Focusing on impact
Value creation model Eneco Group
Trends and market developments
Transformation of the energy sector
Our energy system is in transformation. The speed of the transformation is mainly being determined by technological developments. Value chains are innovating and integrating; technical companies are entering the field of mobility and energy, and start-ups are at the crossroads of traditionally different industries.
Our efforts are aimed at limiting global warming to well under two degrees Celsius and continuing to focus on increasing the sustainability of our energy.
The energy transition is driven by decarbonisation, decentralisation, democratisation and digitalisation.
More sustainably produced electricity will be entering the grid. New wind farms can be developed at much lower cost, driven by technological developments and economies of scale, in accordance with the requirements of international tenders. As a result of the increase in solar and wind energy, the market price of electricity is also decreasing. Consequently, these prices are influenced less and less by conventional power plants. Prices on wholesale markets are becoming more volatile due to large fluctuations in the demand and, above all, in the supply of energy, which is more dependent on weather conditions.
There is a lack of clarity about the future grid capacity in various countries where we are active, including Belgium and the United Kingdom. It appears that Germany will not achieve the CO2 reduction objectives and, depending on the future of the coal-fired power plants in Germany, the current overcapacity is also possibly under pressure. In addition, phasing out natural gas for household use has considerable consequences for the gas, electricity and heating grids and the heating systems in homes in the Netherlands.
Rotterdam to become natural gas free
Rotterdam is working hard on an affordable, reliable and natural gas free heated city in 2050. All homes will then be well insulated, cooking will be electric and heating of buildings will take place with electricity or by means of collective heating. Eneco is working together with Havensteder, Nuon, Warmtebedrijf Rotterdam, Stedin, Vestia, Woonbron, Woonstad Rotterdam, Ressort Wonen, the Municipality of Rotterdam and the Ministry of Economic Affairs to achieve this joint final goal.
We are going from a centralised model to a decentralised model. The electricity system is transforming into a more distributed, customer-oriented and service-oriented industry driven by in-depth knowledge of customers.
Owners of solar panels or electric cars are combining their power on a decentralised level resulting in the establishment of virtual power plants that will start to play an increasingly larger role. The revenue potential in the energy market is thus shifting to ‘behind the meter’.
The demand for centrally supplied energy in European households is decreasing. The most important reasons for this are improved energy efficiency, insulation and self-generation, for example via solar panels. With the growth of solar energy, storage and electric mobility, consumers are also becoming active on the other side: they are becoming producers.
People are looking for added value, personal connection and products and services that match their life style and enable a sustainable way of living. People organise this themselves together with others in energy cooperatives and new parties are entering the market that are specialised in a specific segment of the sustainable energy chain, such as storage or charging infrastructure. Companies are increasingly concluding long-term contracts for sustainable electricity from verifiable sustainable sources such as onshore and offshore wind farms, or develop these farms themselves.
The demand for services for (real-time) energy management, decentralised energy solutions and electric transport is rising. Digitalisation enables us to give customers more insight into and control over their energy consumption. In addition, smaller parties such as start-ups can obtain access more easily as the costs for customer systems (for example cloud solutions for maintaining customer relationships) have decreased. However, successfully linking start-ups to companies requires an effective decision-making process with in-depth knowledge of new fields.
New technological developments take place in different industries. As a result, we also see new parties from outside the sector entering the energy world. On the one hand, this concerns technology giants such as Amazon, Google and Apple that are introducing new services in domains that energy suppliers are still just discovering (such as smart home). We also see new entrants from the automotive industry (such as Tesla and BMW) and the energy and telecom markets are also coming closer together (such as NLE and Synnion).
Changes in laws and regulations
The energy market remains strictly regulated. The regulatory framework is being adjusted to accommodate trends such as digitalisation, data, decentralisation and the inflow of renewable energy sources. The support of new adjustable capacity differs per country: there is no support yet in the Netherlands, whereas in, for example, the United Kingdom auctions are organised with specific incentives for new capacity. The same applies with regard to nationally oriented pricing of CO2 emissions. This can lead to an increasingly uneven international playing field on the wholesale electricity market.
Climate policy is playing an increasingly larger role, as is apparent from the coalition agreement of the third Rutte cabinet in the Netherlands. Climate policy is also an important issue for politicians in Germany and Belgium. In Germany, the climate is an important item in the negotiations for the new coalition. More clearly defined objectives, both on an international and a national level, stimulate the development of new technologies and the phasing out of natural gas offers opportunities for the growth of sustainable heating.
The realisation of global and national objectives takes place at a local level. Municipalities have their own sustainability objectives and thus play an important role in increasing the sustainability of the local energy system. In view of the developments in technology and the regulatory framework, local decisions regarding the energy supply (for example, for heating) and the necessary investments in the grid are becoming increasingly important.
Stakeholders and materiality
What do our stakeholders consider relevant?
Our group of stakeholders comprises customers (both retail and commercial), shareholders, providers of capital and investors, local residents and cooperatives, employees and the Works Council, as well as nature and environmental organisations.
Above all our stakeholders are people. People with whom we aim to realise our mission together. People who all have their own motives and interests.
In our contacts with stakeholders, we regularly assess whether we are serving the interests of our stakeholders sufficiently and are delivering on our promises. Certainly in the current phase, in which the market is in transformation, the support and trust of our stakeholders is indispensable.
In 2017, we conducted a survey again to find out what our stakeholders consider relevant. We call this the materiality analysis. We have aligned our strategic key performance indicators (KPIs) with five material themes. Based on consultations with our stakeholders, we have determined that these five themes are relevant for them. Various underlying topics are relevant for our stakeholders. An overview of these topics is provided in the table below.
Reference is made to the annex for a detailed overview of the consultations, discussion points and outcomes.
Topics that stakeholders consider important
per material theme
Living within the limits of the planet
Customers participate in the energy transition
Relevant for the customer
A healthy financial return
Vision, mission and strategy
Our aim is to get the energy requirement in our chain within the limits of a liveable planet. Not only for ourselves, but also for generations to come.
to make the lives of as many people as possible more sustainable.
We only have one planet. At present, worldwide, we consume 1.6 times as much as our planet can support. More and more people are becoming concerned about our planet. They are becoming increasingly aware of how we live, what we eat and how we impact the planet. Worldwide, we are being confronted with climate change and the increasing scarcity of natural resources. People want to do something and contribute to keeping our planet liveable. We are convinced that everyone can take energy and sustainability into their own hands. Therefore, also the energy transition and the speed at which this takes place.
Sustainable decentralised together
We are not the only party that has opted for sustainability. Our vision - the vantage point from which we look at the world - enables us to distinguish ourselves from other companies. The energy transition is the transition from a centrally-organised energy system to a system in which people organise their energy sustainably themselves or together with others. On a street or district level, for example, together with the neighbours.
The energy transition is no longer the future, we are right in the middle of it. More and more people are embracing sustainability; with electric transport, self-generation, energy savings and storage. The survey PanelWizard 2015, commissioned by Eneco, shows that one out of five households expects to be self-supporting in ten years. They do not have to do this on their own. We help them with innovative energy solutions, with new products and services, innovations and new revenue models. This is why we have defined our mission more clearly. From ‘Sustainable energy for everyone’ to: ‘Everyone's sustainable energy’.
Everyone's sustainable energy
The energy transition is not only about technology, it is about people and the choices that they make with the aid of technology. If we look at the customer as a person, then we obtain insight into what drives customers. And that is necessary in our role as service provider, with customers - or rather, people - being in charge. Energy is not ‘ours’, ‘for the customer’, it is ‘the customer's’ also made possibly 'by us’. This means that we will focus even more on the development of products and services with which consumers and businesses can generate, store, use and share their own energy. It is up to us to fulfil the connecting function. We have to go further away from the beaten path and innovate even faster.
We implement our mission through our strategy. Increasingly, we help customers who wish to produce and consume energy. We provide tailor-made service with the integration of smart solutions in households and business.
Until recently, our existing system was still completely focused on supplying energy before the meter. We hardly knew anything about the area behind the meter. And that is starting to change radically. The main part of the energy revolution will take place ‘behind the meter'.
Growth domains and strategic pillars.
We are realising our ambition within our growth domains: Customers, Renewable energy sources and Innovative services. The areas in which we want to grow more rapidly in the period to 2020 and with which we help people, businesses and society in the energy transition. Within these domains, growth is based on the strategic pillars 'energy as a service', 'client sources' and 'smart sustainable solutions'.
We are growing in these domains by making use of our strength; we are making use of our diversity and knowledge of the market and we are working together with partners to accelerate the energy transition. Our customers’ needs determine the demand for (sustainable) energy: a comfortable climate within the house, predictable energy costs and a safe installation. Energy is developing into a service product. We are switching form delivering electricity, gas and heat to offering services. Customers pay us for the quality, convenience and comfort of the services that we provide. We offer our customers the comfort, convenience and the complete experience that they are looking for based on their personal wishes. In this manner, we are making progress together in the transformation. We call this energy as a service.
In order to maintain comfort and create awareness of energy, we are working on smart sustainable solutions. We offer smart and integrated services based on the newest technologies and data-driven platforms. And we bring supply and demand closer together on a local level. We do this ourselves or together with partners that offer technologies that are suited to our services.
The growth in renewable sources is achieved by focusing on client sources. By partnering with our customers and by directly linking renewable generation to the customer's energy demand, we realise more sustainable production (electricity and heating) with the same resources, contribute to the local embedding and acceptance of sustainable projects, increase the confidence in our investments and share the risk with other parties.
‘With our 6% sustainable energy, we are far behind in the Netherlands.’
Director of Urgenda
Eneco is a Dutch energy company. We are proud of this, but we do not stop at the border. In order to realise our ambition, we are active in the Netherlands, Belgium, Germany, the United Kingdom and France.sPrevious paragraph:
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