Trends and market developments
In the pursuit of our mission, it is important that we know which factors can influence our activities. In this chapter, we describe key trends and market developments taking place around us and what we must do in response.
What we see around us
The world around us is changing. The economy is growing rapidly and customer expectations are rising. That’s nothing new. But what is different this time is the accelerating energy transition. This transition is being driven by the Paris climate agreement of 2015, but also by the Netherlands’ own ambitions to curb its carbon emissions by 49% relative to 1990 by 2030. In 2018, public authorities, businesses and civil society organisations drafted a joint proposal in outline for a national Climate Agreement. The aim is to further the achievement of the climate objectives. Acting on behalf of the Association of Energy Network Operators in the Netherlands (Netbeheer Nederland), Alliander represented the interests of the network operators in the climate panel talks about the Built Environment. Our main challenge is to prevent the energy infrastructure becoming a bottleneck in the energy transition. Alliander plays a crucial, but also extremely inspiring, role in this context.
Economic growth
The economy is growing considerably. The implication for Alliander is that a much larger number of new houses, businesses and buildings must be connected to the grid. Moreover, greater power capacity is required to facilitate the growth of businesses.
Energy transition
In practice, we are seeing that the energy transition is leading to much more local energy generation and usage: solar energy is becoming increasingly affordable and there are many plans for large-scale solar farms in the regions in which Alliander operates. Furthermore, various wind farms are being constructed and electric transport has become commonplace.
Farewell to natural gas
Initiatives to replace fossil fuels such as natural gas are springing up around the country. The obligation to connect new buildings to the natural gas grid was repealed on 1 July 2018. More and more municipalities are participating in the development of gas-free districts and more renewable forms of heating, such as electricity and green gas.
Digitisation
Digitisation opens up new opportunities for consumers and businesses to manage their utility bills and conserve energy. Network operators can benefit from digitisation to gain a better understanding of the consequences of the energy transition. In addition, digitisation offers new opportunities for the procurement, trade and exchange of energy.
Shortage of technical staff
A vast amount of electrical and gas engineering work is required to bring about the energy transition and meet the growing number of applications for connections and extra power. Tens of thousands of extra technical specialists are needed in the Netherlands. And due to the ageing population, technicians will remain in great demand for many years ahead. Filling the vacancies is a major challenge. In addition, the nature of the work will change, so that different skills will be required in the future. Owing to skills shortages, combined with the growing economy and accelerating energy transition, Liander is increasingly incapable of implementing connections or network upgrades as quickly as the customer wants or within the statutory 18-week term.
What is required?
The energy transition is accelerating. This poses major challenges for us as a network company. Over the coming twelve years, we expect to hook up large numbers of wind turbines, solar panels, hybrid heat pumps and e-charging stations. We also foresee that in the coming decades millions of households will exchange natural gas for another form of heating. During this transition to a more decentralised sustainable energy system, lights must continue to burn and homes must stay warm. This calls for substantial investments in our networks as well as a cost-conscious and efficient approach. Above all, it means a vast amount of work. It is essential for network operators to know well in advance what needs to be done to the infrastructure and where. For this reason, the network operators emphasise that the transition to renewable energy must be brought about in a controlled manner so that the energy system of the future remains affordable, reliable and accessible to everyone on equal terms. The arrangements in the upcoming Climate Agreement are crucial in this respect. All provinces and municipalities are required to have a Regional Energy Strategy (RES) in place by 2020, subsequently leading to the definition of a heating transition vision for each municipality. Under the direction of municipalities, a large number of parties including the network operators, will work on the transition to a sustainable energy system on a district-by-district basis. The network operators expect a lot from this approach, particularly as it will make the work easier to predict and manage. It is therefore vital for each municipality to come up with concrete long-term plans as soon as possible. With its knowledge and experience, Alliander has a crucial role to play in this process.
From trends to strategy
The trends, developments and issues in the world around us constitute the basis of our strategy. This describes how we as a company deal with the challenges of the changing energy system. Our strategy outlines how we respond to these new demands, while our SWOT analysis sets out where the opportunities and threats lie for our organisation.