Trends and developments
In implementing our task, it is important that we know which factors can influence our activities. In this chapter, we describe key trends and 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 and customer expectations are rising. This is nothing new. But what is different this time is the accelerating energy transition. The Netherlands aims to reduce national carbon emissions by 49% compared with 1990 levels by 2030. In 2019, the Dutch Climate Act was adopted and, as part of this act, public sector bodies, businesses, and social sector organisations presented the Climate Agreement. The Climate Agreement sets out agreements on the feed-in of 35 terrawatt hours of renewable energy produced onshore, taking millions of homes off the gas grid and heating these differently, and installing additional charging points for electric vehicles. Our biggest challenge is to ensure that the power infrastructure is ready on time.
National and international climate goals
The economy is growing. The implication for Alliander is that more new houses, businesses, and buildings need to be connected to the grid. Moreover, greater power capacity is required to facilitate the considerable growth of businesses, which can be seen, for example, in the sharp increase in the number of data centres, the growing demand for larger connections, and the surge in demand for expanded capacity from our current customers.
In practice, we are seeing that the energy transition is leading to more local energy generation and consumption: solar energy is becoming increasingly affordable, and, partly as the result of the Dutch subsidy scheme designed to promote the production of sustainable energy (SDE+), many large-scale solar farms have been built in the regions in which Alliander operates. Furthermore, various wind farms are being built, and electric transport and the associated charging infrastructure are becoming a familiar sight: in 2019 we connected 1,700 public charging points (more than twice as many as in 2018). A huge amount of work awaits us in the coming ten years to fulfil the agreements in the Climate Agreement. System studies show that the electricity demand will have at least doubled by 2050. We cannot afford not to see that the required work gets done. We want the Netherlands to achieve the climate goals, and for customers to get the capacity and energy they want.
In addition to the major focus on reducing CO2 emissions, the nitrogen and PFAS issues also played a role in 2019. At the end of 2019, the government took measures to get construction projects that had been brought to a halt going again, including lowering the maximum speed on motorways and raising the PFAS standard. However, it will take until 2024 before new construction is brought back up to speed: until 2023 fewer homes than planned will be delivered in our service area due to the temporary shutdown (or continuing standstill) of construction projects.
Shortage of technical staff
A vast amount of electrical 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. Filling the vacancies is a major challenge for the construction industry, installation sector, and network operators.
Farewell to natural gas and coal
The Netherlands wants to stop using natural gas from the Groningen gas field by 2030. All coal-fired power stations need to be shut down by then too. Initiatives to phase out fossil fuels like natural gas are springing up around the country. For example, the obligation to connect new buildings to the gas grid has already been repealed, and 69% of applications for new construction and renovations are now ‘natural gas-free’. All municipalities are working on their own transition vision statement for heating, in which they describe how they intend to wean each district off natural gas and which alternative will take its place. Alliander is assisting the municipalities and provinces with knowledge and experience. The transition vision statements will be ready in 2021.
Rising costs of the energy supply
As a result of the major investments that will be made in the energy networks, the costs for network management will increase, which will, in turn, make it increasingly difficult for more and more households to pay their energy bill.
Digitalisation opens up new opportunities for consumers and businesses to manage their utility bills and conserve energy. Network operators can benefit from digitalisation by gaining a better understanding of the consequences of the energy transition, the condition of the grids, and the investment opportunities. In addition, digitalisation offers the market new opportunities for the procurement, trade, and exchange of energy.
Impact on Alliander
The developments require substantial investments in our networks, and it also means a vast amount of work.
In parts of our networks use is approaching the maximum capacity. The capacity that an average solar farm supplies, for example, is comparable to the electricity consumption of a medium-sized city. Liander has many applications from solar farms, especially those in rural areas where the cables are thin because the demand for electricity was traditionally low. The cause is the sharp increase in subsidies for solar farms in the past two years. We are working hard on solving these bottlenecks by upgrading networks and applying innovative solutions. This takes time however. Until these issues are addressed, there is a chance that in some areas we will not yet be able to supply the capacity that the customer demands.
For network operators to make the right investment decisions in good time, it is essential that they know well in advance what needs to be done to the infrastructure and where this needs to happen. It is with this in mind that the network operators want the transition to sustainable energy to be brought about in a well-considered, manageable way. The arrangements in the Climate Agreement and the development of the Regional Energy Strategies are crucial in this respect. Alliander (and network operator Liander in particular) are assisting municipalities and provinces with knowledge and expertise.
Our mandate for society
The trends, developments and issues in the world around us constitute the basis for the formulation of our strategy, which 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.