efficiently.
We need far more technical colleagues in order to cope with all the work for our customers. In 2021, we welcomed 469 new technical employees. Here again, a change in thinking was required because of the COVID-19 pandemic and associated restrictions. To get more people interested in a job in engineering, we started online webinars for people thinking about working as an electrical engineer, including a virtual tour of a mechanic’s van. We won the Werf& Award for recruitment with this innovative approach. The panel of judges praised Alliander for its rapid adaptation to new circumstances.
We want strong partnerships
We cannot accomplish the task at hand on our own. The number of links in the process, complicated and lengthy permit procedures, the scarcity of physical space for our purposes and the extreme shortage of technicians and materials in the Netherlands all result in long lead times. More direction is needed from the government, for example on spatial planning choices and reserving areas in public spaces. Turnaround times for procedures also need to be much shorter. It currently takes an average of seven years to build a transformer station. During that time, new residential districts, businesses, supermarkets or primary schools in areas with insufficient capacity may not be able to obtain a connection, or expand an existing connection. To really make progress, new legislation is essential and a breakthrough is needed in addressing the chronic huge shortage of technical staff. We will continue to partner with government bodies and other sectors in efforts to tackle these challenges in a fundamentally different way.
We are shaping a sustainable future
We are proud and privileged to work every day on making the energy supply more sustainable. Therein lies our greatest social impact. We do this within the context of an organisation that is and will remain transparent in terms of its broad impact on society. And we continue to pursue our goal of operating as a climate-neutral, circular and inclusive organisation.
We deliver results together
Every day, thousands of Alliander colleagues and our contractors work on the energy network of today and the future. As in 2020, the global COVID-19 pandemic in 2021 required us to be flexible in our work and private lives. We have developed an effective way of collaborating online. At the same time, we see that face-to-face contact remains crucial in ensuring cohesion within teams. We have embraced hybrid working to combine the best of both worlds. We work online wherever we can and team up in person when necessary. The work itself and social bonding are the determining factors here. As for our employees out in the field; they carry out their work as safely and professionally as possible, supported by the industry-wide ‘Samen Veilig Doorwerken’ (Carry on working together safely) protocol.
In a year full of challenges and changes, we could always count on the professionalism, energy and enormous commitment of our colleagues. Together, we make sure that the lights stay on, that homes are heated and that businesses can carry on operating. We are proud of those achievements and warmly thank all our colleagues for their efforts.
Alliander Management Board, 21 February 2022
Left to right: Maarten Otto (CEO), Walter Bien (CFO), Marlies Visser (COO), Daan Schut (CTO)