Our plans for 2021
Alliander expects to improve its operating profit in 2021, barring unexpected developments. This improvement is expected as a result of the higher, regulated tariffs set for 2021, partly because these increased tariffs will compensate the increases imposed by TenneT. The tariffs charged by TenneT are set to rise further in 2021 and this will also affect Alliander’s cost base. This profit forecast assumes that the impact of COVID-19 on our profit in 2021 will be of the same magnitude as in 2020.
The energy transition is accelerating and the demand for solar farms, wind turbines, heat pumps and charging stations is increasing sharply. Alliander’s work package is continuing to increase dramatically, in particular because both homes and businesses are increasingly using more electricity or want to feed their own sustainable electricity back to the grid. We anticipate that the gross investments for, mainly, replacing and expanding the networks, as well as those relating to the energy transition and to IT, will total nearly €1 billion in 2021. These investments are necessary to ensure a sustainable and reliable energy supply. Due to the fast-growing demand from solar farms, data centres, and other rapidly developing energy-intensive sectors, like commercial greenhouses for example, the power grid is operating at full capacity in more and more locations. The projected investments will be made in regions experiencing a higher demand for capacity due to economic growth and the energy transition.
The high level of investment cannot be fully financed by the operating cash flows. We therefore anticipate a negative free cash flow in 2021. This, in combination with the dividend that will be paid in 2021 on the profit in 2020, will, as it did in 2020, result in a financing need on the part of Alliander.