Developments within society and the energy market
Various developments affect Stedin Group. Below, we describe the principal influences that play a part in our strategic choices and business operations.
Risk of problems with grid capacity and voltage quality
Energy supply and demand have become far less predictable. In particular, the growth of decentralised, sustainable power generation facilities, such as solar farms, continues apace. The speed of these developments means that we are approaching the limits of what the grids in the Netherlands can handle. There is a risk of problems with our transmission capacity and voltage quality, and these problems are already cropping up in some places. A lot of solar roofs and wind farms have been constructed in Schouwen-Duiveland and Tholen in Zeeland, for example. These produce more electricity than is taken up in the area. The challenge for us, as a grid manager, is to provide solutions to these issues.
By 1 October 2020, each RES region had submitted its draft RES. It was found that the total ambitions far exceeded the national target of 35 TWh large-scale onshore renewable energy generation capacities, with a total nationwide in excess of 50 TWh. It is good to see that there is so much drive to meet the climate targets. Many regions also focus heavily on using roof areas for the installation of solar panels. The impact analyses that were carried out show that major grid expansions are needed to facilitate the regions' plans.
Climate Agreement
Through the Climate Agreement, we are seeking to implement the international goal of limiting global warming to no more than 2 degrees. For the Netherlands, endorsement of the 2-degrees goal means that emissions of greenhouse gases must have been reduced by at least 49% by 2030 compared with 1990. The European Union tightened up this target in 2020, replacing the 49% emissions cut with a 55% reduction in greenhouse gas emissions. As a result, we need to engage in renewed discussions with stakeholders about how we will jointly meet these new, more ambitious targets.
Natural Gas-free Districts Programme
On 22 October 2020, Minister of the Interior and Kingdom Relations Kajsa Ollongren announced the names of the municipalities in the Netherlands that qualify for a government grant in the second tranche under the Natural Gas-free Districts Programme. In Stedin's service area, this include districts in the municipalities of Goeree-Overflakkee, Rotterdam and Pijnacker-Nootdorp. In partnership with these municipalities and local residents, Stedin will gain experience and further the process of achieving a gas-free built environment by 2050, one step at a time. The projects from the first tranche are still underway, and we are continuing our hard work in relation to them. We also help municipalities and other parties in making the transition by sharing our knowledge about relevant topics. We are continuously increasing our knowledge in relation to the energy transition and calculations in respect of potential options and scenarios in the future. In 2020, for example, we published various papers to stimulate discussion about the heat transition, the role of hydrogen in the future energy system in the built environment and sustainable gases.
Industry
The Industry Climate Agreement Infrastructure Task Force (TIKI) examined what type of infrastructure industry needs to meet the commitments in the Climate Agreement and what input and options the grid managers require to make this possible. A significant number of their recommendations have now been adopted by the Minister of Economic Affairs and Climate Policy. One such recommendation is the creation of Energy Strategies Clusters (CES). Stedin will be actively involved in the CES for Rotterdam Moerdijk, as will Enduris in the CES for Zeeland (Terneuzen and the surrounding area).
Energy legislation
To implement the climate agreement, existing energy legislation needs to be amended to ensure sufficient provision is made for new roles and tasks in the energy system of the future. In addition, new EU legislation must also be implemented into Dutch domestic legislation.
The results of the elections for the Lower House of the Dutch parliament in 2021 will also play a role in this regard.
The Ministry of Economic Affairs and Climate Policy is drafting an Energy Act 1.0 for this new legislation (including the merger of the Electricity Act (Elektriciteitswet) and the Gas Act (Gaswet). Informal consultation was carried out regarding the relevant policy choices in this regard to gain a feeling for the positions of the various stakeholders. Netbeheer Nederland, through the action team in which Stedin participates, gave an informal response to a draft of this Outline Policy Memorandum for the Energy Act 1.0, as well as a formal response to the final outline policies. We are broadly satisfied in substantive terms with how the Ministry of Economic Affairs and Climate Policy intends to implement fundamental choices and the way in which a large number of implicit working practices will be formalised. A further impact analysis of the Energy Act 1.0 is certainly necessary, as this piece of legislation impacts to a greater or lesser extent on virtually all the processes undertaken by the grid operator.
Market regulation of heat grids
Collective heating supply (heat grid) is a key element of the energy transition. In the service area of Stedin Group especially, large-scale heat grids are a realistic vision for the future. Stedin foresees an increasing convergence of the critical infrastructures for electricity, gas and heat in the long term which makes the construction and management of heat grids logical tasks for a network group as well. A public party such as Stedin Group is often a logical party for municipalities and provinces, given its considerable experience with infrastructures and comparable public and other interests. Our knowledge and experience as a public party means that we can provide the necessary added value. This also ensures that any contribution, be it project-related or otherwise, from public funds remains within the public domain.
Heat grids are primarily provided for in the Heating Supply Act (Warmtewet). A new version of this Act (now known as the Collective Heat Supply Act (Wet Collectieve Warmtevoorziening, WCW)) was circulated for consultation in mid-2020 and is still undergoing drafting. A potential role for grid operators is under constant discussion in the national debate on scaling up the heat supply. A combination of the new Heating Supply Act and EU regulations would seem to render a role for grid operators in heat virtually impossible in practice, in spite of the fact that several municipalities openly advocate a far greater role for grid operators. Furthermore, Eric Wiebes, Minister of Economic Affairs and Climate Policy, already confirmed in a letter to the House of Representatives his intention not to exclude any parties for the heating market and to examine how the grid operators can best fulfil their role. In our opinion, this is consistent with the more general wish for greater room for manoeuvre in relation to energy carriers such as heat and hydrogen, as also previously pledged in the Energy Transition (Progress) Act. Robust and up-to-date legislation in the short term is essential to enable us to carry out our core tasks, both now and in the future.
Within Stedin Group, NetVerder is currently responsible for realising our strategic ambition in this regard: to develop heat projects with the aim of gaining experience in the market for heat. You can read more about this topic in the section on Non-regulated activities.
Socioeconomic developments: COVID-19
COVID-19 has significant negative consequences from a macroeconomic and socioeconomic perspective, and this in turn has a direct impact on the speed of the energy transition. Dutch companies are increasingly putting off necessary sustainable investments. Jobs are also under threat. This is affecting people's financial stability and therefore influences the debate on the affordability of and support for the energy transition.
New technologies
Developments in the field of solar energy and electric cars are advancing rapidly. These trends call for additional investments in our electricity grids. At the same time, new technologies as well as the installation of roughly 22,000 smart grid terminals in the energy grid also enable us to track the energy flowing through the grid in real time and improve our grid management even further. The future lies in making our grids smarter and implementing an integrated energy system. Our System Operator strategic initiative helps us to determine how to gain maximum benefit from an integrated approach. This enables us to make optimum use of the energy grid according to the energy requirements in a particular area. You can read more about our innovations in the section on Facilitating the energy transition.
Reducing environmental impact
Care for and attention to a valuable natural environment have increased in recent years. The focus is directed not just at the climate but also at people's immediate living environment. Stedin Group is therefore investing in reducing the environmental impact of its business operations – for example, by electrifying its vehicle fleet and preventing environmental as well as health risks by increasing employees' knowledge and understanding of hazardous materials through environmental workshops. You can read more about this topic in the section on One Planet.
Crucial craftsmanship: Sanne de Boer
Sanne de Boer is a senior analyst in the energy transition. What does 'crucial craftsmanship' mean for her? Real craftsmanship means being able to explain the consequences of choices that are made. The energy transition is just not that simple, after all.'
>What makes your work of vital importance? In other words, why is your work important for society?
'I work as part of a team of four people analysing the energy transition, and in particular the heat transition in the built environment. The leading question is: what will we use instead of natural gas? Solutions differ from one district to the next. My job within the team is to disseminate knowledge. This is of such importance to me that I self-published a book this year, "The energy transition explained". I'm delighted that 1,200 Stedin employees have asked for a copy. I wrote the book to explain concepts that are used, such as the difference between kW and kWh, in plain language. It also bugged me that the media make so many errors, such as referring to a water pump when it is actually a heat pump. They are totally different things. I don't think my work is directly of vital importance to society. Unlike fitters, who are absolutely essential. But I do contribute to making our energy infrastructure future-proof. My work has relevance in the long term.'
>How do you recognise a professional in your field?
'A true professional can clearly explain, in plain and balanced language, the interests and tensions involved in the energy transition. The system as a whole is complex. Take the current discussion about biomass, for example. Opponents believe it shouldn't even be considered. Its advocates believe it is a necessary option. A true professional can explain the consequences of choices in terms of the cost, space and speed of the transition. It is just not that simple.'
>What has working been like for you during the lockdown? What was different from normal?
'After the Prime Minister's first press conference, I felt anxious. I live alone, and I wasn't keen at all on working from home. I even phoned my boss to ask whether I could come in to the office. But I have completely changed my mind; now, I wouldn't want to work any other way. I work far more effectively from home. It's difficult not to be distracted by the clamour in an office environment. My daily commute is normally 2.5 hours, but now I can stay in bed an hour longer. I love it! And I like the fact that we start the work day with a half-hour casual meeting to touch base with the team.'
>How do you ensure that you remain fit and healthy yourself?
'The daily ops remote meetings with my colleagues really help to maintain focus on my work. I also exercise three times a week, including one skateboarding session. I have a healthy diet and make sure I eat something every two to three hours. I also stay active throughout the work day by going for short walks.'
>What gives you the most satisfaction in your work? How does your work help you maintain vitality?
'I am really happy to be part of this team. I also enjoy doing work that, in my view, is useful for society. I could never be a tobacconist, for example. That has no added value for me. The idea of doing purposeful work is what motivates me each and every work day.'
