Our sustainability performance
We made huge advances in our sustainability results in the 2018 reporting period. We saw the effects of our social programmes becoming properly embedded. Now almost at the halfway point, we are on track for achieving climate-neutral operations by 2023. Additionally, we have established a link between our good results in progressing towards a circular economy on the one hand and cost savings on the other hand, with increased reuse of assets leading to lower costs. We are also working with other infrastructure operators towards the achievement of sustainability for the Netherlands. We have made a start with generation from renewables on state-owned land in a way that is appropriate for network operators.
Areas of attention
Our CSR efforts are aimed at three areas of attention:
We contribute towards the energy transition by giving all customers equal access to renewable energy.
As a large employer, we take responsibility for a social and inclusive organisation. A socially responsible company is an inclusive company where everyone gets a fair chance to reach their full potential. We actively manage diversity and inclusiveness in our HR policy, for example, in recruitment and selection, training and development.
We have climate-neutral and circular operations, including working with partners in our supply chains.
Climate-neutral operations in 2023
Alliander’s ambition is to have climate-neutral operations by 2023; in other words, on balance Alliander will have zero CO2 emissions as a result of our network activities, offices and vehicles in 2023. Our programme on reducing and greening the CO2 emissions is moving us step by step towards more sustainable operations. High-impact measures were the further advances in our vehicle fleet policy and accelerating greening of our overall footprint.
Alliander had a substantial CO2 footprint totalling 288 kilotonnes in 2018 although CO2 emissions fell by 128 kilotonnes during the year compared with the year before, representing a reduction of some 31%. The effect of our greening policy was clear for the third successive year. The net emissions have dropped sharply in recent years, with the greening of our buildings and part of the grid losses as well as the vehicle fleet. The gross emissions were also reduced as a result of the replacement of grey cast-iron gas mains and purchasing green electricity to cover the grid losses.
Emissions from network and leakage losses
94% of our gross emissions are caused by network and leakage losses that arise mainly from the distribution of electricity and gas. Network losses cost us about €49 million in 2018 and can only be mitigated to a limited extent. Nevertheless, we are working to reduce our technical and administrative network losses each year.
Technical network losses
In 2018, technical network losses fell by 1.5% in absolute terms compared with 2017. The technical grid losses are closely connected with the state of the economy, with economic growth resulting in more electricity and gas being carried by the systems and therefore greater grid losses. The reduction programme for technical network losses is being pursued as diligently as ever and focuses on measures for savings at our stations and better day-to-day management of the network. In addition, each year we are replacing grey cast-iron gas pipes at various locations for safety reasons and to reduce gas leakages.
Administrative losses
In absolute terms, our administrative network losses were sharply down compared with 2017. Administrative network losses arise in part from fraud including illegally drawing off energy to grow cannabis. We rely partly on the police and judiciary, with whom we work closely, to give us active and focused assistance in our efforts to fight fraud. The digitisation of our networks is supporting the fight against energy fraud. In 2018, we continued to work on improvements in fraud detection and the collection of unpaid accounts.
Greening network losses with renewable energy
The ‘greening’ of the energy that has to be bought in to cover ‘network losses’ (grid losses) is making an important contribution to the reduction in our CO2 emissions. Alliander is greening its network losses by generating additional renewable energy in the Netherlands. We have made a deliberate decision to shift the purchase of energy to meet our network losses to energy from new investments in renewable sources in the Netherlands. This will allow us to ensure that our network losses are low-carbon and we will be supporting the objective of renewable energy generation in the Netherlands. In 2018, we greened 187 kilotonnes of our total network losses with Guarantees of Origin (GoOs).
Alliander Greening network losses with new GoO contract
In 2018 we authorised the procurement of new GoOs from the Borssele III and Borssele IV wind farms that are currently under development. Wind farm owner Shell Energy Europe Ltd is itself taking 50% of the power generated by Borssele III and IV and is able to offer GoOs from this capacity to Liander and other power distributors. The new 10-year contract will help to make our network losses sustainable. Liander is currently ‘greening’ approximately 40% of the network losses in this way. The new contract means that a further 11–14% will be greened from 2021 onwards.
Buildings and transport emissions
Our CO2 emissions from the use of offices and other buildings has remained steady, adjusted for degree days. However, the addition of technical facilities means that the total gas consumption by buildings was up overall. Our CO2 emissions from buildings rose accordingly compared with 2017. The remaining emissions have been greened. Also, we agreed in 2018 that we would be redeveloping the site we lease on Basisweg in Amsterdam according to our sustainability principles and we have renewed the lease based on those principles.
Despite higher mileages driven, owing to the increase in the amount of ongoing work, our transport-related CO2 emissions were slightly down, by 4.4%, compared with 2017. That is partly attributable to the fact that we introduced a new ‘mobility’ programme for commuting to and from work. The travel expenses system was changed so as to encourage carbon-neutral travel. We also tightened up the emissions standards for CO2 and NOx for company cars, removed diesel vehicles from the fleet and made it easier to drive electric. Those with company cars also get a railcard to encourage the use of public transport.
During the year we once again invested in a more efficient vehicle fleet: our vans were fitted with speed limiters (Ecodrive). A particular innovation is the introduction of electric vans for the area in and around Amsterdam, and we aim to add more electric vans to our fleet. We also signed up a new supplier for our fleet of company cars and vans. The contract was awarded partly on the basis of making the vehicle fleet sustainable but such aspects as affordability and freedom of choice were also considerations. One of the requirements with regard to the vans was the ability to transfer the existing interior fittings for reuse in a new vehicle. Anything that cannot be reused will be given a second life or be disposed of responsibly.
Liander using electric vans
Since April 2018, a number of Liander’s technicians in and around Amsterdam and Alkmaar have been using electric vans. The vans are fitted out in an efficient manner and have a substantial range. The battery can also be charged up in less than two hours and the technicians can charge them at home, using the charge point that has been installed for that purpose. Liander is leasing the vans as part of the ‘More with Less’ programme that is aimed at making the vehicle fleet more sustainable. All our vans had previously already been fitted with the intelligent Ecodrive speed limiter, which encourages economic driving. The result is an 11% reduction in our transport-related CO2 emissions.
Alliander’s CO2 emissions1
- 1 For 2018, CO2 emissions were calculated using a new method, involving a lower coefficient for the electricity we have to buy from EDF and DONG to meet grid losses. Originally, this coefficient was not specifically calculated, an average (trading mix) factor being used instead. The comparative figure for 2017 has been restated using the new method.
The top step on the CO2 performance ladder
Our CO2 approach and methodology were externally assessed on the basis of the CO2 performance ladder. Certification on the CO2 performance ladder provides proof of insight into the company’s own footprint (level 1), the possible reduction measures (level 2) and the competence to actually implement these measures (level 3), make insights transparent (level 4) and initiate innovations with supply chain partners (level 5). The CO2 performance ladder is often used as a tender award criterion. In 2018, we maintained level 5 on the ladder. This means that we know the CO2 emissions of our A-suppliers, have achieved the level 3 and 4 objectives, and are publicly committed to the government’s CO2 reduction programme. We are proud of this step but to retain our excellent position on the CO2 performance ladder we must continue mobilising and challenging our suppliers to reduce emissions throughout the supply chain.
Science Based Target
We have recently had it reaffirmed that our CO2 policy meets the rate of reduction in emissions set out in the Paris Agreement: the so-called Science Based Target (SBT). The SBT is based on achieving the IPCC target of ‘well below 2°C’ by 2050. This target can be broken down into the maximum CO2 emissions per sector (agriculture, manufacturing, energy etc.) and into maximum CO2 emissions per company. This is known as the Sectoral Decarbonisation Approach. For Alliander, this means cutting total CO2 emissions by approximately 38% by 2030. On the transport front we are lagging slightly behind. Overall, however, we are comfortably on track to meet the SBT, with our policy of becoming climate-neutral by 2023 and with the results achieved so far. The review corroborates the course we have set as a company for our climate-control emissions.
Supply chain partnership: renewables on state-owned land
In the Netherlands, there is still a huge untapped potential for generating electricity from renewables on state-owned land: areas along waterways and motorways, dredging spoil deposit sites, lakes and areas surrounding technical stations. Through our partnership in the Green Networks coalition we have discovered that the combined potential can help the Netherlands to speed up its use of renewables and even double the existing proportion of energy that comes from renewables.
In 2018, the Ministry of Economic Affairs and Climate gave the official go-ahead for the ‘Energie op Rijksgronden’ project (previously ‘Petaplan’), which will involve 10 pilot schemes to explore the available potential. Alliander is a member of the Steering Group for Renewables on State-Owned Land, with the task of looking at things from the network operations angle; it has to be possible to connect the power that is generated to the grid when it comes on stream. Through this work, we are taking a step, in close partnership, towards the careful management of the energy transition.
Alliander is one of the initiators of the Green Networks platform, which is made up of several national infrastructure operators. The Green Networks aim is to achieve a climate-neutral and circular national infrastructure. During the annual Springtij event on the island of Terschelling, the partners in the Green Networks (Alliander, Enexis, Gasunie, ProRail, KPN, Stedin, TenneT and Rijkswaterstaat) signed a mission statement on cooperation on Impact Measurement and Sustainable Development Goals.
Climate risk and adaptation
Alliander is a member of the Delta programme. This is a Dutch government initiative for examining climate change risks at national level and for coordinating the necessary approach. Effects and risks are assessed and action is focused on adaptation and management by our crisis and disasters organisation. Risks to existing and planned assets from such things as floods, wild fires and storms are examined. Attention to the energy transition and sustainable operations policy are focused on actively limiting emissions and on sustainable energy supply.
The greenest substation in the Netherlands
In Groenlo, construction is taking place on the greenest substation in the Netherlands. Alliander signed the associated contract with the contractors in August. The station has several green credentials. The use of natural resources is being minimised by using natural cooling methods and by using recycled materials. Both frame and cladding of the building are of wood, and the roof is covered with solar panels that supply the station’s entire energy needs.
Supply chain responsibility with partners
We achieve a considerable part of our CSR performance by working with partners managing the value and product chains where we have impact as a result of our financial expenditure or the existence of specific risks. Our procurement policy is built on Alliander’s sustainability pillars: access to clean and affordable energy, climate, raw materials and inclusive employership.
A sustainable relationship with our suppliers
With an annual procurement volume of about €900 million, we are a major purchaser of products and services in the Netherlands. Together with our suppliers, we can make a major contribution to sustainability. Sustainable procurement is an integral part of our tender invitation/evaluation criteria. Our outsourcing policy incorporates provisions relating to human rights, working conditions, use of raw materials, recycling and CO2 emissions. Alliander requires work to be performed in line with safety protocols and standards for working with gas and electricity such as VIAG and BEI. Suppliers’ staff must comply with these.
All contracted suppliers of Alliander have committed to the ‘Alliander Suppliers Code of Conduct’. This standard is based on OECD guidelines and requires suppliers as well as their suppliers and manufacturers to adhere to ethical and fair business practices. Infringements of the code can lead to the imposition on our part of sanctions such as termination of the contract or temporary suspension of work with or without notice of default.
Nineteen supplier audits carried out
In 2018, a total of 19 audits were carried out into the quality of the products and services supplied. No critical deficiencies in these aspects were reported at our suppliers during the year. Discussion of compliance with the Code of Conduct was part of the audit. Additionally, compliance with supply chain aspects and monitoring of possible discussion points are included in the audit reports. On top of the customary quality and product checks, we look at elements of CSR such as compliance with universal human rights, working conditions, health and safety and the environment. Outsourcing, investment and production in other countries sometimes lead to an increased risk regarding the recognition and observance of fundamental human rights, safety and the environment. An organisation can involuntarily become involved in dubious practices such as child labour. As well as advance checks, we also carry out on-site audits at contract parties. Findings are shared with the supplier. The follow-up is then discussed at regular intervals and will be included in any future audit. In the event of proven negligence or infringements of the agreements, we end the relationship or impose other sanctions in line with the contract and the Alliander Suppliers Code of Conduct. In the event of losses or risks, we communicate with our stakeholders, carry out investigations and institute temporary or permanent measures. We maintain contact on progress with all concerned and keep them informed.
CO2 measurement in the supply chain
Procurement worked with an outside agency in 2018 on a model enabling CO2 emissions in the supply chain and on the part of suppliers to be measured as objectively as possible. The insight that this information provides allows us to segmentalise procurement categories on the basis of CO2 emissions and the potential for Alliander to influence the suppliers. We look at the whole of the supply chain and are able to focus our effort where we can make the biggest impact, such as in the purchase of plotters and printers. By continuing to use the existing printers for longer we save CO2 emissions in their manufacture and on the costs of procuring new printers.
Circular operations
As a network operator, we use large quantities of materials and, indirectly, of raw materials. We have a responsibility to do the best we can in meeting our materials needs and so we are aiming to make circular purchases of at least 40% of our primary assets by 2020. This means that all raw materials we use are recycled and nothing is wasted. To do this, our management focus is along four lines:
We make the best possible use of the materials we have.
Where possible we make circular purchases of our main materials.
We avoid wasting materials in our operations.
We recycle 100% of the remaining waste.
Circular procurement demands intensive co-operation with our suppliers. Underlining our commitment to this policy, we became one of the first twenty signatories of the Circular Procurement Green Deal with the aim of learning from each other’s experiences when starting up circular procurement processes and to speed up circular purchasing. The more than sixty participants have a great deal of knowledge and experience. Alliander makes a major contribution to these objectives, involving such things as protective clothing, transformers, redeveloping office space, coffee cups, furniture and fair meters.
For a few years now we have been integrating circular procurement into our purchasing processes. Each quarter we report on the percentages of circular procurement and recycling. There is a clear roadmap for achieving our targets. The share of circular procurement at the end of 2018 was about 16.5% thanks mainly to the first resource passports for cables which show that they include recycled materials and can be recycled. In 2018, the first ‘circular’ cables, containing a percentage of recycled material and themselves fully recyclable, were laid in the Netherlands.
Dilemma: supply chain transparency
Alliander aims to be procuring an ever-increasing proportion of the primary assets on a circular basis by 2020. In 2018, 16.5% of our primary assets involved circular procurement. Last year it became obvious that obtaining an acceptable balance between cost and quality in a transparent, Europe-wide competitive tendering market was not compatible with the goal of using recyclable materials. This dilemma can only be addressed by investments in the recycling chain and Alliander is encouraging suppliers to do just that.
It was also found that information on recycling/reuse is not yet generally available. Production systems largely operate on new raw materials that are mined in low-wage countries under often poor working conditions. The situation is exacerbated by the fact that sourcing recycled material is a problem and the costs are often higher. Alliander is pushing for greater transparency regarding the origin of materials and their recycling.
Making the best use of what already exists: reuse
In 2018 we successfully implemented our Reuse programme. For instance, 208 existing transformers were dismantled and 192 of them were reinstalled elsewhere. We are also engaged in keeping better records of our ‘grey inventories’ (returned and unused materials), checking them for quality and making them available on an internal marketplace. Top-notch network operation means making efficient use of materials and generally adopting the principles of the circular economy. All infrastructure operators are seeking ways of minimising waste.
Fair meters installed
2018 saw the conclusion of an extended R&D period with the actual delivery of a smart meter boasting, among other things, a raw materials passport, 35% less metal, 25% less plastic and part use of recycled plastic. Insofar as we are able to monitor the supply chain, the use of minerals from conflict zones has been excluded. One of the two suppliers, Iskraemeco, was awarded a sustainable innovation prize in its home country (Slovenia) for its efforts in producing the ‘fair meters’ in 2018.
Raw materials passport
The existence of raw materials passports gives us a good idea of the origins of 33% of our procurement. Within the Green Networks coalition, the coalition members share their experiences with raw materials passports. The intention is to make the raw materials passport a standard part of every purchase enquiry from 2020 onwards.
Making sustainable agreements with suppliers is possible
Sustainable agreements with suppliers are possible: we successfully concluded an eight-year agreement for the supply of power transformers, for instance, in which previously used oil is reused. We have also drawn up a plan of approach with the suppliers for working with them in the years ahead on further sustainability improvements to the transformer. The power distribution losses attributable to these new transformers are around 10% lower than those of our existing transformers. Based on the current order volume and the load on the transformers, this translates into an appreciable reduction in CO2 emissions and a cost saving of €1.2 million over a useful life of 40 years.
Recent RFPs for low-voltage and medium-voltage cables placed extra emphasis on the development of a ‘circular’ cable, and the suppliers have responded to that in their designs.
Impact case study: the impact of reuse of transformers in our power distribution networks
In this case study we explored what the financial and physical impact would be if we reused existing components of our distribution systems instead of using entirely new transformers. This was found to have benefits, although using previously used components did result in greater network losses.
The aim of the reuse programme is to make optimum use of the existing value in our system components. Our power distribution networks are made up of a multitude of components. Transformers are used to deliver power at the desired voltage. As network operator, we guarantee that the mains voltage remains within agreed limits at all times. Transformers generally have a long life, of 40 years on average. Transformers are removed from the system in connection with new projects, periodical maintenance or work on the system to accommodate third-party needs. Our engineers check them in, test them and assess numerous aspects of their condition. In conjunction with suppliers we ensure that the transformers are ready to be deployed elsewhere in the system again. Quality and safety are paramount. Through active management aimed at extending the useful life, transformers can be installed again, under certain conditions, even beyond their planned lifespan.
Reuse programme
The reuse programme covers several different types of distribution system component. This allows us to build up experience with process management and practices that are necessary in order to prolong useful life. The activities concerned are then turned into standard processes. Part of the programme involved calculating the impact of using distribution transformers of various ages compared with using entirely new distribution transformers.
The case study involved calculating the impact on financial and natural capital of reusing distribution transformers. The transformers predating 1970 are not being reused as part of the programme. The average age of the transformers at the time of reuse was 24 years. For the purpose of the case study, the impacts were calculated over a period of 40 years, discounted to net present value.
The impact on financial capital is a saving of €563,000. In other words, it pays to avoid investing in new transformers even after the costs of reusing them such as maintenance and the logistics involved. The shorter lead time when transformers are reused also has operational benefits. The calculated impact on natural capital is also beneficial, with a saving totalling €338,000. Not building new transformers reduces ecological damage in the production chain. The ecological costs of copper, core lamination material and oil that are saved amount to €639,000. However, reusing transformers means reduced efficiency compared with new transformers, resulting in greater power losses over the service life. These network losses in turn have a downside impact of 4,500 tonnes of CO2. On the other hand, Alliander ‘greened’ 40% of its network losses in 2018, and this compensates to some extent for the adverse effect. Reuse does, however, also deliver a saving in ecological costs equal to 500 tonnes of CO2 in the new transformer production chain. Overall, therefore, there is a beneficial impact on natural capital in that avoiding the use of materials and natural resources avoids the ecological costs otherwise incurred.