Interview: Koen Bogers and Michel Heijdra

Last year was a special one for Stedin. At the close of 2023, the State officially joined Stedin Group as a shareholder. CEO Koen Bogers and Michel Heijdra, Director-General for Climate and Energy at the Ministry of Economic Affairs Climate Policy, look back on a process that took years. Together, they also look ahead to a partnership that will accelerate the energy transition.

Koen Bogers: “I had perhaps slightly underestimated how long the process would take. There are reasons for that, of course, as it involved a big investment and a new structure, but the State certainly did not become a shareholder overnight.”

Michel Heijdra: “Initial discussions started in 2021, when it became clear that Stedin had a need for capital that could not be met by its existing shareholders. We then immediately discussed the issue. Could the existing shareholders really not step in? Was a subordinated loan an option? Would it be possible to make adjustments to investment frameworks? Those were the questions we considered in that first period.”

State shareholding proved the best option

Koen: “In the end, the acquisition of shares by the State, however unique, proved to be the best option. Also because the stakes are fairly high, of course. The electricity grid is essential for the energy transition and there is no room for delay. In September 2022, the government reserved the funding in the Budget Memorandum; a step in the right direction, but we still had a way to go.”

Michel: “We recognised that the other grid managers could also experience this need for capital in the future, so it was essential to also invite Liander and Enexis to the table. That also says a lot about the good relationship between the grid managers. Stedin felt under pressure, but still kept the other grid managers involved to arrive at an agreements framework that applies to all major regional grid managers. That was a very important intermediate step.”

“In 2023, we started to tailor those agreements to Stedin specifically,” adds Koen. “And of course it was also a tense time for our existing shareholders, because what does it mean for them?”

“Yes, because we had to discuss things like: what shareholding percentage will the State get? What will those shares be worth when the State buys them? And what about the dividends?”, says Michel. “Moreover, from a control perspective, it is not so common for the Ministry of Finance – which, incidentally, is formally the shareholder – to have a role as a minority shareholder, as is currently the case with Stedin. That was also a factor. It is a unique structure because the State is also a minority shareholder of Stedin along with a considerable number of other public authorities. It was quite difficult to make agreements between them. It was important to achieve a good balance in doing so.”

Koen: “In the end, we are all public parties and we all support the energy transition. That helped. We can all see the problems of the congested power grid and the urgent need to reinforce it. It is essential for grid managers to have a strong capital position. So the official signing on December 8 felt like a triumph and makes me proud.”

‘There has been a real increase in the sense of urgency and necessity’

Michel: “2023 was a really important year in that respect. At the end of 2022, we launched the National Action Programme for Grid Congestion (Landelijk Actieprogramma Netcongestie, LAN), a plan by the grid managers and the State to accelerate the electricity grid expansion and optimally utilise the existing capacity. That and the many congestion announcements have really increased the sense of urgency and necessity.”

“Among both the public and politicians,” says Koen. “When I talked about the energy transition in 2021 and 2022, several politicians thought it could be done at a slower pace: after all, we have until 2050. I think there is now a real awareness that grid congestion is not just hampering the growth of renewable generation, but that it’s a much bigger problem. Increasing the number of heat pumps and electric cars, building new homes, greening industry, ensuring the Netherlands remains an attractive place to do business: all of these require a properly functioning electricity grid.”

“A lot has happened in the past year,” Koen goes on. “For instance, we have updated the scenarios for the new energy system contained in the Integrated Energy System Survey 2030-2050, there is a new report on the Financial Impact of the Energy Transition for Grid Managers (FIEN), and we have a National Energy System Plan (NPE). I was struck by the fact that the NPE states that natural gas and biogas still continue to play an important role, whereas before we used to say we need to become gas-free.”

Michel: “The built environment is one of the most difficult transitions, and ‘what do we do with gas?’ is the hardest question. Renewable gases will be relatively scarce in the future. You don’t want to use those as fuel, but as a raw material in industry, heavy mobility and power plants. Eventually, all-electric heat pumps will become the standard in residential areas where there are no heat grids, but not everywhere and all at once. That would put too much load on the electricity grid. Moreover, hybrid heat pumps – and thus the gas grid – will still be needed in places where full electrification is not an option, such as historic city centres.”

“That is why we are now focusing on building as many new heat grids as possible,” Michel explains. “They do not burden the grid and use renewable sources, not gas. Moreover, they are collective and relatively cheap in the longer term.”

The new energy system is more decentralised

Koen: “The energy transition requires the help of municipalities and provinces. Because it’s such a massive renovation, it also more often involves a local effort. I requires arranging more at the regional level because the new energy system is more decentralised. Space and permits for works need to be arranged at the municipal level. For that reason, it’s great that, thanks to the State having become a shareholder, we are now once again in talks with provinces (Utrecht and Zeeland) and municipalities in our service area that aren’t shareholders yet to also buy a stake.”

Michel: “We also prefer to see close links, including in terms of finances, between local communities and the grid manager. This makes cooperation easier. We see this as an important precondition for accelerating the energy transition. That’s why it’s so important for municipalities and provinces that aren’t shareholders yet to also join.”

Koen: “That commitment, including financially, means you literally sit down at the table together.”

Michel: “Exactly. The commitment will hopefully also ensure that permitting procedures are fast-tracked. That’s going to help the energy transition.”