Government reserves €500 million for strengthening Stedin Group’s equity 

Today, Budget Day (Prinsjesdag), the Dutch government has announced that it reserves €500 million for strengthening Stedin Group’s equity. This is an important step that will allow Stedin, for the time being, to continue investing in future-proof infrastructure and making a positive contribution to the economy and employment in the grid operator’s area of operations. 

Stedin’s CEO Koen Bogers: “This is a significant step in the energy transition in our service area. Due to the investments required to expand the capacity of the electricity grid, Stedin needs more equity in the near-term. This strengthening of our equity will allow us to make these necessary investments while our financing costs will remain limited. The Supervisory Board, the Board of Management and the Shareholders’ Committee appreciate this step and the speed with which it has been brought about. In the upcoming period, the exact details of the capital reinforcement will be discussed.” 

Energy crisis demands acceleration 

The Netherlands is implementing the Climate Agreement, facilitating economic development and connecting new homes to the grid. It is a matter of great urgency to achieve these objectives; all the more so since we in the Netherlands are experiencing an energy crisis that demands acceleration of the energy transition. Economic developments, digitalisation and the consequential increasing demand for capacity in the electricity grid are proceeding quickly. The grid has reached full capacity in more and more locations and it is temporarily not possible to connect businesses and new housing estates. 

Stedin has a capital requirement of €1.8 billion

To expand and create the necessary capacity in the grid, Stedin will have to invest €8 billion up to 2030. Further ambitions such as FIT 55, RepowerEurope and compensation for congestion management will increase this amount. Stedin expects that it will have to connect some 251,000 new homes (roughly the equivalent of a city the size of The Hague), 350,000 additional EV (?) charging points and over 5 gigawatts of sustainable power generated by wind turbines and solar panels in the period to 2030. A large proportion of the main distribution stations will will get a capacity upgrade and thousands of new substations will be required in urban areas. In the next few years, Stedin will need €1.8 billion in additional equity to achieve these social targets. 

Challenge requires collective action

In the past, the existing municipal shareholders have made a capital contribution. They cannot, however, meet the total requirement alone and a contribution from others, including the government, is required. Stedin of course recognises that it has to continue to critically review its own costs and work as efficiently as possible. In addition Stedin and the Shareholders’ Committee are in negotiation with the municipalities and provinces to examine how they can contribute as current or new shareholders. Also a call is made to revise the regulatory model, which determines permissible income.

Stedin's CFO Danny Benima: “The strengthening of Stedin’s capital by the government will help in the short-term, but it does not fully meet the capital requirement. We are continuing to work on reducing our own costs but we also invite local authorities to participate in Stedin Group. Only together can we ensure that there is sufficient capital to continue investing in the energy transition and housebuilding in the Netherlands. It is important that all parties involved work together practically and financially on this major social challenge.”