About this report
The Alliander Annual Report 2016, as published on 9 March 2017, provides an account of our activities in 2016. Key to our integrated reporting are an open dialogue with stakeholders, transparency and the impact of our activities on society.
Structure of the report
The 2016 annual report is largely structured according to our largest stakeholder groups. This approach corresponds with Alliander's governance model, which is geared to these groups:
Stakeholder dialogue is the basis
We maintain an ongoing dialogue with our stakeholders: customers, employees, shareholders, public authorities, investors and others. In 2016, we intensified our relationship with municipalities. These contacts enable us to obtain and retain insight into trends in society and what society expects of Alliander. We also exchange thoughts and ideas with our stakeholders, and seek feedback on proposed policy choices and decisions.
Stakeholders
Materiality
We asked our stakeholders to tell us what aspects they considered important for inclusion in the annual report. Based on the outcomes, we selected 15 top themes, which form the basis of the annual report. To find out how these themes are linked to, for instance, Alliander's strategy, simply click online on the theme you are interested in. You will then receive an explanation of the relevant aspect, its relationship with our strategy and the results achieved in 2016. For the complete materiality chart including all the themes, please see Other information.
Materialiteitsgrafiek
1 Reliability of supply
Input and relationships relevant for theme
Stakeholder expectation
Continuous supply of energy is of great social importance. Interruptions have a direct impact on the interests of our stakeholders. Customers want immediate information about interruptions, as well as an indication of the estimated outage time.
Our long-term objective
We aim for a consistently low electricity outage duration of at most 21 minutes per year.
Contribution from Alliander
We work daily to secure a continuous energy supply, both now and in preparation for the future. We invested € 680 million in the quality of our networks to increase their reliability. Our outage duration was 23.3 minutes in 2016.
Relationship with strategy
Reliability
Risks
Safety, Availability of technical staff in labour market, Insufficient long-term regulatory focus, Required competences, Facilitation of energy transition
Stakeholder information
2 Energy transition
Input and relationships relevant for theme
Stakeholder expectation
The energy transition comprises a shift away from fossil energy generation towards local renewable energy sources, thereby promoting the transition to a more sustainable society. Customers expect flexible and reliable networks, enabling them to feed in energy whenever they want.
Our long-term objective
Technical and economic developments make new solutions both feasible and necessary. Alliander wants to do its bit by facilitating the energy transition.
Contribution from Alliander
The energy transition demands new and smart applications for the energy networks. Alliander invests in these smart technologies to facilitate the transition to a sustainable society, while continuing to guarantee reliability of supply. In 2016, the amount of solar energy that customers fed into our network increased strongly. We also helped customers to start up renewable energy initiatives in their local communities. And we are engaging in innovative business activities to explore new markets.
Relationship with strategy
Accessibility
Risks
Insufficient long-term regulatory focus, Privacy, Required competences, Facilitation of energy transition
Stakeholder information
3 Safe and healthy working practices
Input and relationships relevant for theme
Stakeholder expectation
Safe working practices are vital for all stakeholders. Employees expect a working environment where they can concentrate and work safely. Customers expect us to guarantee their safety during the performance of our work.
Our long-term objective
Everyone safely home! That is Alliander's safety ambition. The objective is an LTIF (lost time injury frequency) of 2.2 or lower. In addition, Alliander promotes a culture where safety comes first. This culture can be described as: “Alliander wants to find out which safety rules are considered important, listen and learn, and take responsibility. The responsibility for safety and regulatory compliance mainly rests with the senior management. Safety is a top-of-mind concern and that is appreciated”.
Contribution from Alliander
We take initiatives to promote safety and have developed a safety programme aimed at realising intrinsically safe working practices. In 2016, we engaged in a safety dialogue with employees, introduced improvements in the workplace and trained managers and employees to recognise and report risky situations more quickly. A new safety approach was rolled out further in 2016. The LTIF amounted to 2.0.
Relationship with strategy
Reliability
Risks
Safety
Stakeholder information
4 Innovation
Input and relationships relevant for theme
Stakeholder expectation
Alliander wants to respond actively to the changing energy landscape and future developments to assist the energy transition. This includes embracing new technologies and solutions. Customers expect us to help them make new energy choices.
Our long-term objective
We want to gain experience in order to realise the energy system of the future with the smartest solutions possible for our stakeholders. We do this by exploring new markets and encouraging market parties to pursue and implement sustainable innovations.
Contribution from Alliander
In 2016, we set up testbeds in various places such as Heerhugowaard, where we are trying out and gaining experience with smart energy solutions, together with customers and other partners. We also engage in business activities in the field of electric mobility and help customers make responsible energy choices.
Relationship with strategy
Accessibility
Risks
Required competences, Insufficient long-term regulatory focus
Stakeholder information
5 Energy generation
Input and relationships relevant for theme
Stakeholder expectation
What role should network operators have in the promotion of renewable energy generation, particularly in relation to the ambitious Paris climate objectives. Customers need a flexible energy network that supports more renewable energy generation. Consumers and businesses are increasingly taking renewable energy generation into their own hands. Alliander wants to discuss with its stakeholders what role network operators should play.
Our long-term objective
Through the ongoing digitisation of our infrastructure, we enable renewable generation at local level. We also invest in the greening of our CO2 footprint.
Contribution from Alliander
We participate in testbeds and partnerships in order to learn from cutting-edge developments such as 'Energiekoplopers', a sustainable energy project in Heerhugowaard. Moreover, we are developing new business activities to explore and unlock the energy system of the future. We support customers in making choices, invest in alternative infrastructures and are digitising our networks. In 2016, we greened part of our operations for the first time with renewable energy generated in the Netherlands.
Relationship with strategy
Reliability, Accessibility
Risks
Insufficient long-term regulatory focus
Stakeholder information
6 Smart networks
Input and relationships relevant for theme
Stakeholder expectation
The energy infrastructure must be capable of matching fluctuations in supply and demand for energy in a reliable manner. Customers expect a network that enables them to feed in energy without any problem. They also expect us to make the network more reliable and transparent by means of innovative technology.
Our long-term objective
Alliander's objective is to realise 95% of its most important digitisation programmes within Alliander. The aim of these programmes is to construct intelligent networks and offer smart meters.
Contribution from Alliander
We are working at various locations to make our energy networks smarter. These initiatives include the large-scale roll-out of smart meters and the implementation of ICT applications and sensors for managing the flexible flow of energy. Smart networks support a more efficient use of capacity and infrastructure, and are also more reliable. By expanding our smart energy networks, we are laying the groundwork for the digital services of the future. Unfortunately, we did not achieve our objective and must carefully assess how these efforts can be continued more effectively in the coming year.
Relationship with strategy
Accessibility, Reliability
Risks
Privacy of energy data, Cyber crime
Stakeholder information
7 Regulation and tariffs
Input and relationships relevant for theme
Stakeholder expectation
Network operators charge costs to their customers. These tariffs are regulated and set by our regulator, the Authority for Consumers & Markets (ACM). Customers want to have a grip on their energy costs, as well as predictable network operation tariffs.
Our long-term objective
Continuously outperform the sector in terms of costs and operational excellence. In addition, Alliander wants to realise solid financial results.
Contribution from Alliander
In 2016, we devoted attention to cost control, adhered to a careful investment schedule and expenditure pattern, and closely monitored our position in the national benchmark of energy network operators. In addition, we worked on our strategy to keep the social costs for energy as low as possible, also in the future. In 2016, the network operation tariffs at Liander for our customers were comparable with those in the previous year. The tariffs would have been lower if they had not been taxed with sharply higher regional sufferance tax levies.
Relationship with strategy
Affordability
Risks
Insufficient long-term regulatory focus, Facilitation of energy transition
Stakeholder information
Customers
8 Energy usage and CO2
Input and relationships relevant for theme
Stakeholder expectation
Climate change is a global problem. Stakeholders expect an active climate policy aimed at lower emissions throughout the entire energy chain.
Our long-term objective
We aim to reduce our CO2 emissions.
Contribution from Alliander
Alliander engages in various activities to reduce its CO2 emissions, also by greening our energy usage through the procurement of Guarantees of Origin for renewable energy generated in the Netherlands. We are working within the Dutch network operator community to create a uniform standard for calculating our footprint. Our CO2 emissions in 2016 were lower than in the year before.
Relationship with strategy
Accessibility, Affordability
Risks
Insufficient long-term regulatory focus, Facilitation of energy transition
Stakeholder information
9 Economic performance
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders expect a clear picture of the value that Alliander realises and stable financial results.
Our long-term objective
We want to realise value for our stakeholders and contribute to a better society. We have set targets for our ratings, FFO/Net debt ratio and solvency and monitor their progress.
Contribution from Alliander
In 2016, we created sustainable value for our stakeholders. Increases in the salaries under the collective labour agreement, investments in networks and buildings, procurement expenditures, employee volunteering, social sponsorship and dividend for providers of capital demonstrate our broad economic and social contribution.
Relationship with strategy
Affordability
Risks
Financial risks
Stakeholder information
10 Safety and infrastructure
Input and relationships relevant for theme
Stakeholder expectation
Customers expect us to ensure a safe infrastructure and to guarantee their safety during the performance of our work.
Our long-term objective
Everyone safely home! That is Alliander's safety ambition. This applies both to our own people, and to the quality and reliability of our installations. That is why we continuously invest in the reliability of our infrastructure. Our focus here is on the top risk-mitigating projects, including 25 specifically identified projects.
Contribution from Alliander
In 2016, Alliander invested about € 680 million in the reinforcement, digitisation and maintenance of its networks. We completed 48% of our most important projects. Furthermore, our staff received calamity and incident response training in order to be well-prepared for unforeseen events that impact on, for instance, our infrastructure.
Relationship with strategy
Reliability
Risks
Safety
Stakeholder information
11 Transparency
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders request Alliander to be open about its intentions, operations, decision-making and dilemmas.
Our long-term objective
We aim to gain and retain a leading position in the Transparency Benchmark and apply GRI-G4. We conduct an active dialogue with a broad group of stakeholders and organise a stakeholder panel.
Contribution from Alliander
Alliander is a stakeholder-driven company and asks stakeholders for their feedback on plans. In the past year, Alliander ended in 1st place in the Transparency Benchmark of the Ministry of Economic Affairs and won the FD Henri Sijthoff Award. This year, too, an external stakeholder panel provided extensive input for our annual report. Moreover, our annual report adheres to the latest GRI-G4 guidelines. In 2016, we continued developing our corporate websites. Online dialogues were conducted about various material themes, including the energy transition. We apply the principles of the Dutch Corporate Governance Code wherever relevant.
Relationship with strategy
Reliability, Affordability, Accessibility
Risks
None
Stakeholder information
Materiality Test
12 Training & Development
Input and relationships relevant for theme
Stakeholder expectation
Alliander is a company that works hard to promote training and development. Employees are actively encouraged to develop their professional and personal skills with a range of training and development opportunities. This includes safety courses wherever relevant.
Our long-term objective
Alliander needs well-equipped professionals who contribute to the energy issues of today and tomorrow.
Contribution from Alliander
To find solutions for the energy issues of today and tomorrow, we invest a lot. In technology and, above all, in our people. We offer excellent compensation and benefits. And we offer excellent training. To help our employees get the best out of themselves. That is good for them and good for the company. Our professionals work on challenging projects. So what gives them energy? Doing a meaningful job that really matters to society. We listen to our customers and invite them to come up with innovative and smart ideas. That way, we are able to deliver even better solutions for the energy issues of today and tomorrow.
Relationship with strategy
Accessibility, Reliability
Risks
Availability of technical staff in labour market, Required competences, Facilitation of energy transition
Stakeholder information
13 Customer satisfaction
Input and relationships relevant for theme
Stakeholder expectation
Customers count on excellent service, communication and handling of interruptions, questions and complaints. Municipalities and business customers expect a clear point of contact and that we deliver on our commitments.
Our long-term objective
Our consumer and business customer satisfaction ratings remain higher than the national benchmark of Dutch network operators.
Contribution from Alliander
We work daily to secure a continuous energy supply, both now and in preparation for the future. The quality of our services and communications vis-à-vis business customers and municipalities was improved. Our digital services continued to improve thanks to our 24/7 online accessibility and short response times. The website experience for consumers and business customers was also further enhanced. Our performance was above the benchmark for consumers, and just below the benchmark for business customers.
Relationship with strategy
Reliability
Risks
None
Stakeholder information
14 Supply chain responsibility
Input and relationships relevant for theme
Stakeholder expectation
With an annual procurement volume of about € 900 million, we are a major purchaser of products and services in the Netherlands. Stakeholders expect us, together with our suppliers, to ensure that our procurement is as sustainable as possible. If we can persuade our suppliers to take sustainability as seriously as we do ourselves, we can generate a significant positive impact through our supply chain.
Our long-term objective
We actively seek to improve our supply chain performance. This includes making plans with our suppliers to reduce CO2 emissions and promote responsible operations. Target is at least 80% of our procurement volume is socially responsible. In addition, all suppliers must meet the Alliander Code of Conduct.
Contribution from Alliander
As well as highlighting our compulsory Code of Conduct to all suppliers, we purchased 71% of our procurement volume based on Socially Responsible Procurement (SRP) statements in 2016. These SRP statements help us to achieve our socially responsible procurement objective in the Netherlands and back up our sustainability efforts among our suppliers.
Relationship with strategy
Reliability, Affordability, Accessibility
Risks
None
Stakeholder information
15 Investment policy / Adherence to...
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders expect a clear picture of the value that Alliander realises and stable financial results. Sustainable value creation is an increasing priority for them.
Our long-term objective
The key aim of our financial policy is to at least maintain a solid A rating profile. This is vital to implement our strategy and play a facilitating role in the energy transition.
Contribution from Alliander
In 2016, we created sustainable value for our stakeholders and retained our solid A rating. In the interests of our providers of capital, we seek to strike the right balance between an adequate shareholder return and the protection of bond holders and other providers of debt capital, while preserving the flexibility to invest and grow.
Relationship with strategy
Affordability
Risks
Financial risks
Stakeholder information
Materiality Chart
Integrated reporting
This is an integrated annual report incorporating financial, operational and corporate social responsibility (CSR) information. The underlying building blocks are:
Relevant provisions in the Dutch Civil Code
International Financial Reporting Standards (IFRS)
Dutch Corporate Governance Code
GRI 4 reporting guidelines ('comprehensive’ option), Electric Utilities Sector Supplement
International Integrated Reporting Council (IIRC)
The financial and non-financial information in the report has been consolidated for Alliander and its major subsidiaries (Liander, Liandon, Allego, Alliander DGO and Kenter). Where information is not consolidated, this is explicitly stated. The report also includes information of other Alliander business units whose activities are mainly dedicated to the energy transition. The materiality analysis was leading in the information-gathering process.
Transparency
Our company operates within the complex dynamics of an energy sector that is undergoing radical transformation. That is why our stakeholders attach great value to transparency. And so do we. As testimony to this commitment, our annual report for 2015 won the Crystal Prize, the top honour of the Transparency Benchmark of the Dutch Ministry of Economic Affairs, as well as the FD Henri Sijthoff Award of the Dutch financial daily Het Financieele Dagblad. Our ambition is to remain a leader in transparent reporting. As such we comply with the Transparency Guideline and the relevant provisions in the Dutch Corporate Governance Code and the Decree on Corporate Governance 2009. In addition, this report adheres to Application Level 4 of the GRI sustainability reporting guidelines.
Stakeholder Panel
In keeping with last year, a stakeholder panel read draft versions of the report and provided valuable feedback. In addition, during a joint session with a panel of stakeholders on 25 January, a dialogue was conducted about important issues, including the steps that Alliander needs to make in the coming years in terms of impact measurement and Sustainable Development Goals. The full reflection of the stakeholder panel is included in the report.
Stakeholder involvement in Alliander Annual Report
Sustainable Development Goals (SDGs)
The United Nations presented its sustainable development goals in 2015. Alliander made an analysis of the goals to which it could make the biggest contribution. These can be found in the Sustainable Development Goals section. It is our ambition to give the SDGs a more prominent place in our accountability information in the coming years. We also want to be more transparent about how and what we contribute to the attainment of these goals.