Our impact on society
The energy transition has accelerated massively. The amount of energy from fossil sources that we distribute decreased while the percentage of energy from non-fossil sources increased. Further growth in feed-in from decentralised systems was partly responsible for this development. This is beneficial for the climate and for meeting the goals of the Climate Agreement. Our impact via this sustainability development and our primary role in the energy transition is very significant: we add value across a broad spectrum. We see this in areas such as access to energy, safety and security, the environment, circularity, the development of our investments and effects on work and social cohesion.
We quantify our social impact by expressing our positive and negative effects on the environment in euros, in a manner that is as objective as possible. When we issue statements on this topic, they are couched in societal terms: the impact may be limited at group level, but perceived as extremely large in an individual context, for example the impact of an accident or energy costs. Our aim is to contribute to broad prosperity in society by reducing the negative impact and increasing the positive impact. In doing so, we contribute to the global climate objectives, as agreed at the Conference of the Parties (COP) level, and to the United Nations’ 2030 Sustainable Development Goals (SDGs).
Impact and SDGs
Impact measurements are used to calculate the extent to which our activities affect society. We can see whether we have achieved our goals and what our contribution to the global SDGs is. This enables us to take better decisions on projects and activities. By being transparent about our calculations and measured results, we want to actively involve our stakeholders in our development, the contribution we make to the SDGs, the choices we make regarding the SDGs we want to contribute to and our value creation in a broad sense.
As an energy network operator, we play a vital role in guaranteeing a safe, affordable and constant availability of sustainable energy. SDG7 largely coincides with our mission and strategy. We see opportunities and challenges for the proper regulation of the heating market and energy storage, flex-markets, the technical and regulatory feasibility of smart connections, system integration and the prevention of network problems. Together with our supply chain partners, we want to continue making a contribution to a sustainable energy supply system at low costs.
We work non-stop on ensuring a safe and fair working environment for all our employees and an inclusive corporate culture.
Every day, we focus on making our networks suitable for the requirements of the energy transition. We facilitate customer choices, make maximum use of digital opportunities, actively create open networks and do our work efficiently. The speed of the energy transition creates new challenges that require us to continuously innovate and invest in our network. We support our customers in the built environment in switching to a sustainable energy system.
The agreements in the Regional Energy Strategies (RES) and the elaboration of the Dutch Climate Agreement in combination with social initiatives lead to concrete strategies and district plans. Our task is to assist municipalities in this process and to programme and implement changes as well as possible. By enabling energy feed-in and connecting a growing number of charge points for electric mobility, we are also contributing to the sustainability of our cities, towns and communities.
We are acutely aware of the impact of our operations on the planet, and strive to make our business operations climate-neutral and circular.
Climate change leads to our assets being subject to changing physical conditions, such as drought and flooding. We are giving increasing attention to how to respond and adapt to the consequences of climate change in relation to the energy network and our assets.
Most significant results in 2022
Our Sustainability and Corporate Responsibility report
Alliander follows the ‘six capitals model’ of the International Integrated Reporting Council (IIRC). In the model, we mainly quantify and monetise the impacts where we can make the largest contribution to society, both in terms of our direct activities and in the supply chain. We have described the other indicators qualitatively and made an estimation on the basis of external sources. Supply chain impacts are effects for which parties in the chain are jointly responsible. For basic assumptions, calculations and comparative figures, please refer to the Accountability document.
Alliander tops the list of impactful companies
Alliander finished first in the Erasmus Corporate Impact Index for the third time in a row. This is the list of companies with the greatest expected societal impact in the Netherlands. The Impact Index looks at five components: good governance, the relationship with the outside world, sustainability, financial health and being a good employer. We score highly because of our key role in the energy transition and because we transparently report on our overall impact on society.
Details of our impact in 2022
Our activities have an impact on society. The distribution of energy and its feed-in to our networks make a positive contribution to the economic development of regions and stakeholders. Employees and suppliers are rewarded for their performance. On the other hand, we know that we are also removing value from society, for example through the emission of greenhouse gases, the use of raw materials, safety and security risks and the effects of interruptions in the energy supply. The section below provides a more in-depth explanation of our negative and positive impact on each type of capital. We have collaborated with other energy network operators to improve the comparability of our results as individual organisations in terms of financial capital, manufactured capital, human capital and natural capital.
Our impact model
Financial capital: investing in future-proof networks and the energy transition
Relationship with SDGs
Our impact is reflected by the investments we make to increase the share of renewable energy transmitted through our networks. At the same time, we aim to keep the social cost of accessing energy in the future as low as possible. Ensuring universal access to affordable, reliable energy (SDG 7.1) is a priority. Our impact on SDG 9 is reflected in our activities to build a future-proof energy infrastructure and our use of innovative techniques, such as in hydrogen projects. We invest in local and regional energy networks that support shifts in supply and demand patterns.
Financial capital is related to a number of aspects, including the salaries paid to our employees. An increase in the number of employees and the collective bargaining pay rise increased that impact by €32 million. In addition, suppliers receive payments for goods, services and operating assets; this generates work and income for other parties. Due to intensified investments and the influence of sharply increased procurement costs, the value of the payments made to suppliers increased by 26% in 2022. Our impact on taxes remitted decreased due to a lower profit. On balance, we contribute to the energy transition, the regional economy and employment through our financial capital.
Manufactured capital: less energy transmission, lower contribution to consumer well-being
Relationship with the SDGs
Achieving timely access to energy for our customers is our daily priority. This contributes directly to the level of well-being and prosperity that customers experience (SDG 7.1). Energy distribution and transmission are our manufactured capital and reflect the value that energy has for our customers. We are also working to increase the share of renewable energy (SDG 7.2). We contribute to SDG 9.1, which involves developing high-quality, reliable, sustainable and resilient infrastructure, including regional and cross-border infrastructure. In doing so, we support economic development and human well-being, with a strong emphasis on affordable and equitable access to energy for all.
Impact in terms of reliability
The reliability of energy transmission depends on the impact of faults and outages. Last year, the gas outage duration in our service area increased by 34%, which compares unfavourably with a lower outage duration across the industry as a whole. This led to a small negative adjustment to our gas transmission-related impact on consumers.
In the electricity domain, the duration of electricity outages and their frequency increased by 2% and 31% respectively. Duration and frequency fell in the industry as a whole. This led to a negative adjustment to our electricity transmission-related impact on consumers (minus €2.9 million).
Energy is directly related to well-being; higher prices negatively impact the well-being of a growing group
Our main impact on manufactured capital is our contribution to the well-being experienced by consumers through the use of energy. We analyse this impact by looking at the transported volume, the price and households’ willingness to pay for energy. According to economic theory, the value of a product to a customer is at least equal to the price paid but can be even greater if the customer’s willingness to pay is higher than the price.
Due to geopolitical developments, energy prices have risen sharply over the past year. Households’ willingness to pay is expected to respond to this change, subject to a time lag. Households started saving energy and substantially less energy was transported. These effects reduce our contribution to consumer well-being. This impact applies to the total value for all customers. We are aware that there are significant differences in the level of well-being experienced by different groups in society. This is reflected to some extent by the emergence of energy poverty (an aspect of social capital).
Impact on consumers
Due to the situation in the energy market, the geopolitical situation relating to energy and a relatively mild winter, we are seeing lower distributed volumes of gas. As a result, the associated well-being expressed in monetary terms fell by €664 million.
We facilitate customers by offering open and sustainable district heating networks in a number of regions. The number of heat connections for small-volume consumers increased, so the monetary value of the well-being value associated with the heat connections increased proportionately.
The total amount of electricity distributed has fallen. The high energy prices led to lower consumption. As a result, the associated well-being expressed in monetary terms fell by €174 million. The amount of energy fed back into the electricity network by consumers increased further in 2022. We are seeing an increase of some 26% in the number of connections with solar panels. The increase in solar power feed-in by consumers resulted in a positive contribution to perceived well-being of €25 million. Our goal of connecting all the new decentralised generation capacity in our areas each year was not achieved.
Impact on business customers
We are seeing an increase in electricity connections and a decrease in gas connections among our business customers. The energy transition is also clearly visible here. The impact value of the electricity distribution activities increased by about 9.2% to €446 million; the impact value of the gas distribution activities decreased by 6.5% to €43 million. The total impact value of electricity and gas transmission for business customers rose from €453 million in 2021 to €489 million in 2022.
Natural capital: decrease in climate pressure
Relationship with the SDGs
Alliander embraces SDGs 7, 12 and 13 in its wish to reduce the negative impact of its operations on natural capital in the form of raw materials usage, waste, effects on biodiversity, air, water and soil quality and effects on climate change. We contribute to the international emissions reduction targets that are designed to limit global warming to 1.5 degrees. We also contribute to SDG 7. We do not yet measure the impact of measures designed to achieve climate adaptation at the level of our assets (SDG 13).
Impact on climate costs
The decrease in the volume of gas and electricity distributed and cleaner production of electricity have led to a decrease in climate costs. This is reflected by the 16% decrease in the negative impact of our CO2-eq emissions, which fell to €187 million. The mild winter and higher energy prices are the main factors behind the decline in total energy use. The fall in carbon intensity per kWh due to a cleaner energy mix magnified the effect of this decrease. Compared to 2021, there was a decrease in the electricity emission coefficient from 0.338 to 0.291 kg CO2/kWh. The percentage share in our own organisation's total climate footprint remained virtually unchanged.
Impact on eco-costs
Due to the growing work package, the volume of materials purchased increased by about 10,800 tons. As a result, our negative impact in terms of the circular use of materials increased from €34 million to €39 million in 2022. By means of circular procurement, we were able to reduce the negative impact by €3.3 million. As a result, we achieved an 8% reduction in the total costs of the ecological damage that occurs when exclusively new primary raw materials are used. The fact that a very large percentage by weight of our waste materials is recycled or reused means that we have a limited negative impact in terms of waste: €0.1 million.
Total negative impact on natural capital of materials and the procurement of primary and secondary materials
Human capital: well-being through satisfied employees
Relationship with the SDGs
Our impact on SDG 8 is reflected in our positive contribution to the well-being of employees and to employment in the Netherlands, and our efforts to positively influence working conditions and workers’ rights elsewhere. Our procurement and tendering policy reflects our desire to encourage corporate social responsibility. Contractors who work for us must meet the same safety standards as those we adhere to in-house. In our labour market policy, we pay extra attention to specific groups. As a result, we contribute to SDG 8.5: achieving full and productive employment and decent work for all women and men, including young people and persons with disabilities, and equal pay for work of equal value. With regard to internships and learning experiences, the Quota Act, recruiting and selecting women for leadership positions, people with a non-Western immigration background and our diversity policy, please refer to the explanation in the section Composition of the organisation.
The impact on well-being of being in a job has risen by 15% to €72 million (2021: €61 million). This is mainly due to higher job satisfaction compared to the previous year (80% versus 76%). In addition, the increase in positive impact comes from the increase in the number of employees in 2022. People in subsidised employment have also been included in the impact analysis since 2021; this relates to labour participation via Step2Work. This impact has remained almost the same due to a similar number of positions for people with poor job prospects.
Long-term work-related sickness absence or safety incidents have a dampening effect on the positive value of being in work. In 2022, we saw a more negative impact compared to 2021. The impact comprises a negative effect of €0.53 million due to work-related absence and an effect of €0.17 million attributable to safety incidents. This brings the total negative impact value to €0.7 million.
Continuous development and training of all our employees and efforts to raise awareness and provide support regarding health are not yet included in the impact measurement.
Social capital: exploratory study for broader measurement
Relationship with the SDGs
Our social impact is expressed in our connecting role. In the Regional Energy Strategies, we are the connecting factor between government bodies, energy companies and community initiatives. Within the framework of a collaborative planning process, we focus on meeting energy infrastructure needs and creating sustainable cities and communities (SDG 11). Participation and connectedness are important values in an open, inclusive and democratic society and nurture the trust that individuals have in each other and in institutions. Alliander attaches great importance to participation and inclusion in the energy transition. In a comprehensive exploratory study of our social impact in 2022, we considered how we relate to society in our role as a network operator, buyer and employer. Despite a predominantly positive picture, it appears that we can profile ourselves more emphatically and focus more on connection and participation in our working methods, for example through more direct interaction at the neighbourhood level in spatial plans, by making better use of the input and practical knowledge of supply chain partners and by promoting inclusion and diversity in the energy transition process and the composition of teams. The results of the exploratory study are the basis for further analysis of our social impact in society.
How stakeholders perceive and value our performance is part of our social capital. The value for reputational change indicates how we compare to similar companies in terms of reputation. A good reputation is beneficial for collaboration, employee recruitment and customer satisfaction.
In 2022, because Alliander's reputational position was not measured this year, we used a projection of the results from previous years that was adjusted for current developments in the sector. The net impact shows a reduction in our reputational value from €20 million in 2021 to €12 million in 2022. This is attributable to the loss of brand value suffered by other energy companies in Europe in relation to their income. This brand value is used to express our relative position as a monetary value.
The increase in energy prices has led to a drop in energy consumption. However, much of the household energy usage is essential to meet daily needs, for example heating, cooking and telecommunications. For households with limited financial resources, energy is claiming an increasing share of their expenditure due to rising prices. As a result, more and more households are having difficulties paying their monthly energy bills. This is called ‘energy poverty’. We stand for accessible and affordable energy for all and, in consultation with energy suppliers and the government, we take appropriate measures, for example exercising restraint in disconnections.
Intellectual capital: added value of market-facilitating data
Relationship with the SDGs
The purpose of our innovation programme is to develop and apply innovations and smart solutions as rapidly as possible. The digitisation of power grids is essential for the energy transition. New models for business and markets and the use of renewable energy lead to knowledge and data on these developments. This knowledge and data is intellectual capital that can make a positive contribution to issues around the energy transition, raw materials and implementation. Transparency, innovation and collaboration are key concepts for denoting intellectual capital.
Our indicators for intellectual capital are linked to SDG 9 and they are reflected in our activities to build a future-proof energy infrastructure and our use of innovative techniques, such as in hydrogen projects. Participation in international initiatives aimed at knowledge sharing and technology development and application is associated with SDG 7.4.
In 2022, the impact of market-facilitating data decreased by €0.5 million to €2 million due to a lower number of consultations. We share public data directly on Liander’s website and other data can be requested on a case-by-case basis. The quality and value-in-use of this data generate value for society when the data is compatible with other applications employed by users. Making data available offers market opportunities for other companies. The decline in the use of the data is probably due to the delay in development plans for the construction sector, price developments in materials and labour shortages in various sectors.
Case study: Smart use of emergency power reduces emissions
Diesel generators are widely used as a reliable source of temporary power during foreseen and unforeseen work on the network. This technology leads to CO2 emissions. Alliander has investigated the use of more sustainable alternatives, such as plant-based diesel (Hydrotreated Vegetable Oil, HVO) and batteries. When deploying these alternatives, considerations such as energy supply reliability, cost and the space required come into play. To understand the impacts of the different alternatives available to us, we conducted an impact analysis using data gleaned in a 2021 emergency power supply situation when a diesel generator was deployed in a village in Gelderland.
Situation and study question
Mobile generators were deployed at various locations in 2021. Over 2.9 million litres of fuel were used by the generators. So the deployment of these generators resulted in 8.8 kilotons of CO2 emissions. The impact case study focused on the social benefits and costs of the different solutions for generating emergency power, both now and in the future. In all of the scenarios in the comparison, having energy available delivers the same level of well-being. The impact on the manufactured capital is constant.
The impact calculation is based on a situation involving scheduled maintenance work on the electricity network for a nine-day period in a village with a high density of low-rise buildings. The stakeholders in this case study are the customer, Liander, local residents and society at large (climate). For the case study, the impacts in terms of costs, climate change, and noise and odour nuisance were calculated based on the available data. Supply chain aspects related to the production of the options investigated, such as the eco-costs of the materials used and climate-related emissions, were not part of the study. The study explored the use of HVO diesel, a hybrid generator set with an HVO-powered engine and a battery, and a battery pack in comparison to the reference impact of a generator set running on type EN590 diesel fuel.
Results of the impact calculation
Liander incurs higher costs when a hybrid or battery generator is used rather than the diesel unit. In the case of HVO and diesel, fuel is the main cost component. In the case of hybrid generators, the rental costs are high and fuel consumption is lower. The battery pack alternative is associated with significantly higher costs due to the number of battery packs needed and transport back and forth. Deployment of this technology only becomes competitive when a lower level of facilitation is needed, for example, in the case of shorter deployment periods or in combination with local feed-in. The use of HVO and a hybrid technology requires a relatively small investment and may even lead to cost benefits if diesel prices rise.
For natural capital, the use of the hybrid generator has a favourable climate impact: switching from a diesel generator to HVO or a hybrid generator delivers a positive impact of €1,300 on climate costs. The climate cost of transportation to and from the site is €30 for diesel and HVO and €90 for the hybrid generator. The heavy battery pack has a higher climate cost: €900. In this case study, the use of battery packs proved not to be cost-competitive, as 41 battery packs would be required for sufficient capacity. But that picture may change if less capacity is needed, for example if the period of use is shorter, or the generator is used in conjunction with solar-power feed-in. Noise and odour pollution were further aspects considered in this case study. The battery pack generates hardly any noise. The noise emitted by the hybrid generator set is much less when it switches to the battery. The diesel and HVO generators have similar noise emission levels, equating to a negative impact value of €900. In addition, the diesel generator causes a perceptible odour nuisance in the surrounding area. In the case of the other options, little or no odour nuisance occurs.
In this case study, the hybrid alternative to diesel generators emerges as the best choice because of the positive impact in the event of a diesel price increase and the favourable scores for natural capital and social capital. By including these effects in our decision-making process when choosing between the options, in addition to the specific considerations such as space, availability, duration and cost, we and our suppliers increase social value creation.
Case study: initial experiences with a new energy system on Vlieland
On the island of Vlieland, more and more sustainable energy is generated locally. This development has led to new initiatives in several places that provide an alternative to upgrading the electricity network. In Vlieland's case, upgrading the network would mean running an additional undersea cable through the Wadden Sea, a World Heritage Site. In addition to high costs, this has implications for nature. So in 2020, it was decided to deviate from standard network management practice. A resistor array was installed to handle ad hoc energy peaks. These resistors dissipate the excess energy in the form of heat. This addition removed the need for a cable through the Wadden Sea for the time being.
However, delaying the Wadden Sea cable in combination with the resistor array is not a future-proof solution: further developments in the local energy supply will require an additional resistor array or make it necessary to install a Wadden Sea cable anyway. Furthermore, the current situation, in which energy is lost in some situations, is not optimal. So we are exploring how this can be done differently. Our approach includes looking beyond the standard procedures applied by network operators and considers value across a broad spectrum.
Together with the stakeholders on Vlieland (residents, municipality, energy corporation, a local swimming pool), we are investigating how to make social value transparent when choosing a solution. We are exploring how and whether we can contribute to an energy system that is capable of responding to the changing demands of the community and that contributes to broad societal value and the energy transition through a different approach.
Optimising the social benefit of energy and avoiding network capacity upgrades may open up a wider field of application. The swimming pool could potentially use some of the island's energy surplus. Other functions may also become part of a different type of energy system on the island. The key aspect in this process is that we collaboratively explore what smart combinations of energy supply and demand lead to a solution with positive social impact. The parties involved in the exercise are looking beyond their own interests and financial revenues in order to achieve a socially optimal result on the island, for the system as a whole.