02 Our story in 2021

At the time of publication of this annual report, events surrounding the Russian invasion of Ukraine are following one another in rapid succession. Gasunie sympathizes with the population that is now suffering under the violence of war. It is clear that this war also has consequences for the European energy markets in which Gasunie and its subsidiaries are active. It is not yet possible in this report to make statements about the implications of these developments. We refer our readers to note 36 in the annual accounts, 'Events after the balance sheet date'.
 

A year ago, our annual report was dominated by Vision 2030, our ideal situation for the energy supply in 2030, coupled with our actions to make this a reality. At the beginning of 2021, most of the plans were still mainly only on paper within the walls of our company. Now, at the start of 2022, we can state with certainty that the first investment projects will actually be implemented. WarmtelinQ (residual heat) is coming, and we are about to decide on Porthos (carbon transport and storage) and HyTransport (regional hydrogen infrastructure in Rotterdam). In addition, we have been asked by the Dutch government to start the construction of the national hydrogen backbone.

Gasunie has established that the technical capabilities and the capital required for the energy transition are largely available in society. Moreover, not only are we seeing an increase in the social and political will for this transition, the intrinsic motivation of consumers and companies is also increasing. Now’s the time to take concrete steps and really get the ball rolling. The lead time for a new electricity connection or gas or heat supply pipeline is long: new technology has to be tested and permit processes take a long time, as do the consultations and dialogues between all project parties. As a society, we can no longer afford such long lead times for realising sustainable energy infrastructure if we are to achieve the climate goals set for 2030. And those goals are not even at the halfway point compared to the full ambition for 2050. So it’s all hands on deck.

A broad, future-oriented integrated approach to the energy system is extremely important. The energy mix of the future is one that combines a wide range of modalities, many more than those presently arranged in our energy supply system. With space both onshore and offshore for the generation of sustainable electricity, the infrastructure for import, with storage facilities, national and international transport capabilities, and the required knowledge and skills, the Netherlands and northern Germany are in an excellent position to achieve the national and European climate goals.

To show what the result of such an integrated approach could be, in the Netherlands national and regional transmission system operators use the 2030-2050 Comprehensive Infrastructure Survey (II3050), a rigorously developed scenario description that outlines the options and the associated implications and which can be used as a basis for decision-making. Looking ahead and building ahead of demand is crucial for us as network operators: sustainable energy will not automatically get from producer to consumer without the required new infrastructure first having been built. The same applies to the storage of captured CO₂.

There is more good news: costs associated with many new technologies is falling faster than expected, meaning more is now possible than we expected a few years back. In combination with the availability of financial resources, this creates enormous opportunities. The question is, based on the knowledge and resources currently available and the technology that is around the corner, are individuals, companies and government bodies willing to take the leap over the initial steps we have taken and make a really radical choice for the energy transition? We certainly hope so!

Paradoxically enough, a radical yet inevitable choice for a carbon-neutral energy supply also means recognising as a society that we will still need natural gas until roughly the middle of this century. When the sun doesn’t shine and the wind doesn’t blow, natural gas-fired power stations will fill the electricity gap – until the time when sustainable energy carriers such as hydrogen and green gas take over this role. If we tear down the old energy system faster than we build the new one, we are in for new periods of scarcity. Accordingly, at Gasunie we keep a sharp focus on carrying out our core task: ensuring the accessible and efficient transmission and storage of natural gas, while also doing everything we can to facilitate the closure of the Groningen field, something society would very much like to see happen.

To realise our strategy, it is essential that our organisation continuously develops and improves. We see the energy transition as a contest we have to win for the sake of the generations to come. And that’s a game that requires the best teams, including those from Gasunie. In order to achieve our energy transition goals on time, we started scaling up our workforce in 2021, a major challenge given that in many domains we are faced with a shortage on the labour market. 

The rapidly changing environment demands flexibility and perseverance from our partners and from our people. We would therefore like to thank our stakeholders for their efforts over the past year, especially our own people – the people ensuring the safe and efficient transmission and storage of natural gas every day, the people building a new, robust and sustainable energy system.

Adjusted for the effect of a previously recognised impairment, our operating result decreased by € 144 million in 2021 compared to 2020. Although revenue this year was higher than last, the effect of higher energy prices due to the economic and geopolitical turbulence was many times greater. Furthermore, we have become more active in the energy transition, and this involves incurring costs in preparation. These activities will help us make significant progress in the realisation of our strategy in the coming years. We believe we are ready. Let’s accelerate our pace as we head towards 2030!

Han Fennema, Janneke Hermes, Bart Jan Hoevers and Ulco Vermeulen

In order to make the value we create as a company visible, we report our financial and non-financial results. The illustrations below show our potential impact on the energy transition and the progress we have made in realising the part of the transition for which we are responsible. We contribute to emission reduction by building, among other things, hydrogen and heat transport infrastructure and by transporting fossil-free energy. By reusing existing assets, we are helping to keep the energy supply affordable.
 

Our influence on achieving the Dutch climate targets*

Progress of our Vision 2030 projects**

Our financial results are as follows:

Revenue was € 14 million higher than in the same period last year. This increase is the result of higher tariffs resulting from the regulation methodology on the one hand and higher BBL capacity sales on the other. Revenue from regulated activities in the Netherlands was around € 20 million higher than in 2020. Due to changing gas flows, revenue from regulated activities in Germany was more than € 10 million lower than in 2020. This lost income will be recouped in the coming years. Revenue from non-regulated or exempted activities totalled nearly € 170 million and was more than € 15 million higher than last year. 

The method of regulation in both the Netherlands and Germany includes various regular post-calculations. Where the actual revenues deviate from the permitted revenues, the difference is settled in the tariffs for subsequent years. A post-calculation mechanism also applies to part of the energy costs for gas transmission. For the effects of this mechanism, please refer to the Regulatory settlements section.

The operating result decreased by € 444 million compared to last year. Firstly, this is the result of the reversal of a previously recognised impairment of € 300 million in 2020. Adjusted for this effect, the operating result comes out at € 144 million lower than in 2020. The increased depreciation costs of € 21 million compared to 2020 can also be largely attributed to this reversal.

Operating expenses were up € 15 million on last year, mainly due to the energy transition activities being scaled up further, which resulted in a stark increase in the number of employees on the payroll as well as in the number of agency and temporary workers we engage.

Energy costs of gas transport were up € 110 million on last year. about 80% of which can be explained by higher energy rates in the second half of 2021 in particular. In addition, an increase in the use of the installations brought with it higher energy usage. The higher energy costs in 2021 will largely be recalculated by the regulatory authority, with the effect that in the coming years Gasunie will recoup these higher costs as higher revenue.

The result after taxation decreased by € 289 million compared to last year. Adjusted for the effect of the reversal of the previously recognised impairment, the result after taxation was € 64 million lower.

In 2021, two bond loans were refinanced at a lower interest rate. Partly as a result of this, the balance of financial income and expenses is € 11 million lower than in 2020. The result from participating interests was comparable to last year.

The tax expense decreased by € 144 million compared to 2020. The taxable result was lower in 2021. Furthermore, the tax expense was substantially affected by the adjustments to corporate income tax rates in the Netherlands in both 2020 and 2021.

The total investment value in the EUGAL pipeline project is approximately € 400 million for Gasunie Deutschland, € 380 million of which was realised as of year-end 2021. The expected total investments for the nitrogen plant in Zuidbroek are approximately € 500 million, € 415 million of which was realised as of year-end 2021. 

Investments relating to renewable energy totalled approximately € 50 million in 2021 and included investments in WarmtelinQ (heat grid in the province of Zuid-Holland), Porthos (CCS) and SKW (green gas). 

We expect the operating result to drop over the coming years compared to 2021, mainly due to declining regulated revenue and a further increase in energy transition activities. In addition, we expect higher energy prices to have an effect in 2022.

Over the upcoming years, we foresee an investment level of at least € 200 million and up to € 300 million a year. Once we have made investment decisions for our Vision 2030 ambitions, the investment level could possibly rise to between € 600 million and € 700 million per year in the coming years. The investment level in 2020 was approximately € 350 million. 

The regulatory methods may lead to settlements in years to come. Current IFRS accounting rules do not allow regulatory settlements to be recognised on the balance sheet as a receivable or debt. Consequently, under IFRS, we do not recognise regulatory settlements in the year in which they arise, but in the year in which the settlements take place in the tariffs. This causes timing differences between IFRS and the regulatory revenue model, which can result in periodic impairment.

In recent years, network operators in Germany have already been receiving an investment allowance during the construction phase of an expansion investment; this investment allowance needed to be repaid over a period of twenty years once the asset was put into operation. The regulations concerning this allowance were amended in 2021, as a result of which the repayment obligation has also lapsed.

In the tables below, revenues are shown corrected for regulatory settlements resulting from differences between the permitted and actual revenues and energy costs (ENF). Previous special settlements, such as settlements resulting from appeal procedures, have not been taken into account in the tables below.

The normalised EBITDA corrected for the aforementioned regulatory settlements (the underlying result) was € 813 million in 2021 (€ 840 million in 2020).

The tariffs for 2021 included a set-off of € 53 million from previous years, consisting of a positive settlement of € 26 million for Gasunie Transport Services and a positive settlement of € 27 million for Gasunie Deutschland.

Both the revenue realised and energy costs incurred in 2021 deviate from the standard set by the regulators in the Netherlands and Germany. This difference amounts to € 103 million on balance for Gasunie Transport Services and € 1 million on balance for Gasunie Deutschland. These amounts will be set off in the tariffs in subsequent years.

The tables below show the movements in the regulatory receivables and debts to be settled which, on the basis of IFRS policies, have not been included on the balance sheet. The special settlements have also not been taken into account in the tables below. 

A regulatory settlement for a sum of € 119 million had to be made at year-end 2021. This sum consists of an estimated € 138 million to be received for Gasunie Transport Services and an estimated amount repayable by Gasunie Deutschland of € 20 million. The final amounts will ultimately be set by the regulatory authorities. In the table below, this amount is broken down according to the periods in which the amounts will be settled in the tariffs and recognised in the financial statements on the basis of IFRS policies. 

In 2009, Gasunie entered into a ‘compliance covenant’ with the Dutch tax authorities to lay down mutual agreements. In line with this covenant, an internal Tax Control Framework (TCF) was set up, on the basis of which the tax policy, tax processes and control measures were drawn up and implemented. The tax policy aims to ensure that we pay any taxes due in a timely manner and in accordance with tax laws and regulations in those countries where we operate. 

The table below shows how much we paid in taxes or received as a rebate for the main types of taxes.