Going forward: what you can expect from us
Given the regulated nature of the majority of Alliander's business activities, the current regulation method and the development of tariffs in 2016, Alliander expects, barring unforeseen and one-off events (e.g. the sale of Endinet), that the operating profit in 2016 will be lower than in 2015.
The gross investments, mainly for network replacement and expansion but also energy transition, are estimated to total about €600 million in 2016. The extent and speed at which decentralised energy generation and feed-in are adopted influences our long-term investment plans. Other capital expenditures scheduled for 2016 include the redevelopment of the head office in Arnhem and new activities.
The large-scale roll-out of smart meters that got under way in 2015 will be scaled up in 2016. The investment in this operation in 2016 is estimated at €100 million.
Alliander's financial policy is aimed at creating and preserving financial strength and flexibility and securing good access to the capital market by maintaining a solid A rating profile on a stand-alone basis and by ensuring a balanced repayment schedule and a balanced investment plan, controlling operating expenses, having access to committed credit facilities and maintaining adequate reserves of cash and cash equivalents.
Significance of sustainability for future financing
During 2015, a clear shift in cash flows became visible in the capital markets. Major investors announced their intention to invest part of their total investment portfolio more sustainably. The market for Green Bonds received a strong impulse. Sustainability results are becoming steadily more important for companies from a funding perspective. Investment selection is increasingly based on sustainability criteria. Alliander, too, is assessed by the capital markets on the basis of its financial, and CSR performance.
Our CSR and financial results must therefore increasingly be viewed as an integrated whole. In this light, Alliander initiated an impact measurement in 2015 in order to quantify the economic, social and ecological impacts of our actions on society. The first impact measurements at project level are contained in this report. In 2016, we intend to take further steps in the development of our CSR impact measurement.
In the coming years, Alliander will continue to improve its sustainability performance on the road towards being climate-neutral by 2023. In 2016, we expect to make 5% of our network losses more sustainable, with further steps in this direction expected in 2017. We are also actively seeking to make our buildings (such as our revamped head office) more sustainable and our assets more energy-efficient. One aim is to reduce the energy consumption of our substations by 30%. Our exact plans and objectives can be read in the Alliander Year Plan 2016 which is posted on www.alliander.com.
We are keen to take the lead in making our company and wider society more sustainable and to encourage other infrastructure operators to follow suit. That is why we initiated the national Green Networks coalition in 2014, which centres on collaboration and knowledge exchange. In 2016, the coalition will be given a formal administrative structure and its activities will be developed further.