Given the regulated status of the majority of Alliander’s operations, the existing regulatory system and the changes in tariffs in 2017, Alliander expects to report a higher operating profit than in 2016 (barring unforeseen circumstances and incidental occurrences).
The gross capital expenditure on the networks, relating mainly to replacement investments and expansion, but also on investments relating to the energy transition and ICT, is expected to total more than €750 million. The level of our long-term investment programme will be dictated in part by the extent to which decentralised generation and feed-in to the power grid expands.
The mass rollout of smart meters begun in 2015 will be scaled up in 2017 and is expected to involve an investment in excess of €100 million this year.
Alliander’s financial policy is aimed at preserving financial strength and flexibility, as well as ensuring good access to the capital market at all times. This is achieved by maintaining as a minimum a solid A rating on a stand-alone basis and by ensuring we have a steady repayment schedule and a balanced investment plan, keep operating costs under control, have at our disposal committed lines of credit and hold sufficient reserves of cash, among other things.
Importance of sustainability to future financing
In recent years there has been a dramatic shift in the flows of funds provided by the capital markets. Major investors have let it be known that they intend to invest a proportion of their overall investment portfolio in sustainable assets. The market for Green Bonds has seen robust growth. When it comes to financing, a company’s sustainability performance is becoming ever more important and investors are increasingly applying sustainability criteria in their selection of assets. In April 2016, Alliander, too, issued a Green Bond loan, for a total of €300 million. As a consequence, in any assessment of Alliander by the capital market, the company’s CSR credentials carry growing weight alongside its financial performance.
Increasingly, therefore, our financial performance has to be judged in conjunction with the way we discharge our public responsibility. We began making an impact assessment of Alliander in 2015, quantifying the effect of our actions on the world at large in economic, social and ecological terms. In 2016 we made further progress in the development of this social impact measurement process. The section headed ‘Our impact’ looks at the methodology and results connected with our social impact in specific detail.
Alliander will be seeking further improvement in its sustainability performance in the years ahead, with the goal of becoming a climate-neutral company by 2023. In 2017 we expect to meet 30% of our grid losses with energy from renewable sources. And at the start of 2017 we move into our totally renovated head office. The improvements to this building go a long way to achieving sustainability, with a reduction in energy consumption of 80%. In addition, we are continuing to make our assets more energy-efficient. Details of our various plans and goals can be found in the Alliander Annual Plan 2017 on the website www.alliander.com.