We begin by analysing everything that we could be doing, and that is within our control, to be effective and efficient. For instance, we critically examine our investments and their timing, and in 2018, we launched a five-year efficiency programme aimed at reducing our operating expenses by €150 million. Of this figure, €109 million had been achieved by the end of 2020. In 2020, we reviewed the efficiency programme and raised our ambition to €180 million. In addition, the programme was extended to expire in 2025 instead of 2022, driven in particular by our success in achieving the savings to date. In 2021, we will consider which additional steps we can take until the end of the forthcoming regulation framework in 2026. Although we retain a sharp focus on continuous efficiency improvements, this will not be sufficient to finance all the investments necessary for the energy transition.
And what if we do not succeed in strengthening our financial position? In that event, we could end up in a scenario where we are unable to make the necessary investments to achieve the desired progress with the energy transition. Or a scenario in which we need to borrow more, resulting in a lower rating and higher interest charges, which may also potentially have an impact on the level of necessary investments we can make. Neither scenario is desirable, in our opinion. The policy choices we make today provide the basis for fulfilling our role in the energy transition in several years' time. It is important to do this together and from a financially healthy perspective.
Workload is increasing, scarcity in the labour market
The energy transition is in full swing, and this has implications for Stedin. It means a sharp rise in the number of new connections and grid reinforcements. We are closely involved in various partnerships where choices are made and have to analyse the different scenarios, including the impact they have on our grids. The energy transition also requires grid managers to play a greater role in making data accessible, and substantial input is needed from Stedin in the debate on energy policy, market regulation of heat and hydrogen, for example, and financing the energy transition. This challenge has an impact on how we should shape our workforce.
In order to have a clear understanding of the current and necessary future capacity and competences, we set up a system of strategic personnel planning in 2019. We made good use of the first insights this yielded in 2020. Thanks to the fine work being done by our in-house training school, we know that we have enough junior fitters. At the same time, there is a growing shortage in trained intermediate and more specialised technical roles and in the area of IT. These insights have enabled us to refine our planning to permit greater differentiation in terms of current and future colleagues and to concentrate on recruitment and internal advancement.
Within our strategic spearheads 'Improved grid management' and 'Facilitating the energy transition', we are focusing on four change projects that will contribute significantly to delivering our strategy. They are: Customer-oriented connections, Multidisciplinary collaboration, Sustainable energy transition and System operator.
1. Customer-oriented connections; on time and tailor-made at the lowest societal costs
By implementing digitalisation as much as possible, among other things, we aim for improved lead times of connections by the end of 2022: we intend to connect 80% of our customers within four weeks, if the customer wishes. We are also aiming for a customer satisfaction score of 80% and a 40% increase in productivity. The result will be that satisfied customers receive a tailor-made service on time and at the lowest possible societal costs.
3. Sustainable energy transition; ready for the future
To achieve the goals of the climate agreement, we are preparing, as a grid manager, for a future with a new energy system. The sustainable energy transition strategic initiative is aimed at embedding the new working practices in the Stedin organisation. This enables us to predict grid capacity and create future scenarios. We are also engaged in close dialogue with stakeholders.
2. Multidisciplinary; efficiency and customer satisfaction go hand in hand
A multidisciplinary way of working is aimed at developing cooperation with other parties, such as the drinking water companies in our service area. As we all work below ground, a multidisciplinary approach to working enables us to carry out our work more efficiently, achieve savings, make better use of scarce personnel and reduce inconvenience for local residents.
4. System operator; overseeing and directing the energy system
Within this initiative, we are expanding our role as a manager of physical grids with the management of digital data flows. We are exchanging increasing amounts of data with customers, municipalities, market parties and other grid managers on a range of topics, such as available grid capacity. This expanding role in overseeing and directing the energy system means we are becoming a system operator.
Interview with Jeroen Grond, director of Safety and crisis team chair (SST)
'The greatest risk? That 30% of staff might not be able to come to work.'
It has been a hectic period for Stedin Group's crisis team: for months on end, it put in long days to ensure the organisation could cope effectively with all the challenges of COVID-19. 'Stedin plays an important role in keeping the critical infrastructure in the Netherlands functioning.'
‘I can still remember it clearly’, says Jeroen Grond, director of Safety, on behalf of the crisis team. 'It was a Saturday evening in mid-February when our colleagues at Enexis raised the alarm internally. The first coronavirus cases had been recorded in the province of North Brabant, and the situation did not look good. This was the trigger for us at Stedin to start working on our coronavirus contingency plans.' The greatest risk? 'That 30% of staff might not be able to come to work, with all the accompanying adverse effects on our services. We quickly scaled up the crisis organisation to level 3. This is the second-highest level in the crisis plan, which we had never previously had to activate at Stedin. In practical terms, it meant that a crisis team was formed that assumed overall control, whilst the regular crisis organisation continued as before, to deal with failures, for example. The confidence that the Board of Management immediately placed in us was and remains immense.'
Even before Prime Minister Mark Rutte gave his first COVID-19 press conference, Stedin was already well advanced in its preparations. This is important, given Stedin's responsibility for critical infrastructure. It was quickly decided, for example, not to carry out any work nearby hospitals, to avoid any risk of failures or power outages affecting them. Maintaining supply security, ensuring the safety of our workers and continuity were priority considerations in every discussion. Jeroen recounts, 'We kept asking: how well prepared are we? Where can we spot potential issues? And how do we distinguish an incident from a problem?' The team was able to resolve essential issues even before the press conference took place. 'For example, we "only" had 1,000 VPN connections. That would have been plenty under normal circumstances, but now the entire company had to work from home. IT doubled this number in the space of a single weekend and then quickly ramped up to 4,000 connections. That is quite an accomplishment.' In addition, a dashboard was immediately set up as well as a project team, to monitor information and facilitate quick decision-making.
The first 24 hours
As you would expect, every crisis situation is accompanied by some tough decision-making. 'Personal situations are the most difficult. Take the example of an employee with 40 years' service who is denied a proper farewell. I find this really difficult, but it's just not possible in the present circumstances.' Another painful episode was when a colleague's wife died of the coronavirus. 'Just terrible. His fellow workers lined the route of the funeral procession with Stedin vans, to pay their last respects. The sense of solidarity is incredible at times like this.'
During the coronavirus period, there was a continuous flow of new areas for attention. 'These mainly related to additional assistance for employees: confidential counsellors, an HR coronavirus helpdesk, leadership training. As colleagues, we also got together to donate EUR 19,500 to the food bank.' Financially, the coronavirus has had an adverse impact, with production losses.' Still, there are also some bright spots: 'The unselfish cooperation, with everyone pulling together and lending a hand. The interest of Stedin as a whole is more important than the interest of any individual department.'