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Record expansion of electricity grid insufficient to meet growing demand

7 Mar 2024

Enexis installed approximately 1,350 kilometers of electricity cables last year and built more new stations than ever before. A record capacity of 2,180 megawatts was added: 1,258 megawatts through expansion and 922 megawatts through regular replacement. Enexis spent €1.214 billion on its grid in 2023, an increase of 18%. This growth was partly due to the increasing number of technicians choosing a career at Enexis, with 370 (FTE) technical employees starting last year. The grid operator announced this during the publication of its 2023 annual report. Rutger van der Leeuw, CEO of Enexis Groep, stated, "Last year, our employees worked very hard to achieve the necessary acceleration. In the coming three years, Enexis is investing 3 billion euros in the expansion of its grids and about 1.5 billion euros in maintenance and management of the existing infrastructure. We plan to expand all 125 existing high-voltage stations and build over 40 new ones in the coming years. Despite significant efforts, the gap between what is needed and what we are able to build additionally, became bigger in the past year.”

In 2023, Enexis was again confronted with an enormous growth in both the demand for electricity and the supply of wind and solar energy. Consequently, waiting times for new customers or customers who wish to upgrade their connections have increased further. “As result, we had to inform large business customers that, in some cases, it could possibly take five to ten years before we can provide a new or upgraded connection. This is a very unwelcome message that we would rather not deliver. It means that these entrepreneurs will have to postpone their plans or look for other solutions”, said Van der Leeuw.

Collaboration with customers

In our encounters with customers, we see that they are becoming  increasingly aware that electricity grid congestion is a new reality in the energy transition. Moreover, large business customers are feeling the need to work together with grid operators to make optimal choices as the consequences of the lack of grid capacity are far-reaching for them. “Research indicates that many companies do not fully comprehend the impact of the congested electricity grid on their business operations,” Van der Leeuw states: “As a result, these companies are suddenly confronted with long waiting times when they actually submit a connection request.” Enexis provides detailed information to businesses about regional waiting times via waiting list maps, showing how many large business customers per station are on the waiting list and how much capacity they have requested. Van der Leeuw: “With this information, businesses are increasingly realising that they have to look at their energy requirement in a different way. In addition, businesses are thus better able to foresee how grid congestion will impact their business activities.”

The electricity grid is not full all the time. This is mainly the case during peak hours, there are also times at which the demand for grid capacity is lower. Businesses can possibly still make use of the grid via flex contracts. Enexis notes a slow increase in interest for flex contracts, also among existing customers. Currently, a few companies are willing to shift their production processes to the night, share electricity with a neighbouring company or install batteries to make their business case possible. Van der Leeuw adds: “We are also learning more about this every day and are developing new types of contracts to give customers a perspective for solutions.”

Reliability of the electricity grid remains high

In the meantime, Enexis is connecting as many customers as possible and by doing so it is increasingly pushing the electricity grid to its limits. More and more often, consumers are also being confronted with the consequences of the full energy grid. For instance, they can encounter the inconvenience of outages of inverters of solar panels. Interruptions can also occur more frequently and last longer. The number of minutes that an average customer did not have any electricity rose in 2023 to 20 minutes. This is an increase of 6 minutes compared to a year earlier. Despite this increase, the electricity grid, with a reliability of supply of 99.996, remains one of the most reliable electricity grids in the world.

Strong financial position

The unprecedented task of preparing the energy grid for the future leads to enormous investments. Due to a further increase in investments, the regional grid operator generated a negative cash flow from operational activities and investments for the energy transition amounting to €516 million in 2023. This trend is expected to continue in the coming years. This negative cash flow was partly financed by the proceeds of the sale of Fudura in 2022, which shareholders largely reinvested in the company.

Unfortunately, the rising costs of the energy transition are also being felt by Enexis's customers. For instance, households were faced with a tariff increase of about 10 euros a month for their combined electricity and gas bill in 2023. The company's net profit fell to €72 million in 2023. Compared to 2022, this represents a profit decrease of € 115 million (excluding the proceeds of the sale of Fudura). This decrease is mainly attributable to higher purchasing costs for transport and distribution losses and higher operational costs.

Enexis was able to maintain its strong financial position. This is also confirmed by S&P Global Ratings with a credit rating of AA- (stable outlook) and by Moody’s with a credit rating of Aa3 (stable outlook).