Press release

Stedin Group ends 'coronavirus year' 2020 in solid fashion

Rotterdam, 18 February 2021 – 2020 was a year of many contrasts for Stedin Group. The coronavirus pandemic, the acceleration in the energy transition and the discussions with stakeholders on the long-term financing of the grid operator combined to make 2020 an extraordinary year. In spite of these challenges, Stedin Group finished the year with a solid operating profit of €129 million. This compares with €172 million in 2019. The profit after income tax was €42 million (2019: €74 million, excluding the sale of Joulz Diensten).

COVID-19 had various one-off impacts on the operating profit. The number of orders and the energy consumption of business customers both decreased. By contrast, the low price of electricity led to lower energy costs for network losses. Due to the COVID-19 crisis, Stedin Group invested slightly less in 2020, at €620 million, than in 2019, when €646 million was invested. Unfamiliarity with the virus in the first part of the year resulted in the temporary suspension of various non-vital activities, such as smart meter installation, during the first lockdown. Compared with 2019, the revenue from regulated activities of €1.2 billion was stable.

Longer-term financing

Faced with all the investments in the energy grid and the energy transition, Stedin Group announced in 2020 that it will need an additional €750 million to €1 billion in equity over the coming years. Intensive discussions were held with shareholders on how this can be achieved. In addition, Stedin Group is in dialogue with the regulator, the Netherlands Authority for Consumers and Markets, to consider how the regulatory model that determines the earning capacity of grid managers might be better aligned to the challenges of the energy transition.

‘For several years, the energy transition has required a considerable step up in investment in order to expand and modernise the energy grid. This trend is set to continue.’ says CFO Danny Benima. ‘As a result of those extra investments, our cash flow has been negative for some years now. To ensure that the energy transition remains affordable for everyone, it is important that we continue to innovate, maintain our efficiency programme and strengthen our equity capital base. This is an issue that needs to be addressed at the national level and with all stakeholders. For this reason, we are in discussions with the central government, regulators, current shareholders and potential new shareholders.’

Supporting the energy transition in the built environment

The employees of Stedin Group are working every day to facilitate the energy transition, so that our customers have a supply of energy in order to live, work and do business. Various figures show that this energy transition is continuing unabated. For example, the number of electric charging connections for low-volume users rose to 1,912 (a growth of 55% compared with 2019), and the capacity of solar panels increased by 48% (2019 growth: 53%). Furthermore, more and more new homes are built to high insulation standards and without a connection to the natural gas grid. Their number grew in 2020 to include 92% of all newly built homes in Stedin's service area. Gas-free houses are essential, as the Climate Agreement includes a commitment to eliminate CO2 emissions from heating domestic and other buildings by 2050.

Stedin Group supports the local authorities in its service area with knowledge and experience. This is why Stedin Group has published various papers on the heat transition and the use of sustainable gases, such as hydrogen. In addition, Stedin modified an existing natural gas grid for a housing block in Uithoorn to make it completely suitable for transporting hydrogen – the first time this has been done successfully in the Netherlands. Although it is unclear to what extent hydrogen will play a role in the built environment, Stedin Group wants to gain experience with it and understand its potential.

Capacity of electricity grid

In 2020, Stedin Group underlined its continued commitment to guaranteeing sufficient grid capacity and high voltage quality. A large package of grid expansions and modernisation was announced in the 2020-2022 investment plan, which was published last autumn. In Zuidplaspolder in the province of Zuid-Holland, for example, Tennet, Liander and Stedin jointly announced plans for the construction of a new transformer station. This is expected to be commissioned in 2024. Stedin is working together with market parties to avoid overburdening the grid. For example, market gardeners in the region responded by agreeing to do so by turning off their lighting or turning on their heating system (CHP) at set times. This is the first time that Stedin has applied this innovative form of flexibility in relation to the electricity grid.

Regional energy strategy system efficiency

Stedin and Enduris are actively involved in preparing the draft regional energy strategies (RES), which were delivered in 2020. Stedin and Enduris calculate the impact on the grids of each draft. They analyse how the scarce space available is used, as well as how efficiently the electricity grid is put to use. Where large amounts of energy are sustainably generated far from the current grid, many extra cables and distribution substations are needed to facilitate connection. This makes the energy transition more expensive. The RES is intended to strike an optimum balance in terms of support amongst stakeholders, use of the available space and efficiency of the electricity grid to ensure the energy transition remains affordable.

Read our annual report at: https://jaarverslag.stedingroep.nl/ or an English extract.   

The full English translation of our Annual Report 2020 is expected to be published on 15 March 2021, and will be posted on our website.