Our plans for 2020
Given the regulated nature of the largest part of Alliander’s operations, as well as the current regulatory methodology, the rate trend in 2020, and the increase in TenneT’s rates in 2020, Alliander expects a lower operating profit in 2020 compared to 2019 (unforeseen and non-recurring developments excluded).
We anticipate that the gross investments for, mainly, replacing and expanding the networks, as well as those relating to the energy transition and to IT, will total more than €800 million in 2020. Alliander’s work package is continuing to increase dramatically, in particular because both homes and businesses are increasingly using more electricity or want to feed their own sustainable electricity back to the grid. These investments are necessary to ensure a sustainable and reliable energy supply. As the energy transition continues to accelerate, this calls for a lot of extra work on our part. Due to the fast-growing demand from solar farms, data centres, and other rapidly developing energy-intensive sectors, like commercial greenhouses for example, the power grid is operating at full capacity in more and more locations. The projected investments will be made in regions experiencing a higher demand for capacity due to economic growth and the energy transition.
The higher level of investment in combination with the projected lower operating profit is expected to lead to a negative free cash flow in 2020. This, in combination with the dividend that will be paid in 2020 on the profit in 2019, will, as it did in 2019, result in a financing need on the part of Alliander.