Affordable and efficient services
In our view, it is important that the energy transition is achieved at the lowest possible public cost. This means that we are also continuously exploring how we can work more efficiently. Multidisciplinary working is a good example of this.
Efficiency
In 2018 we launched a five-year efficiency programme in order to reduce our costs on a permanent basis. The initial target was to achieve a permanent cost reduction of €150 million per year. In 2020, we raised the cost reduction target to €180 million, to be achieved in 2025. From 2018 to year-end 2022, we achieved cumulative costs savings totalling €166 million. We ended the programme in late 2022. The efficiency measures that were ongoing or were yet to take effect as per year-end 2022 have been incorporated into a new programme. In that programme, we will recalibrate existing measures, add further measures and tighten our policy objectives.
Total cost savings | 2018 | 2019 | 2020 | 2021 | 2022 |
Cumulative cost savings in millions of euros | 40 | 62 | 109 | 143 | 166 |
We realised a large part of the efficiency improvement through the results on four strategic initiatives. Part of the savings also came from lower costs of funding. The integration of DNWG with Stedin Group also improved our efficiency. While we are working more and more efficiently, the volume of our work is increasing. As a result, our absolute operating costs (excluding transmission costs, costs for network losses, and municipal sufferance taxes, which were abolished with effect from 2022) rose by €38 million compared with 2021 to €508 million. In addition, investments in business assets increased by €25 million to €712 million.
Examples of working efficiently
Modular stations: Constructing standardised, modular stations shortens the design process, makes their realisation more straightforward and results in fewer errors and construction defects. Two modular stations have now been constructed in Vinkeveen and Houten Oost. We are currently designing modular stations for the entire Stedin area, including for the new stations in Zoetermeer, Tholen, Delft, Zuidplaspolder, Heliotroopring, Driebergen and Oudenrijn. This is leading to continuous improvement of the concept. The lead time for the design and realisation of these stations yet to be constructed can thus be reduced by one year, depending of course on our obtaining the necessary permits.
Compact connection module in public areas: We have developed a compact connection module in a national cooperation with all grid managers. This uniform connection module allows us to connect objects in public areas, such as charging points, parking ticket machines and advertising panels, faster and more easily. As many technical features are already set in place in the factory ready for use, connections can be created more safely, cheaply and quickly. The installation work itself is simple thanks to a click system, which means an improvement in working conditions. Installation time has been reduced from 31 minutes to 8. This saves both time and money, and allows us to make better use of our scarce technical personnel. Four test models were taken into operation last year, and we will begin use of the new modules in January 2023.
Multidisciplinary working - efficiency and customer satisfaction go hand in hand
Multidisciplinary working entails cooperation with other parties in our service area, such as the drinking water companies. Multidisciplinary working means that the ground only has to be dug up once, the front door only has to be opened once and customer contact is unambiguous. This enables us to carry out our works more efficiently, make savings and ensure that jobs are feasible. We can also make optimal use of our scarce personnel and improve satisfaction for customers and the environment by reducing disruption for local residents.
We work in a multidisciplinary manner throughout the Stedin area. The form this takes varies depending on the region concerned.
Multidisciplinary working in Zeeland
In Zeeland, we already have 15 years of experience with multidisciplinary working. In this region, DNWG Infra cooperates on an equivalent way with the water company Evides in a Multidisciplinary Organisation Initiative (Regie Organisatie Multidisciplinair, ROM), thus with no duplication of work. This means that in Zeeland, DNWG Infra not only carries out all works below ground for water, electricity and gas, it also is responsible for the project organisation. One project manager, one application, one invoice, one supervisor and usually one of just a few project coordinators representing all the disciplines. Under the Energy Act, fully deduplicated work such as we carry out in Zeeland is only possible by means of a ‘Non-Regulated Activities BV’ (Niet Gereguleerde Activiteiten BV), as DNWG Infra is within the Stedin Group non-regulated activities.
Multidisciplinary project in Vlissingen
The ‘Kop van Dok’ high-rise project is a new-build project in Vlissingen consisting of 185 apartments in three towers. DNWG Infra has laid the electricity, water and data connections here. This meant that all disciplines involved were able to do their work in quick succession once the ditches for this project had been dug, so they did not have to be reopened again. Excavation costs in Zeeland are thus lower, the chance of excavation damage is three times less and the costs for traffic measures are also lower. Because the ground only had to be opened once rather than three times, there was less disruption to the neighbourhood as a result of the works.
Multidisciplinary working in Zuid-Holland and Utrecht
Because of the complications involved in applying the non-regulated activity approach in Zeeland to the rest of Stedin’s service area, we have chosen another form of cooperation: we carry out work below ground together, while keeping the roles in the project organisation separate. We do this through cooperative agreements with the water companies Dunea, Oasen, Vitens and Evides (in Rijnmond). The combined works below ground are carried out by contractors by means of joint tenders. A number of contracts with contractors were replaced in 2022, involving further work on the forms of cooperation: joint programming of installation and replacement work, designing the joint operational organisation and making preparations for a joint framework agreement with contractors.
This approach has led to savings totalling more than €1.2 million on the projects completed in 2022. We expect our financial savings since 2017 to increase to €11 million a year.
Tenders
Stedin initiated 37 European tenders in 2022, and completed 13. The total contract value of these tenders was €2.8 billion. Around 40% of these tenders involved cooperation with contractors for multidisciplinary work. This concerns, for example, the contracts with our contractors that were jointly tendered again this year together with the water supply companies Oasen, Dunea, Evides and Vitens. The contracts were mainly awarded based on the performance of the contractors on reducing CO2 emissions and fostering biodiversity.
Stedin initiated 39 multiple negotiated contracts and completed 57 in 2022. The combined contract value of all these joint tenders is €60 million.
Cooperation with municipalities in covenants
Together with the water companies, we approached an increasing number of municipalities regarding the conclusion of covenants in 2022. In these covenants, we coordinate our plannable work below ground so that we carry out as much of the work as possible at the same time and deduplicate tasks as far as possible. We sealed a covenant with the municipality of Delft and Evides in 2022. Covenants are also being prepared with the municipalities of Dordrecht, together with the water company Evides and the district heating company HVC, and in The Hague with water company Dunea. There are also two exploratory consultations ongoing, firstly with the municipality of Zoetermeer and Dunea, and secondly with a consortium municipalities of Barendrecht, Albrandswaard, Ridderkerk and Hoekse Waard, Evides and the Hollandse Delta Water Authority.
In the municipality of Rotterdam, we have carried out 27 projects under the covenant (of the total of 40 projects we had there in 2022). This included the realisation of 18 kilometres (of a total of 31) of a route with Evides and the municipality of Rotterdam. This mainly involved the replacement of brittle pipelines. For these 18 kilometres, this led to cost savings of more than €0.3 million.
We have coordinated our first joint portfolio in the cooperation with the municipality of Dordrecht. This coordination means, for instance, that we will not have to carry out a project twice on the same route within the foreseeable future. This will mean savings of over €1.2 million for Stedin on these ‘avoided’ projects. We are also consulting with district heating companies such as Eneco Warmte and HVC to better coordinate the works portfolio with them. This is an important cooperation, given the heating transition and the impact of this on both our gas and electricity grids.
Stedin’s grid management rates
We are keeping our rates for consumers as low as possible with all these initiatives aimed at efficient operation. The rates for grid management are determined based on the costs incurred by the grid managers. The Netherlands Authority for Consumers & Markets (ACM) established proposals for grid management rates on 28 November 2022. A household with a gas and electricity connection with Stedin will pay a transmission rate of €583.22 in 2023. This is an increase of around €12 per month. Most of this increase is due to higher energy prices. We are aware that this is a significant increase, especially in combination with high energy prices. We strive to keep our rates as low as possible. The rates for grid managers are legally regulated. The supervisory authority the ACM determines how much each grid manager may charge consumers and businesses for its services. These costs are part of the energy bill.
