Progress

Relevant for customers

Connection with customers

The trust of our customers forms our basis. This is why we provide energy that is reliable and affordable as well as sustainable. We offer high-quality products and services, and fast and excellent support, all designed to meet the actual needs of our customers. Because they are the determining factor. We assess the changing needs of our customers and develop innovative services and products to support them in making their energy supply sustainable.

Marginal decrease in the number of contracts

In view of our changing role from energy supplier to an energy partner with a wider range of products and services, as of now, Eneco reports the number of supply contracts instead of the number of customers. There was a marginal decrease in the number of contracts with customers in 2015 to 4.4 million. There was also a slight drop in the number of customers, but our customers increasingly purchase additional products and services from Eneco, such as a Toon thermostat or a service contract for their central heating system or their solar panels.

Toon is popular

The number of households that have opted for Toon already amounts to 225,000. We know that this is a loyal group. While consumers switch to another energy supplier more and more frequently, customers stay with Eneco for a longer period of time. One of the reasons for this is Toon.
In order to also enable households that do not have an energy contract with Eneco to benefit from the advantages that Toon has to offer, this smart thermostat can also be purchased via other sales channels, such as the web shop Coolblue. We aim to reach an increasingly wider target group in the coming years with our new services.

More services for the business market

In 2015, the focus in the business market has been on defining and expanding our role as service provider. This was achieved by strengthening ties with existing partners, such as railway company NS, and by creating new partnerships with, for example, a number of water boards. Using the Building Manager (Gebouwenmanager) developed by Eneco, we also helped customers to increase the sustainability of their buildings. The Building Manager provides information to customers about the energy consumption, level of comfort provided and performance of the installations in buildings. Another service that we introduced in 2015 was Eneco KeepGrowing (Eneco GroeiDoorTM ), in which providing services to customers is the focal point and energy is provided at cost price.

Eneco Electric Charging (Elektrisch Laden) enables customers to make their sustainable business operations visible. Via the lease company, we provide a charging station that is installed at the customer's house and a charging card. The electricity provided is 100% HollandseWind. At present, 6,000 customers have been provided with a charging station and/or charging card. The Electric Charging service showed 280% growth in 2015 and we are currently the fifth largest player on the market. This growth has been achieved mainly through collaboration with parties such as Mercedes, Nationale Nederlanden, PON (VW/AUDI), ING and Alphabet. Our customers covered a distance of 17.8 electric kilometres in 2015, which is the equivalent of going around the world 445 times.

A designated contact person has been assigned to each of our small and medium-sized business customers. This person is familiar with the sector and the issues faced by the business owner. In addition, we have expanded our opening hours for the small and medium-sized enterprise sector. On weekdays, customers can now reach us until 9 p.m. for answers to all their energy and sustainability questions.

AgroEnergy

A low churn rate and the acquisition of a number of large new customers resulted in a slight increase in contracted volume and market share in the greenhouse horticulture sector. In 2015, AgroEnergy introduced products for the supply of heating and CO2 in the market. As of January 2016, the first users will be horticulture customers of Eneco Heating & Cooling with a connection to the RoCa energy plant. Customers in other heating clusters will follow during the course of the year. The number of customers of the service product BiedOptimaal doubled to 65 in 2015. Another product introduced by AgroEnergy in 2015 was the EnergieRadar, which helps customers to determine their energy strategy and optimise their energy cost. In collaboration with Eneco Energy Trade, AgroEnergy launched a pilot project with FlexLive; a product for electricity regulation that enables the Eneco chain to make the electric capacity of business customers in the mid-segment available to the market in a flexible manner. This service is offered not only to customers in the horticulture sector, but also to other business customers of Eneco.

Joulz works together with customers on sustainable energy supply

Joulz Energy Solutions is the leading expert in the area of complex medium and high voltage. Together with customers and partners, Joulz works towards a sustainable and affordable energy supply.

Joulz carried out projects for clients in various sectors in 2015. This included collaboration with energy producers such as Clusius, a joint venture between Eneco and Mitsubishi with which Joulz concluded a five-year contract for the management and maintenance of Luchterduinen Wind Farm. For Stedin, an important client in the grid management sector, Joulz carried out the management and maintenance of high-voltage stations and acted as system integrator for the telecommunications activities. Joulz's first strategic alliance in the energy sector was formed with national grid operator TenneT. TenneT requested Joulz to carry out a number of activities, including work on overhead cables and stations. Activities in the industry sector included the design, construction and maintenance of high-voltage stations for clients such as Total and RWG. In connection with activities in the transport sector, Joulz invested a lot of time and effort in 2015 in obtaining the required qualifications. The most important contacts in this sector were ProRail and RET. For ProRail, Joulz designed and constructed a transformer station in Zevenaar, at the terminus station of the Betuwe railway.

Joulz also measures customer satisfaction. The average score for the fourth quarter was 8.3.

Customer satisfaction at Eneco

It is very important for us to have satisfied customers, because satisfied customers are also loyal customers. This is why service improvement is a continuous process at Eneco and Stedin. In combination with more favourable market conditions, our efforts in this area have resulted in an increase in customer loyalty over the past year. Customers indicate that they attach importance to the level of service that we provide.

Higher customer satisfaction

Measures that we have taken to improve customer satisfaction, and which have proven to be effective, include:

  • A comprehensive programme designed for Customer Service employees aimed at answering the customer’s questions and resolving complaints instantly. This results in a higher NPS, both immediately following the contact between the customer and Eneco and in general.
  • The 'Day out together' in Rotterdam Zoo, which was organised for the sixth time in a row. The wonderful day at the zoo organised by Eneco was attended by 10,000 customers and their families in 2015 and a total of 60,000 customers over the past years. The NPS of customers who have attended this event is significantly higher than the scores of other customers.
  • The large-scale rollout of Toon. The number of installed Toon thermostats now stands at 225,000. Customers with a Toon thermostat are more satisfied with Eneco than other customers. Their NPS with respect to Toon is +10 and 0 with respect to Eneco (the overall NPS for Eneco is -12).
External conditions play a role

In addition to the measures described above, customer satisfaction also improved as a result of a number of external conditions. These include a general increase in consumer confidence and mild weather conditions. The latter resulted in lower annual energy bills and lower differences between prepayments and actual costs. The large-scale use of Toon also prevents surprises with respect to the annual energy bill, because the thermostat provides information on energy consumption.

What did we aim to achieve in 2015?

The Net Promoter Score is used to determine to what extent our customers would recommend Eneco to others. Eneco's NPS target for 2015 was -15.

What have we achieved?

With an improvement from -21 to -12 in 2015, our NPS result was well above target.

What actions have we taken?

Despite the improvement of customer satisfaction over the past year, the result is not yet good enough. This is why we continue to focus on improving our customer service and on providing smart energy solutions. Examples include the website mijneneco.nl, were customers can easily manage more and more of their own affairs. Together with our customers, we also try to find ways to further improve the way they experience Eneco. This includes making it easier for them when they move to a new house: they only have to inform Eneco of their new address once, after which Eneco takes care of the rest and keeps them informed of the status of the process via email.

More practical services

Eneco is changing from an energy supplier into an energy partner. In the role of partner, we not only supply electricity, gas and district heating to our customers, but we also provide services that make their lives a lot easier in and around the house.

One of these services is Ketelcomfort, which was introduced in 2015 and which provides support for customers with respect to the maintenance of their central heating boiler. The number of customers with a subscription to this service already amounts to nearly 30,000.

2016: high-quality service and innovation

Eneco continues to invest in sustainable energy for everyone. We are making fast progress with smart and innovative solutions. We do this, because we believe in a world in which everybody will be able to generate their own energy and the traditional energy supplier will no longer exist. Eneco's aim is to be a partner to its customers in this process. To this end, we invest in the development and supply of smart services such as Toon and Ketelcomfort. Stedin is developing smart grids that will make the supply of energy by customers to the grid or to their neighbours common practice. Furthermore, we have made an amount of 100 million euros available to the business unit Innovation & Ventures for investment in start-ups involved in the development of sustainable and smart energy solutions.

Our mission will continue to be the focal point of our operations in 2106, because we believe in a future in which all energy is sustainable. Consequently, it is no surprise that the result of a study carried out by environmental organisation Natuur & Milieu (Nature & Environment) show that Eneco is, by far, the most sustainable large energy company. We hope that this is a reason for customers to continue to choose for Eneco.

We cannot ignore the fact that the price of energy shall continue to play an important role in 2016. For this reason, we will continue to participate in the low-price end of the market with our brand Oxxio. At the same time, we will expand the functionality of the Oxxio app. This app is used by more than 7,500 people a day and provides both customers and non-customers with a better understanding of their energy consumption and enables them to easily implement changes or find an answer to their questions.

We will also continue to provide high-quality service in 2016. Many people contacted Eneco in 2015 with questions that we answered by telephone, email, Twitter and Facebook. We will continue to improve our customer service this year. We will invest, in particular, in further digitisation of our services, not only because this will save time and money, but primarily because it is what our customers want. The website mijneneco.nl will be improved and letters by post will be replaced more and more by digital forms of communication with customers. The biggest steps in this direction will be taken by the brand Oxxio. The Oxxio app will make it very easy to take care of all energy-related matters, ranging from entering into a contract to contacting the customer service department.

Customer satisfaction at Stedin

We aim to achieve customer satisfaction by providing enthusiastic and sustainable service. Our starting point is to solve the customer's problem first. Through continuous measurement, we assess if we are doing well enough in the perception of our customers.

Satisfied customers are essential

Despite the major organisational changes in our company, our aim is to continue the upward trend with respect to customer satisfaction that started in 2014.

Enthusiastic service means that customers perceive us as being friendly and polite and that our employees are enthusiastic about working for Stedin and Eneco Group. This is why we have included questions on the friendliness and politeness of our employees in our customer satisfaction survey.

What did we aim to achieve in 2015?

Stedin’s target for 2015 was that the customer satisfaction score with respect to service of at least 77% of our customers would be 7 or higher. This score is calculated on the basis of ten separate assessments. In general, nine of these assessments are carried out after some form of contact between a customer and our organisation, for example in the form of making an appointment, a visit by one of our technicians or a phone call to our customer service department, but they can also relate to customer satisfaction in connection with the smart meter. In the tenth assessment, which is an ongoing process, we ask a number of randomly selected large customers to tell us what they think about our invoicing procedure.

What have we achieved?

The customer satisfaction score in 2015 was 78%. We are very pleased with this result. Our employees have lived up to our promises and have provided services to our customers enthusiastically. Despite all the changes, they continued to focus on the customer. This is clearly reflected in the results of the customer satisfaction survey. In all the separate assessments, technicians and employees received high scores with respect to politeness and friendliness. The customer satisfaction score with respect to the smart meter and related services was 82%.

Room for improvement in some areas

Customers indicate that they are less satisfied with our service in relation to new connection requests and requests for changes to existing connections. This can be attributed to the recent restructuring of the organisation. In the first half of 2015, the restructuring of the teams, processes and systems had not yet been sufficiently completed to be able to provide excellent service in this area. This had an effect on customers, which is reflected in a score that was more than 13% lower than the score in the previous year (2014: 71%). Priority is being given to bringing this part of the service to a higher level as soon as possible and considerable attention has been paid to this issue in 2015. We hope that the slight improvement in customer satisfaction that was visible in the fourth quarter is the beginning of a trend that will continue in 2016.

What actions have we taken?

Sustainable service refers to our ongoing effort towards improvement, which ultimately leads to enthusiastic customers and positive reactions from our surroundings. We are noticing an increase in interaction with our customers and stakeholders and with our surroundings and are adapting our working methods and organisation accordingly.

We grouped all our first-line customer contact activities in a single customer department in 2105. This gives customers easier access to the different disciplines in our company and enables us to respond more promptly to customer questions relating to increasing the sustainability of the energy supply. All signals that enter our organisation through the customer service, account management, complaints management and customer research departments, now come together at a single location. The insights that this provides can be used to accelerate and expand the learning ability of our organisation.

More customer self-service

Customers are making more and more use of digital and online methods to contact us in search of answers to their questions. We are increasingly better able to respond to that development. The web care team was expanded in 2015 and we continuously monitor and actively respond to statements by customers on social media.

Our online environment has been upgraded. Stedin.net is now a responsive website, which means that it can also easily be viewed on mobile phones and tablets. The website provides a lot of information as well as several self-service tools that enable customers to manage various basic aspects. The interruptions overview, which provides real-time information to customers on interruptions in their area, has also been improved. Furthermore, customers have been given the opportunity to reschedule their appointment for the installation of a smart meter. All these improvements enable customers to take matters into their own hands instead of being dependent on our schedule.

As customers can find the answers to many of their questions on our website, our customer service and complaints management departments only have to deal with the more complex issues. Despite problems with the staffing of these departments in 2015, solving the customer's problem first continued to be the starting point throughout the year.

Strong improvement complaints management

The customer satisfaction surveys generate useful starting points for further improvement of our service. A good example of this is the sharp increase of 14% (2014: 59%) in customer satisfaction with respect to complaints handling due to a more customer-oriented approach. Our new working method is based on five pillars for excellent complaint management and has been thoroughly explained to our employees. A personal approach and personal attention are the focal points. Customers are contacted within one working day by a dedicated person in charge of handling their complaint.

Regional account management

More and more often, large organisations and municipalities contact us in connection with their wish to increase the sustainability of their energy supply. As we wish to become the expert discussion partner in this noticeable trend, we have restructured our account management from a customer group approach to a regional approach with account managers who are well informed about the developments in their area. They proactively support municipalities in achieving their sustainable energy ambitions and initiate partnerships aimed at exploring the energy transition together within the framework of existing legislation.

Regional account management is also in line with the regional structure of our operational activities. This results in more efficient and effective internal alignment on current and future projects and activities. As account managers are aware of any issues at an early stage, we are now able to discuss these situations with the parties involved sooner than before. It is expected that this proactive and committed approach will have a positive effect on customer satisfaction.

Outlook for 2016

We aim to provide immediate feedback to our employees on the results of the customer service surveys. On a daily basis, customers who have had some form of contact with our organisation will be asked to share their experience with us. This feedback is then immediately shared with the employees concerned, to provide them with a clearer understanding of the customer experience and show them how they can improve their performance. This approach will first be implemented at the customer service department and is expected to be applied on a wider scale during the course of the year.

In addition to customer surveys, outings with customers will be used on a structural basis for the purpose of continuous assessment and improvement of our contacts with customers. All forms of communication with customers will be evaluated, adapted and monitored, including the digital communication channels. We wish to make even better use of the channels preferred by customers, such as WhatsApp, taking into account clear guidelines on how we communicate via these channels and how to protect the privacy of our customers.

Reliable energy supply

Eneco's aim is that customers always have access to clean, reliable and affordable energy. To keep their households and businesses running smoothly, our customers must be able to rely on the availability of the energy that they need, anytime and anyplace, at home and at work.

Interruption duration

We do everything that we can to ensure continuous availability of energy for our customers and any interruptions in the energy supply must be resolved quickly. These are our goals and the reasons why we continuously work on decreasing interruption duration. This is also a theme that is relevant for our stakeholders.

What did we aim to achieve in 2015?

Our target for 2015 was to limit the interruption duration for electricity to 25 minutes or less, to limit the interruption duration for gas to 60 seconds or less and to limit the interruption duration for heating to 49.5 minutes or less.

What have we achieved?

The table below shows the actual interruption duration of our energy networks in 2015, calculated on the basis of the System Average Interruption Duration Index (SAIDI). Notifications of interruptions in the supply of electricity and gas are published on the Stedin website and customers are informed of any developments via social media. Notifications of interruptions in the supply of district heating are published on the Eneco website.

Target

Actual results

number of customers in millions

2015

2015

2014

2013

2012

Electricity (in minutes)

2.1

<25.0

24.3

21.1

21.2

35.6

Gas (in seconds)

2.0

<60

97

124

40

77

Heating (in minutes)

 

<49.5

24.6

45.0

38.8

26.0

Interruption duration electricity increased but within target

With a result of 24.3 minutes, we achieved our target for 2015 with respect to the interruption duration for electricity, which represented an average power outage duration per household of 25 minutes or less. The number of medium-voltage outages resulting in an interruption in the supply of electricity was 393 (2014: 414). In 2015, there was a further drop in the average interruption duration in Stedin's medium-voltage grid to 72.9 minutes from 86.5 minutes in 2014 and 93.2 minutes in 2013.

Lower interruption duration gas despite a few complicated outages but still within target

The average interruption duration of the supply of gas per household was 97 seconds. This was due to a number of complicated outages in the municipalities of Rhenen and Rotterdam that had a significant impact on Stedin’s customers. In Rhenen, the outage was caused by the presence of water in the gas pipeline, which took a few days to resolve. In Rotterdam, the interruption was due to an incident caused by an external contractor who drove a pile through an 8 Bar gas pipeline.

Interruption duration heating well within target

No special incidents occurred in 2015 in connection with the supply of heating. The average interruption duration of 24.6 minutes was well within the target of 49.5 minutes.

Drop in average interruption duration electricity

Eneco uses the Customer Average Interruption Duration Index (CAIDI) to measure and manage the security of the supply of electricity. This indicator provides insight into the average time it takes to resolve outages in the low and medium-voltage grid and the average interruption duration for customers affected by the outage. As such, this is a fitting indicator that is in line with our goal to resolve outages that cannot be prevented as quickly as possible.

Target

Actual results

 

2015

2015

2014

CAIDI (in minutes)

90.0

82.8

103.9

Further reduction response and resolve times gas outages

Our average response time in 2015 was 26 minutes, which is well within our target of being on site within 30 minutes. On average, it took 13 minutes to resolve the problem and restore the safety of people and objects, which is well within our target of a maximum of 20 minutes.

Target

Actual results

 

2015

2015

2014

Response time (in minutes)

<30

26

28

Resolve time (in minutes)

<20

13

14

Risk management: preventing interruptions

Our highest priority with respect to the electricity grids is preventing interruptions in supply through measures such as station automation for grid control, replacement of fault-sensitive components and preventing damages resulting from excavation. In addition, we replace components that will no longer be available in the near future and we ensure the reliability of public lighting networks. With respect to our gas grids, maintenance has the highest priority in order to avoid gas leaks and guarantee the supply of gas. To avoid inconvenience and significantly reduce total costs, activities are carried out simultaneously with other work on infrastructure (roads, railways, sewers), where possible.

Automation and smarter grids lead to fewer interruptions

The implementation of the Distribution Management System (DMS) was continued in 2015. This system enables us to obtain a lot of information on the performance of the grids and to take corrective measures remotely. As was the case in 2014, further steps were also taken in the area of station automation for the remote control of distribution facilities. In 2015, the DMS system was implemented in the city of Utrecht and the surrounding area, the large part of the district Rotterdam Zuid and the surrounding area and a small region to the northwest of Rotterdam.

Preventing damage resulting from excavation

Damage resulting from excavation was again a frequent cause of supply interruptions in 2015. Stedin allocated an even higher priority to this issue, by setting up a new department that is dedicated to the prevention of damage resulting from excavations. This department also includes the Klic Desk, which handles requests for cable and pipeline drawings and connection sketches from companies that carry out excavation work. The good results of the many visits to contractors by Stedin employees specialised in excavation damage prevention, demonstrate that direct communication with contractors on site is also very effective in preventing this kind of damage. This also includes situations where these specialists in excavation damage prevention alert contractors to incorrectly installed cables and pipelines, which could lead to interruptions in the electricity and/or gas grid in the future.

Security of the supply of heating

Customers were not, or only to a very limited extent, confronted with interruptions in their heating supply. The interruptions that did occur were caused by small leakages and defects in installation components and, as such, part of normal business operations. The efforts of our own service and maintenance department contributed to keeping the duration of interruptions to a minimum.

The structure of our service and maintenance department enables us to respond to notifications quickly, resulting in minimal duration of interruptions. Naturally, the prevention of interruptions is also taken into account in the design, for example in the form of built-in redundancy of all heating production resources, most of the transmission networks and, where possible, the main transmission networks.

In addition to the permanent monitoring of the operation of our heating networks, quality is also measured frequently. In 2014, an aeroplane with thermographic cameras on board was used to make thermal images of the district heating network in Rotterdam. Analysis of these images showed where repair was needed, which was carried out in 2015. Such actions contribute to reducing the number and duration of supply interruptions.

Rollout of smart meters

Stedin launched the Large-Scale Rollout (Grootschalige Aanbieding, GSA) of smart meters on 2 March 2015. This rollout entails the obligation for grid operators to contact customers proactively and make them an offer for the installation of a smart electricity and/or gas meter.  

By the end of 2020, all customers with a small-volume connection must have received an offer for the installation of a smart meter. The government's aim is that, by then, at least 80 percent of households have a smart meter installed. Customer satisfaction, company image, safety and efficiency are important conditions for achieving this goal.

What did we aim to achieve in 2015?

Following a test phase in the years before, our goal for 2015 was to make an offer to 315,000 customers for the installation of a smart meter. Due to a shortage of smart meters in the sector, this number was reduced in May to 290,000. Our target was again adjusted in September to 225,000. The installation of such a large number of smart meters is an exceptional and complex operation. In order to be able to deal with this challenge, the team of mechanics, which now also includes people from other professional backgrounds, has been expanded for a longer period of time, which means that we now have a stable basis for the coming years. The current backlog compared with the original planning of 315,000 smart meters will be cleared in stages over the period 2016-2019.

What have we achieved?

In 2015, we approached 237,816 customers with an offer for the installation of a smart meter, which means that we exceeded the planning as revised in September. This resulted in the installation of a smart meter at the premises of 76 percent of these customers. At the beginning of January 2016, Stedin sent out the 500,000th offer for the installation of a smart meter, which means it has already fulfilled 25%t of its obligation.

Impact on the planet

One Planet

Our mission is ‘Sustainable energy for everyone’. We strive to bring our customers’ and our own energy consumption to within the limits of a habitable planet for the sake of our own generation and generations to come. The results that we achieve with respect to our One Planet Thinking ambition show exactly how sustainable Eneco really is, which is what our stakeholders want to know.

One Planet Thinking

One Planet Thinking (www.oneplanetthinking.com) is a strategic framework that we are developing in collaboration with Ecofys and the World Wildlife Fund (WWF). The objective of One Planet Thinking is to enable companies to develop and implement strategies, objectives and actions in order to be able to operate within the absolute local, regional and global limits of the planet's systems. An example of this, is the fact that Eneco has brought its own carbon emissions and objectives up to 2020 in line with the path towards the 2˚C goal for 2050.

Eneco also wishes to help other companies to bring the impact of their activities within the limits of the planet's capability to recover. A number of companies is now conducting experiments with the use of One Planet Thinking to determine whether their efforts are sufficient.

We intend to place the One Planet Thinking concepts and ideas with an independent organisation that will be responsible for further development of the initiative and will help companies all over the world to increase the sustainability of their supply chains in order to operate within the limits of our planet. As the founding father of this initiative, Eneco will continue to participate and monitor its own sustainable development by applying the One Planet Thinking framework.

What did we aim to achieve in 2015?

Our ultimate goal is to bring the energy consumption of our customers and our organisation within the limits of a liveable planet. In connection with this goal, we strive to further reduce the impact of our own and our customers' electricity consumption on the climate. Our target for 2015 was a 10% reduction of the impact of the electricity consumption of our customers on climate change and a 40% reduction of the impact of our own electricity consumption compared with 2012. Another goal was to formulate a KPI relating to our customers' consumption of gas and heating.

Eneco Group operations in line with the 2˚C scenario for greenhouse gas emissions

During the climate conference in Paris, it was agreed that global warming must remain well below two degrees Celsius. Eneco Group has brought its own greenhouse gas emissions and objectives up to 2020 in line with the path towards the 2˚C goal for 2050. This relates to the greenhouse gas emissions resulting from the production and supply of electricity for all of our customers as well as the supply of gas and heat to about two million households in the Netherlands and Belgium. The objective to limit global warming to 2˚C, and preferably less, is a logical objective for Eneco as it is in line with our mission ‘Sustainable energy for everyone’ and is monitored by us on the basis of the One Planet Thinking initiative. This makes Eneco one of the first companies in the world that demonstrably contributes to the realisation of the global climate objective in its entire supply chain. This is achieved by substantial annual investment in sustainable energy, including offshore and onshore wind farms and enhancement of the sustainability of our district heating by means of waste plants, as well as the reduction of the energy consumption of our customers resulting from the use of the smart Toon thermostat.

What have we achieved?

The impact of the electricity consumption of our customers on climate change was reduced by 15% in 2015 compared with 2012, which is well above our target. The same applies for the impact of our own electricity consumption on climate change, which was reduced by 56% compared with 2012. Furthermore, we have formulated a KPI and specified a target relating to the consumption of gas and heating by our two million customers in the Netherlands and Belgium in line with the 2˚C scenario. A target for the gas and heat consumption of business customers will be specified as soon as a suitable method is available.

The figure below depicts the latest insights in relation to our electricity portfolio. Climate change is, by far, the most important impact category in the electricity sector.

One Planet Index for most relevant impact categories.

The indexes for 'Climate change' and 'Fossil fuel availability' are lower than previously reported, while the results for ‘Particular matter’ and ‘Mineral availability – Copper’ are slightly higher. The limits for each of these categories have been adjusted on the basis of the latest scientific information. These types of adjustments cannot be prevented, because One Planet Thinking is still in the development stage.

The One Planet Index shows the extent to which a particular limit is exceeded. At present, we exceed the limit for climate change in connection with achieving the ultimate goal of a sustainable energy supply in 2050 by a factor eight. However, the line graph shows that we are on track with respect to the 2˚C scenario for the electricity sector in Europe and that we have surpassed our agreements with WWF on this point. Despite the slight, anticipated increase in 2015, we expect that we will continue to operate within the limits of the 2˚C scenario in the coming years.

Carbon intensity of the electricity consumption of our customers (including the greenhouse gases methane and nitrous oxide and emissions prior to production).

Our impact on fine particles and the availability of fossil fuels and minerals are within the limits of the planet. Therefore, we focus our attention mainly on climate change. There is an increase in the use of minerals due to an increase in the use of sustainable energy in general and wind energy in particular. Sustainable energy requires the use of more minerals per produced unit. In connection with this, circularity requires further development and we also wish to assess our impact on biodiversity in more detail.

Sustainability of own electricity consumption further enhanced

Obviously, Eneco also uses electricity for its own operations. For the past years, we have been using HollandseWind® wind energy as the source of electricity for our lighting, computers, heating and cooling via heat pumps and such. However, the largest portion of our electricity consumption relates to grid losses in the electricity networks of our grid operator Stedin. Green electricity generated by wind turbines is gradually being supplied to these networks. This has resulted in a 56% reduction of the impact of our own electricity consumption on climate change compared with 2012.

Reducing the electricity consumption of our customers

Our One Planet explanatory document 2015 includes a pie chart with the main categories of our supply-chain footprint. This chart shows that two-thirds of our supply-chain footprint relates to the supply chains for natural gas and district heating. In 2015, we have made clear to what extent the emissions per household in our gas and heating supply chains are compliant with the 2˚C objective.

In view of the importance to also bring our natural gas and district heating related operations within the 2˚C scenario, we have formulated a KPI that measures whether we achieve our energy saving objective together with our customers. This KPI is included in our Climate Savers agreements with WWF and will be included as a strategic KPI as of 2016.

The demand for natural gas and district heating is influenced strongly by the outside temperature and the number of hours of sunshine. For this reason, we normalise the actual consumption on the basis of degree days. However, there are also a number of other influencing factors such as the wind, home insulation and customer behaviour. Correction on the basis of grade days, therefore, results in a reasonably good but not an exact comparison between different years.

We are on schedule in relation to the 2˚C scenario for households in Europe. Continuing to operate within the limits of this scenario in the future will prove to be a challenge due to the limited availability of alternatives for natural gas. Innovations such as Nerdalize and Toon are very important in connection with our aim to meet the demand for heating in a sustainable manner and to reduce customer demand.

Further reductions of own carbon emissions

Eneco also continues to monitor its internal footprint. The reduction of carbon emissions compared with 2007 has been stable for quite some time at around 40%. Mobility is the main cause of the emissions. In 2015, we developed our Mobility Vision 2020, which is aimed at facilitating the use of public transport and electric transport. In the coming years, we will take measures to further reduce our impact step-by-step and to strengthen our electric transport business as well as our collaboration with the Dutch railway company NS.

We plan to provide public transport passes to a large group of employees in 2016. Other options that we are considering include a lower mileage allowance, more electric company cars (or other sustainable alternatives), more car sharing and car-pooling, personal budgets in combination with public transport passes instead of lease cars or an attractive (environment-friendly) private lease offer for all employees.

Measures that will affect our employees will be implemented in areas ranging from commuting to work-related trips and from company cars to lease cars. The Mobility Vision 2020 is not intended as a cost-saving measure – the link between what we say and what we do comes first. This way, all employees will be able to contribute to this objective.

Offsetting carbon emissions of internal operations

Since 2008, Eneco's business operations are climate neutral with respect to our offices, vehicles and employees (excluding grid losses in connection with the transmission of electricity). Unavoidable carbon emissions are offset by means of investment in sustainability in other countries, see Background information, in the form of purchasing CO2 certificates relating to the preservation of valuable natural areas, REDD (Reducing Emissions from Deforestation and Forest Degradation), or Gold Standard CO2-certificates.

Investing in sustainable capacity and production

Eneco invests in the expansion of sustainable electricity production by means of wind farms, solar power and biomass installations, Our focus is on developing assets in which our customers play a central role and on obtaining maximum value from all realised assets,

We have decided to develop our production assets in direct cooperation with local stakeholders and customers, Where possible, they are involved in the development process in the role of consumers, co-developers, shareholders and participants,

Some stakeholders are interested in knowing how much sustainable energy Eneco's own portfolio includes, We would like to provide these stakeholders with more information on our progress in connection with the realisation of our mission 'Sustainable energy for everyone',

Sustainable electricity production

Our target for 2015 was that 23,2% of our total supply portfolio should consist of sustainable electricity produced and purchased by Eneco, This target was 15% higher than the targets for previous years and is, therefore, in line with our ambitious objectives,

What have we achieved?

In 2015, we produced and purchased 4,6 TWh of sustainable electricity, of which 4,4 TWh was used for our supply portfolio, and we supplied in total 17,6 TWh of electricity, This means that the share of sustainable electricity produced and purchased by Eneco in our total supply portfolio was 25% in 2015 and that we have thus achieved our target, Wind farm Luchterduinen, which was put into operation during the course of the year, contributed significantly to this result,

The average wind speed in the Netherlands in 2015 was high: 5,4 meters/second, The wind was especially strong in November and December, The combination of higher wind speeds and expansion of the production capacity in the Netherlands resulted in an increase of 0,6 TWh in production from wind farms to 2,2 TWh (the equivalent of the electricity consumption of 700,000 households),

More sustainable production capacity

We have achieved our ambition for 2015, which was to significantly expand our sustainable production capacity, With an increase of 239 MW, our total capacity is now 1,1919 MW, This increase was mainly the result of investments in offshore wind energy (Luchterduinen), but we have also invested in onshore wind projects in the Netherlands and the United Kingdom, The increase in biomass capacity is attributable to an increase in power purchase contracts,

Production (GWh) *)

Capacity (MW) **)

Capacity (MW) per country**)

Technology

Total

Total

NL

B

UK

F

 

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

Biomass

795 

624

142 

101 

132 

97 

10 

Solar

66 

57

76 

72 

49 

47 

10 

10 

14 

12 

Hydro

3

Onshore wind

2,390 

1,888

1,273 

1,208 

852 

808 

287 

289 

134 

111 

Offshore wind

1,374 

969

427 

298 

249 

120 

178 

178 

Subtotal sustainable

4,627 

3,541

1,919 

1,680 

1,236 

1,028 

524 

518 

144 

121

15 

13 

Conventional

2,606 

3,501

435 

1,275 

435 

1,275 

Combined heat and power

1,600 

149

622 

33 

622 

33 

Total

8,833

7,191

2,976

2,988 

2,293

2,336

524

518

144

121

15

13

*) including purchased production
**) including controlled capacity third parties

Risk: uncertainty with respect to future government policy on energy transition

The energy market is dominated by government interventions relating mainly to the profitability of assets and the market model (pricing). These interventions could lead to relatively abrupt changes in the profitability of these and other activities. An example of such interventions is the policy with respect to increasing the sustainability of coal-fuelled plants by means of a subsidy for the co-firing of biomass. Investments in increasing the sustainability of coal-fuelled plants form a risk for the achievement of Eneco's strategy. This is partly due to the fact that subsidisation of the co-firing of biomass makes it possible to operate coal-fuelled plants at a profit more frequently at the expense of modern, less carbon-intensive gas-fuelled plants. As a result, these gas plants continue to be loss-making for a long period of time. This could have a domino effect in the form of low energy prices and less room for investment in alternative sustainable sources such as wind energy.

This risk is limited for Eneco's new products and services, which are less vulnerable to government policy since they are profitable without the need for government support in the form of, for example, subsidies relating to sustainability. Government policy in other areas, such as data and privacy, do have an effect on these new products and services, but these types of government interventions are of a different order of magnitude than those relating to more traditional activities.

Risk: low carbon prices

The current carbon price of around 6 euros/ton is too low to lead to a significant reduction of carbon emissions or to stimulate sustainable production. In part in connection with the introduction of the Market Stability Reserve in 2019, experts expect that the carbon price will rise to around 20 euros/ton in 2020. However, as the carbon price depends primarily on political decisions, it is unpredictable. An example of this, is the wish of a number of parties in Europe to completely move away from carbon emission trading (EU ETS). Due to the connection with the electricity price, in the long term Eneco is exposed to fluctuations in de carbon price; a lower carbon price has a negative effect on the price of electricity. We are cautious in our expectations with respect to the development of the carbon price and approach governments to raise the argument that a substantial increase of the carbon price is necessary for the EU ETS system to be effective.

Risk: lower energy prices

Eneco is active in the area of developing and contracting sustainable electricity producing assets. In connection with this core activity, Eneco is exposed to the potential risk of lower electricity prices.

This risk is partly mitigated by the structure of the subsidy scheme for the stimulation of sustainable energy (Stimulering Duurzame Energie (SDE+)), as a result of which higher subsidies are granted when the electricity price is low. This means that a substantial part of the income related to sustainable production assets is steady. Eneco further mitigates this risk by monitoring the long-term electricity positions by means of stringent position management under the supervision of an independent Eneco Risk Management department. In addition, risk analyses are carried out before entering into sustainable energy contracts and prior to new investments in sustainable assets. This risk is also monitored by means of periodic risk analyses with respect to the financial ratios of Eneco Group as a whole.

Guarantees of Origin

Eneco obtains Guarantees of Origin (GOs) in connection with the sustainable electricity it produces for its customers. These GOs are proof that the electricity has been generated in a sustainable manner. Eneco obtains GOs for the production of sustainable electricity from wind and solar power and biomass in the Netherlands, Belgium and the United Kingdom. Eneco also frequently obtains GOs in connection with the purchase of sustainable electricity directly from another producer under a Power Purchase Agreement (PPA). Public authority CertiQ, which is part of TenneT, is in charge of monitoring these GOs and supplying them to producers. Suppliers such as Eneco submit obtained GOs to CertiQ to demonstrate that the electricity they have supplied has been generated in a sustainable manner. CertiQ is part of the Association of Issuing Bodies, which has the task of developing, applying and promoting the standardised European Energy Certificate System.

In addition to GOs obtained in connection with its own production and electricity purchased under PPAs, Eneco also purchases GOs related to other products on the market in order to enable the supply of sustainable electricity. These GOs are purchased in countries such as Denmark (European Wind GOs) and Norway (European Water GOs). Eneco exclusively uses Dutch Wind GOs for its product HollandseWind.

Also see Carbon emissions compensation and GOs for more information about the countries where Eneco obtains GOs and the number of GOs obtained in 2015.

More and more solar energy

Eneco expects that it will own and manage more and more solar energy projects in the coming years. Expected growth regions are the Netherlands (in connection with the more favourable Sustainable Energy Stimulation scheme), France, Belgium and the United Kingdom. In France, we concluded a partnership agreement with Ophiliam specifically for this purpose.

To a growing extent, customers are directly involved in these types of projects by means of integration with energy storage and customer driven demand, for example when prices are low. More and more, these projects are also developed and financed in collaboration with local partners. Furthermore, we notice that an increasing number of customers are interested in purchasing location-specific solar energy. In collaboration with the municipality of Ameland and the Amelander energy cooperative we are working on the construction of Solar Park Ameland, which has a capacity of 6 MWp and is currently the largest solar system in the Netherlands. The solar park is expected to come on stream at the end of January 2016. The construction of the 0.8 MWp solar park on the roof of the Kyocera Stadium of soccer club ADO Den Haag was completed in 2015. These projects fall within the growth area Client Sources.

More sustainable energy from biomass

A good example of how Eneco is strengthening the connection with its customers is the agreement that was concluded in 2015 for the Bio Golden Raand energy plant in the municipality of Delfzijl. At present, the plant only supplies electricity. As of 2017, it will also produce steam that will be supplied to various nearby business including AkzoNobel. As a result, the lifespan of the plant has been extended to 2029.

Eneco is also investigating possibilities to further enhance the sustainability of the district heating network in the municipality of Utrecht by means of a biomass boiler. A decision on this subject is expected during the course of 2016.

The possibilities for further improvement of the sustainability of the electricity supply of customers in the industrial sector by means of biomass boilers are also being investigated.

Sustainable biomass

The discussion in the Dutch Social Economic Council between energy companies (in particular energy companies with biomass co-firing activities) and NGOs on the sustainability of solid biomass was continued in 2015. As one of the largest producers of bioenergy in the Netherlands, Eneco actively participated in this discussion. Eneco's starting points in this matter are the company's Biomass Sustainability Charter and the agreements that have been made with WWF relating to the sustainability of biomass. These steps taken by Eneco go further than what is being done by the sector. The agreements with WWF are recorded in a separate module of the collaboration agreement between Eneco and WWF and specify Eneco's ambitions with respect to sustainability and certification, which are NTA 8080 (Sustainably produced biomass for bioenergy and bio-based products) and, in connection with sustainable forestry management, FSC or equivalent.

In 2015, around 300,000 tons of biomass were converted into energy in our bioenergy plant Bio Golden Raand. This biomass originates from the Netherlands (39%) and North-West Europe (in particular the United Kingdom) and consists of B-grade wood (waste wood from construction and demolition and waste collection facilities). Eneco has reported the amount and origin of the biomass used by the company in 2015 in accordance with the sector agreement 'Green Deal Sustainability Solid Biomass'.

In connection with certification for the entire supply chain, certification in accordance with the NTA 8080 criteria was obtained for the Bio Golden Raand plant in May 2015. Certification for Eneco Energy Trade had already been obtained at an earlier stage. Bio Golden Raand is the first organisation to obtain this certificate under the new name 'Better Biomass'. Certification of the entire supply chain is not a requirement; Eneco has decided to do this voluntarily. The process of obtaining certification for the suppliers of biomass for Bio Golden Raand was started in the second half of 2015. Since then, certification has been obtained for 17% of the total volume.

2015 was also the year in which the revision of NTA 8080 (Sustainably produced biomass for bioenergy and bio-based products) was completed. Eneco participated in the project group involved in this revision and also contributed as member of the NTA 8081 Committee of Experts. Similar to the original version of 2009, the revised version is based on stakeholder consultations in which NGOs, the sector and the government participated.

Substantial increase in wind energy

Eneco expanded its onshore wind energy portfolio substantially in 2015. Wind farms that were put into operation were Moy and Loch Luichart in the United Kingdom and, in the Netherlands, Delfzijl-Noord; the largest onshore wind farm in the Netherlands with a capacity of 63 MW. All the sustainable energy generated by wind farm Delfzijl-Noord is purchased by Google. Offshore wind farm Luchterduinen, which is currently the largest wind farm in the Netherlands, was also put into operation. Luchterduinen is a joint venture between Mitsubishi and Eneco and has a total capacity of 129 MW.

Slight delay in onshore wind energy investments

Due to a slight delay in the construction of one onshore wind farm, which was completed in January 2016, the total capacity of onshore wind farms that were put into operation in 2015 amounted to 120 MW instead of the 132 MW that we had aimed for.

Not being able to obtain a permit for the wind farm Navitus Bay in the United Kingdom (a joint development with the French company EDF) was a setback in 2015 in the development of offshore wind energy projects outside the Netherlands.

We expect that we will be able to make positive decisions in 2016 with respect to onshore wind energy projects in Belgium and the Netherlands. We are also working on the development of offshore wind projects in these countries.

Management of local stakeholders

Eneco aims to maintain a good relationship with people living and working in the vicinity of its operations. We strive to be a 'good neighbour' in order to build mutual trust and generate better results. This is why we involve local stakeholders in the development, construction and management of our energy projects at an early stage. Together, we fill in various details of a project by discussing how they wish to be involved, where they see possibilities for improvement and how they wish to be kept informed. We also assess if they are interested in participating in the project, for example, in the form of purchasing the energy supplied by that particular project. This way, these people become participants in the project and collaboration partners.

Risk: development capital-intensive projects

The development of energy production facilities, such as offshore wind farms, can be a lengthy process. It can take years before a project is implemented. There is a risk that a lot of time and money are spent on a development that, in the end, will not be implemented.

In the past years, Eneco has applied the Decision-Gate method to mitigate development risks. This means that, prior to each next step of the development process, it is assessed whether continuation of the development would be reasonable on the basis of estimated costs and benefits and risk analyses. If the result of the cost/benefit/risk-assessment is negative, Eneco will stop the further development of the project.  

Despite the use of this method, Eneco was confronted with a setback in 2015 during the course of the development of the offshore wind farm Navitus Bay in the United Kingdom. After years of development, unexpectedly, a permit could not be obtained for this project and the development costs had to be written off. This experience underlines the necessity of a sound development policy.

Eneco is very thorough in the selection and development of large, capital-intensive projects. Eneco will not start any development projects in which major decisions that determine whether a project will definitely go ahead take place at a relatively late stage in the process.

Risk: changes in subsidy regimes

Government policy, for example in the form of changes in subsidy and (energy) tax regimes, may delay the implementation of our sustainable strategy. Investments in wind energy, biomass and geothermal energy projects have long lead times. Changes in subsidy regimes and permit requirements, as well as changes in government policy in general, cause additional uncertainty, especially in relation to new investment decisions. These factors slow down the development of and investment in sustainable energy.

Eneco seeks to convince government bodies in various ways of the importance of a stable investment and funding climate, with a level playing field for different (sustainable and fossil) technologies. In addition, Eneco spreads its sustainable investments across several countries, subsidy regimes and sustainable technologies (such as wind energy, solar energy and biomass).

In line with the aim of our strategy, from now on, we will only construct sustainable energy production facilities together with customers (Client Sources). A good example is our collaboration with Fujifilm, a company that produces photo paper and offset printing plates. Since 1 January 2016, Fujifilm's production process is powered entirely by wind energy. Fujifilm requires around 100 gigawatt hours of electricity per year for its operations. This is the equivalent of the average electricity consumption of around 30,000 households. The necessary green power is produced by wind turbines owned by Eneco.

Production-related carbon emissions

Carbon emissions of Eneco's electricity production in 2015:

CO2eq emissions 2015 (in kg/MWh)1

Direct2

Indirect3

Biomass

0

86

Solar

0

77

Hydro

0

5

Onshore wind energy

0

12

Offshore wind energy

0

15

Conventional

427

37

Combined heat and power

286

37

  1. 1CO2eq: CO2, CH4 and N2O emissions released during and prior to the generation of electricity
  2. 2Direct: emissions from combustion during generation (source: ACM, version 2014)
  3. 3Indirect: emissions prior to generation, for example in connection with the construction of a wind turbine, also referred to as 'upstream' (source: Defra, CE Delft or Ecofys)

Innovation

New products and services

The next three to five years are a crucial period in the process of making the energy transition possible for our customers. Innovation is a decisive factor in this transition. This is why, in the coming years, we will invest 100 million euro in start-ups, innovative energy projects and strategic partnerships that will accelerate the transition. By 2025, new innovations should be generating half of Eneco's revenues.

A growing number of smart technologies are being implemented in the energy world and more and more customers are taking their energy supply into their own hands by working together in cooperatives and partnerships. Eneco responds to these trends by offering its customers new products and services. In the development of these products and services, we seek to collaborate with start-ups and companies with other strengths and competencies. This approach helps us to accelerate the realisation of our strategy. Shareholders and investors monitor our activities in this area with great interest.

New at Eneco: Innovation & Ventures

In order to further accelerate innovation within Eneco, a new business unit was established on 1 April 2015: Eneco Innovation & Ventures. The task assigned to Innovation & Ventures is to focus and structure current initiatives within Eneco Group and to seek collaboration with high-potential initiatives outside the organisation. The aim is to assess, field test and ultimately market promising and innovative ideas existing within and outside of Eneco Group. Innovation & Ventures also investigates international opportunities for growth.

In view of Eneco Group’s strong starting position in these fields and the extensive possibilities for growth that they offer, we are focusing on the following areas:

  • the home of the future: smart solutions and services that create awareness and provide comfort and convenience in the personal living environment;
  • mobility;
  • solar energy and energy storage;
  • smart solutions for public outdoor spaces.1

We are also working on the following themes:

  • communities, such as a sports club investing in sustainable lighting;
  • smart buildings2, for example, energy-efficient office buildings;
  • one planet heating, which encompasses sustainable and/or energy-neutral heating of buildings;
  • flexibele & smart grids3, which relates to balancing the supply of and demand for locally produced sustainable energy in order to prevent grid overloads resulting from too much electricity being fed into or drawn from the grid.
Home of the future
Intelligent thermostat

Quby is the company that developed the intelligent Toon thermostat, which makes consumers aware of and helps them to reduce their energy consumption. Eneco acquired an interest in Quby in 2013, which was then expanded to 100% ownership in 2015. Collaboration with technology start-ups helps us to accelerate our innovative process. It is our ambition to make Toon the heart of the house, with smart solutions that make life easier. In 2015, new Toon functionality was added, such a Toon Solar (Toon Zon) and a smart smoke detector, which sends a warning to the user's smartphone when smoke is detected in the house. Eneco also introduced a new user interface, which makes Toon even simpler to use than before, and ToonCoach helps customers to easily reduce their energy consumption. In addition to providing customers with a better understanding of their energy consumption, Toon will also provide advice and (energy saving) tips on smarter use of Toon and smarter use of energy.

In order to make the smart thermostat interesting for a larger group of customers, the Toon software has been made available to external developers. Eneco expects that this will result in a rapid increase in Toon functionality, thus creating an appealing device for an even larger group of customers. In order to further speed up the national and international expansion of Toon, we are working together with a growing number of distribution partners, including (web) shops such as Coolblue, Karwei and Bol.com. All consumers, including those who do not have an energy contract with Eneco, have been able to obtain a Toon thermostat at these shops since the end of 2015.

Sustainer Homes

Eneco also invests in promising and innovative ideas outside the Eneco Group. An example of this is Sustainer Homes, a company that builds sustainable, fully self-sufficient and comfortable container homes. A Sustainer Home, with its self-sufficient techniques for water, electricity, heating and electricity storage, forms the perfect environment for innovation experiments. In the next two years, we will work together with Sustainer Homes in this interactive house. This provides us with knowledge for the home of the future.

Nerdalize and the e-radiator

Another company in which we have invested is Nerdalize, the developer of the e-Radiator; a computer server that is used to provide heating for a home. With this solution, consumers require less energy for heating purposes and it also results in a reduction with respect to the cooling of data centres: lower energy consumption on both ends. This collaboration teaches us more about new forms of sustainable energy supply and ways to make them available to consumers.

Mobility
Electric transport expands

Electric mileage in the Netherlands is increasing. At present, there are around 30,000 electric vehicles and this number is increasing rapidly. Based on market estimates, there will be 200,000 electric cars in 2020 and by 2025 this number will have risen to one million. These hybrid and fully electric vehicles require a lot of electricity which, unless changes are made to the current policy, will result in peaks in the electricity net in connection with the charging of these cars. In addition to further expansion of the charging infrastructure, the use of smart technology in future grid management is, therefore, essential.

Charging station within one day

In 2015, the e-laad association was split into two new organisations: ElaadNL and EVnetNL. ElaadNL is the knowledge and innovation centre for charging infrastructure. EVnetNL manages the existing network of public charging stations from within the grid operators, to ensure that it continues to function properly.

Six of the ten types of most frequently used EVnetNL charging stations are located in the Stedin area. It is expected that the majority of the 'fill ups' of car batteries will permanently take place in the Randstad region. However, the process of installing a charging station and getting it to work is still time consuming, labour-intensive and cumbersome and takes three weeks to complete. Stedin is working on a more efficient process. The ideal situation would be if the service provider contracted by the municipality would be in charge of all the planning, work preparation and implementation activities, and Stedin's role would be limited to obtaining the property rights from the landowner, carrying out the grid test and, possibly, selecting the cables. Stedin's aim is that, in the future, this process will only take one day. The first experiments will be conducted by the grid operator in 2016.

Smart electric charging

Eneco offers an innovative service in the field of electric driving: the first app that not only controls the charging station, but also provides an up-to-date estimate of the electricity price. The app selects the most favourable charging moments within the charging time frame selected by the consumer. These are the moments when a lot of green electricity is available and the market price is low. The consumer automatically receives the benefit, which means this app has advantages both from an economic and sustainability perspective. Tesla was the first partner at the launch of this product, which was developed by our subsidiary Jedlix. Before long, this service will also be available for other car brands, including Renault.

Solar energy and storage
ZonIQ – convenient solar energy

Eneco makes the production of solar energy easier and more transparent for its customers. We have invested in ZonIQ, a company that provides support for consumers who are interested in solar panels. ZonIQ provides advice, installation services and transparency. Since 2015, ToonZon enables customers to read the amount of energy generated by their solar panels from their Toon thermostat. This makes it clear which part of their energy consumption is covered by their own production. Since September, we provide support for ZonplusStroom, a community of owners of solar panels that aims to optimise the production of their solar power installations.

Solutions for the public space
Saving energy with smart public lighting

In 2014, Eneco acquired Luminext, a leading company in the field of intelligent public lighting systems. By providing smart solutions, we offer municipalities and provinces the possibility to reduce the public lighting-related energy and management costs significantly and, at the same time, enhance the sense of safety and comfort. These smart solutions include remote dimming and control of public lighting, real-time notification of defects and a range of defect and other types of analyses and control features. This enables our customers to provide comfort for residents and users in the form of lighting that is attractive and pleasant in places where this is possible and lighting that provides safety where this is required.

The acquisition of Luminext also offers the possibility to further expand our services to customers by making the public space smarter with the aid of dynamic outdoor lighting. The brightness of this lighting can be adjusted as and when necessary in connection with road, weather or traffic conditions or calamities. These types of innovations are important to both Eneco and its customers because of their high energy efficiency.

Smart buildings
Coordination of energy demand to save money

Together with start-up company Peeeks, we help companies to align their energy consumption with the availability of cheap power. As soon as the price of electricity goes up, their installations are switched off. This form of coordination of supply and demand enables us to deal with peaks in the production of sustainable solar or wind energy by means of immediate conversion into energy consumption. This results in lower energy costs for companies, provides room to expand the share of sustainable energy on the electricity grid and also prevents the need for investment in expansion of the capacity of electricity distribution networks.

Collaboration with external partners

In 2015, Eneco entered into a partnership with the Cambridge Innovation Institute (CIC), the world's largest innovation centre for start-ups. Operating from seven offices in the United States, the CIC collaborates with over 800 start-ups. The institute's first European office is located in Rotterdam. Eneco is one of the first large companies to be associated with the CIC Rotterdam. This makes us part of this international innovation ecosystem in which the innovation centres YesDelft and Erasmus Centre for Entrepreneurship also participate. In the future, Eneco will place start-ups at the CIC.

We also started a partnership with Stroomversnelling, a close collaboration between municipalities, businesses and housing corporations aimed at the realisation of 111,000 zero-energy homes over the coming years. These zero-energy homes are existing houses that are renovated in such a way that the amount of energy produced is equal to the amount of energy consumed. Eneco is determined to develop and implement new and innovative earnings models in relation to these zero-energy homes, in collaboration with the other Stroomversnelling partners. Improvement of the sustainability of the built environment is playing an increasingly important role in the realisation of a climate-neutral society and is fully in line with Eneco's mission: Sustainable energy for everyone.

These zero-energy homes do not have a gas connection. A new outer 'shell' is installed to make them draught-free, installations are replaced and new components such a solar panels are installed. When the renovation is completed, these houses produce the same amount of energy as they need, which, based on the annual energy consumption of an average household, results in zero energy costs. After the renovation, the houses are as good as new and provide a higher level of comfort. The financing required for the renovation is equal to the amount that homeowners would normally spend on their energy bills. Homeowners will continue to pay the same amount as their current energy bill for a period of about thirty years. The exact number of years depends on the amount of their current energy bill and the type of house.

Innovation Day

In order to increase our relevance for our two million customers, innovation is an ongoing process at Eneco. The available technology and the possibilities for innovation are becoming increasingly complex. In connection with this development, we seek to connect with other parties, such as customers, start-ups, investors and universities. Innovation Day is an event expressly aimed at looking outside the organisation and welcoming a wide variety of guests ranging from customers, members of the Supervisory Board, start-ups and colleagues to students and suppliers. These are the people that we wish to connect with. Attendance was high; around 30 start-ups and other partners introduced their innovations in an interactive manner. This included experiencing 'the internet of things' in a practical manner, taking a look inside a Sustainer Home and workshops on topics such as the future of the Toon thermostat and enhancing the effectiveness of innovation in combination with co-creation with customers.

Outlook

We have made good progress in the area of innovation in 2015 and we will make even faster progress in 2016. The relevance of the Toon thermostat for our customers will be enhanced by adding new services. The thermostat and other successful concepts, such as smart charging of electric cars, will also be introduced on the international market. Economies of scale is essential for many concepts, which is why we will seize the opportunities that we see in other countries. This means that we will support a growing number of people with our smart and sustainable solutions.

Infrastructural footprint

The transition to locally produced and sustainable energy has a big impact on the energy infrastructure. We aim to implement these changes in the current system in a socially responsible and logical manner.

More and more people produce their electricity at home with the aid of solar panels. They use this electricity to light their homes, charge their cars and to generate heating by means of heat pumps. In some cases, a gas connection is no longer required or requested, which leaves the question if the house will heated via a heating network or a heat pump.

Changes in our energy consumption change the infrastructure

When customers make their own choices with respect to sustainability, the question is what the associated costs are to ensure that the infrastructure continues to be suitable and whether the energy supply will remain affordable. Consequently, it is becoming more and more important to apply a comprehensive approach to the local energy supply. What are the possibilities for increasing the sustainability of our energy at socially acceptable costs? Is residual heat available locally? How well are homes insulated? How large is the roof area and how many cars are there in the neighbourhood? These and other variables determine the best ways to save energy, how it can be used efficiently, how it can be produced in a sustainable manner and what infrastructure is needed to store and transport this energy.

Comprehensive mapping of energy costs

The current model is designed for a central energy supply: electricity is produced at central locations and used locally for the purpose of lighting and to operate appliances. Gas is used to provide heating. Customers pay for the supply as well as the transmission of electricity, gas and heat. Energy companies and grid operators each concentrate on their own line of work, while customers see the complete picture. At this moment, the capacity tariff is applied in the Netherlands: the size of the connection and the transmission costs are determined by the peak in consumption. Customers receive a single total bill. Virtually all domestic customers have the same electricity connection (3 x 25 amps) and gas connection (<= 10 m3(n)/hour (>= 500 - < 4000 m3/year). For the large part, the costs for electricity, gas and heating are dependent on the amount of energy consumed. As a result of technological developments, the production, supply, storage and transmission of energy are becoming more and more integrated. This is why Eneco looks at energy from a comprehensive perspective, which makes it possible to, for example, properly assess the chances of success of new technologies.

What did we aim to achieve in 2015?

In 2015, Eneco developed the Infrastructural Footprint project. This is a method that we use to map the total energy costs for homes in different districts, based on the local circumstances. This assessment provides information that we use to keep the costs of the transition to the local production of energy as low as possible for society. The aim for 2015 was to carry out an assessment for six districts and calculate the costs of a number of scenarios based on a variety of technologies such as heat pumps and solar panels.

What have we achieved?

We have learned a lot about local differences and the impact of different choices on costs and carbon emissions. Reducing carbon emissions could generate money in one district, but could cost money in another district. Some choices made by customers lead to grid overloads in one district, but not in others. These assessments give our grid operator Stedin a clearer picture of future developments and required investments. Naturally, insulation plays an important role in this: electrification of the heating of existing buildings without proper insulation will sooner result in the need to expand the capacity of the electricity network than would be the case if buildings are well-insulated.

Taking local differences into account

The above demonstrates that there are substantial local differences in the consequences of the energy transition. Current regulations do not take this into account. It would be a good thing if this would change in the future. In addition, energy companies can respond to customer needs and local differences more efficiently by applying more variety and flexibility with respect to tariffs (both for the supply of energy and for transmission over the grid). In the event of large-scale electrification of a district, it may seem logical to remove the gas grid, but it could also be useful to maintain it. Application of current regulations will not always result in the selection of the option with the lowest costs to society for two reasons. To start with, gas continues to be the most attractive option for customers, despite the recent energy tax amendments. The second reason is that, at present, there is no clear legal framework in place to make binding agreements with respect to local choices relating to the optimal energy infrastructure.

In 2016, we will continue with the development of the Infrastructural Footprint method and test it in collaboration with a number of municipalities to ensure that it becomes a tool with which Eneco will be able to actually contribute to realisation of the energy transition at the lowest costs to society.

Employees

Dynamic employer

Our mission 'Sustainable energy for everyone' is at the top of the minds of our employees. It is a mission that we are committed to, that guides our actions and that we hold each other accountable for. A mission that binds and connects.

Working together in the interest of our customers

Our employees have energy, talents and inner strengths. They have the need to contribute to a mission that really matters, to develop and to reinforce each other.

The energy market is in the middle of a major transition and is characterised by a high level of dynamics and innovation. At Eneco Group, we aim for increasingly better performance and acceleration of the transformation. This is supported by our modern work environment and a high degree of freedom and responsibility at every level of the organisation. One aspect of the 'New way of working' that we introduced a number of years ago, is that nobody has their own office. We are flexible and work together with and in the interest of our customers.

In addition, Eneco Group is changing its philosophy from Employment for Life to Enjoyment for Life and Grow & Go. When all employees enjoy working for the company, act in accordance with the strategy and develop their knowledge and skills, we are doing a good job.

Alignment and motivation
Why is this important?

Alignment with our mission and strategy as well as well-motivated employees are essential to the success of our company. The better our employees are aligned with our mission and strategy, the more ambassadors we have and the better we will be able to implement our strategy. Motivation, which is a good indicator of how much enthusiasm our employees invest in their work and how much they enjoy it, is also important.

A new, integrated method for measuring alignment and motivation has been implemented in 2015. This unique assessment has the form of a survey among a representative sample consisting of a quarter of our employees. The results of this survey give us a good picture of where we stand and provide valuable information for further improvement.

Where are we now?

From the stable motivation score of 7.7, both at the beginning and the end of the year, we can conclude that, in general, our employees were well motivated in 2015. A pleasing result, especially in view of the expected decline in motivation in connection with major restructurings in 2014 and 2015.  

The alignment score improved from 54% in the first quarter to 58.4% at the end of 2015. This score indicates that a growing majority of our employees is, to a moderate or greater extent, familiar with our mission and strategy and puts them into practice in their daily work.

We are not yet satisfied with these results. Activities in this area that were initiated in 2015 will be continued in 2016, with a focus on internalisation of our strategy and the role of management.

Risk: recruiting insufficient numbers of people with the right competencies and limited focus on High Performance culture

The success of the transformation, which is needed to achieve the strategy, depends largely on the quality of individual employees and the shared culture. A lack of capable managers and employees forms a risk for the speed at which the transformation proceeds and the company's capability to adapt.

In connection with this risk, Eneco has implemented a number of High Performance Management tools that focus on alignment, feedback, assessment and new training courses. Central aspects are openness, action oriented, innovation and adapting to change. This way, Eneco creates a High Performance culture with agile employees who continue to develop and have the potential to grow. The quality of leaders and managers plays a crucial role in this respect. Management must stimulate values, performance, possibilities for growth, connection with stakeholders and long-term development. These components are specifically addressed and developed as part of personal and career development programmes for managers. In addition, Eneco's High Potentials programme encompasses focused and effective talent management that guarantees the continuity of the recruitment, development, hiring and retention of (internal and external) talents.

Talent development

Development is an important theme for us. The world of energy is changing significantly and so are the needs of our customers. In connection with this development, Eneco Group places more emphasis on innovative products and services. At the same time, we continue to further improve our performance with respect to our existing activities. In order to ensure that our employees are sufficiently equipped for this, we stimulate their development in a number of ways.

Learning agility, the will and ability to continue to learn and develop, is an important starting point that requires self-awareness – what am I good at and how can I improve myself? Online assessments and 360-degree feedback are methods that we use to improve self-awareness. Learning agility is also a component of recruitment activities and management development.

We stimulate development on the basis of the 70/20/10-model (70% of development is the result of doing new things, 20% is the result of learning from others and 10% is the result of studying, for example from a book). The setup of our online platform, the Campus, is in line with the 70/20/10-model and offers a wide variety of development possibilities. We also have company schools that provide programmes for the development of technical knowledge and skills. The Career Development Centre supports the development of employees by providing them with the possibility to carry out temporary assignments or to take on a new role within Eneco Group.

Performance management

The purpose of performance management is to ensure that our employees contribute to our mission, vision, strategy and plans to their best ability. Since 2014, we apply a modern approach. Annual five-point scale performance reviews have been replaced by 'constructive conversations' between managers and employees, which focus on five central questions: am I doing the right things?; am I doing them well?; in what ways should I improve myself?; what are my strengths?; am I still in the right place?. Acknowledgement is also an important item in these regular conversations.

The ability to conduct a 'constructive conversation' is an important skill. A training programme aimed at helping the 600 managers at Eneco Group to improve their conversational skills was started in 2015.

Diversity and inclusiveness

Eneco Group has over 7000 employees as well as external temporary employees and people with other types of employment contracts. In order to achieve our mission, we need well-balanced teams that are able to make a connection with our customers and stakeholders, make the best possible decisions and implement them in a well-balanced manner, taking into account all implementation aspects. This not only requires a good balance between men and women, but also means that there is a place in the organisation for people with a different view, background or personality, and for the challenged. For these teams to be successful, it is important that differences are respected and that we enter into a constructive dialogue to achieve the best results in collaboration. It is this constructive dialogue that enables us to shape our strategy from all possible angles.

Eneco Group strives for diversity at all levels, including the Supervisory Board and Board of Management. In consultation with the central works council, we have set ourselves the target of appointing women to 30% of the management positions. At present, the share is approximately 25 percent (2014: 26 percent, 2013: 23%). ­

The percentage of female employees at Eneco Group was 24% in 2015 (2014: 25%; 2013: 22%). The percentage of female employees at Eneco was 30% in 2015, and at Stedin 17%.

In order to further improve the balance between men and women within the group, we agreed in 2014 that we would strive for an equal number of men and women in the external recruitment for management positions of department head and upwards. 94 new employees joined the Group at this level in 2015, 38 of which were women (40%; 2014: 36%).

For more information about the composition of our workforce and other details on this topic see Workforce.

Safety

Many of our people carry out work on the energy infrastructure; a working environment with relatively high risks. Their safety and the safety of customers and citizens are our priority. This is why we invest in knowledge and expertise and strive for a proactive 'safety culture'.

Not safe? Don't do it!

Ongoing attention for increasing safety awareness at our company includes providing instructions, identifying and addressing safety risks and stimulating safe conduct, in particular within departments that carry out activities in areas that present the highest risks. Our starting point is: ' if it's not safe, we won't do it '. Risks and safety awareness are topics that are being discussed on site by managers and operational staff more and more frequently. This will continue to be an important focal point in the coming years. The members of the board, executives and line managers are aware that all employees should be actively concerned with safety in all aspects of their work. Safety is a standard agenda item at work and management team meetings and reports on this topic are submitted to the Board of Management on a monthly basis. Eneco's safety management system Alerta provides procedures and work instructions and is used for incident registration and follow-up.

Safety culture

Management spent more time in 2015 on visiting work sites and discussing safety risks. These on-site visits play an important role in the development of a good, open and transparent safety culture.

In addition to general knowledge, safety instructions for managers also address conduct and skills in order to further enhance the safety culture.

Collaboration within the Group

Collaboration between the different safety departments within the group was further intensified in 2015, in part by giving a number of managers responsibility for Eneco Group as a whole. As a result, we were able to improve collaboration with respect to reporting, the supply of information and sharing experiences in the area of safety.

What did we aim to achieve in 2015?

The target for 2015 was to reduce the number of occupational accidents to 61 or lower. This target is based on the number of accidents in previous years and an estimate of the best possible result. Occupational accidents are accidents that require medical attention and may or may not result in absence from work or the need for temporary alternative work. This translates into a maximum Recordable Incident Frequency (RIF, number of occupational accidents per 200,000 hours worked) of 1.18.  

Another aim was to reduce the number of occupational accidents resulting in absence from work (Lost Time Injury, LTI) to 11 or lower. The ultimate goal is to reduce the number of occupational accidents to zero.

Contractors carry out a large portion of our civil engineering and installation work. For this reason, we also wanted to obtain more detailed information on their performance in the area of safety. Our aim was to discuss our findings based on observations and incident reports with our contractors periodically, in order to further improve the safety of the work.

In addition, we strived to enhance the safety awareness of managers by means of safety training courses and by encouraging work site visits.

What have we achieved?

The number of occupational accidents was reduced to 45 in 2015, well within the target range. The RIF was down to 0.86

Due to an increase in the number of accidents resulting in absence from work, we did not meet our target on this aspect. Even though they did result in absence from work, most of the accidents were relatively minor in nature. The total number of registered accidents resulting in absence from work was 26. The number of occupational accidents resulting in absence from work per one million hours worked (LTIR) thus amounted to 2.49.

The severity rate expressed in the number of lost work days was 4.08 days, which is an improvement compared with the 15.5 days in 2014.

Our contractors registered 26 accidents in 2015, 23 less than in the previous year. This is due to a better safety performance and a reduction in the number of activities outsourced by Stedin.

Safety of complex projects

During the implementation of large projects, our supervisors and safety experts always strive to guarantee the safety of our own personnel, the personnel of contractors and the environment. A good example is the excellent safety performance of zero accidents resulting in absence from work during the 350,000 hours that our employees worked to complete the offshore grout project at the Amalia wind farm, despite the difficult and potentially risky working conditions.

Reported incidents

Despite the fact that the number of 3,869 reported incidents is slightly below the target of 4,000, there was a measurable improvement in the speed with which the handling of these reports was completed: 15% of all incident reports were fully processed within a period of four weeks.

We will continue to encourage employees to report incidents. Careful analysis of these reports enables us to identify the cause of incidents and to take measures to prevent repetition, such as improvement of work instructions and communication lines.

Challenges

Incident reporting and the timely implementation of adequate measures continue to be important in order to achieve a significant reduction in occupational accidents in the coming years. In addition to existing risks, we are also alert to new security risks that arise as a result of innovation. Examples include local energy storage and 'smart home' applications such as the Sustainer Homes: self-sufficient, sustainable, mobile container homes. The new business unit Eneco Innovation & Ventures supports smart developments that accelerate the transition to a sustainable and local energy supply. The challenge is to control the corresponding safety risks without imposing unnecessary restrictions or hindering the further development of promising ideas.

New safety risks

Reduction of the number of occupational accidents is closely related to safety in connection with the construction of and maintenance on production facilities and energy infrastructure. We have extensive experience in the area of safety with respect to energy infrastructure and technical installations. However, major projects for which the available capacity needs to be expanded in a short period of time require us to be especially alert and new forms of sustainable production, such as biomass installations and offshore wind farms, lead to new safety risks.

Carbon monoxide incidents

Ventless open combustion boiler systems that are used in the consumer market, obtain the oxygen that is necessary for combustion from the space in which the boiler is installed. Gasses produced in the combustion process are released in this space. As the combination of inadequate ventilation and incomplete combustion can lead to carbon monoxide poisoning, such boiler systems may only be installed in spaces that are sufficiently ventilated in accordance with the building code.

Eneco carries out periodic inspections at its customers to check their boiler systems and the spaces in which these appliances are installed. In case of an unsafe situation, we proactively offer our customers alternative solutions. We install carbon monoxide detectors in homes with ventless boilers. The structured reduction of the number of (ventless) kitchen boilers is taking place in collaboration with home owners and residents.

Business continuity & ICT/cyber security

Safety also applies to the continuity of our business operations. Interruptions in ICT systems may affect our customers in the form of an interruption in the supply of energy, incorrect invoices or a lower level of service due to unavailability of buildings or employees or incorrectly functioning ICT systems. This could result in reputational damage. ICT issues in the form of cyber-attacks or interruptions in the systems that we use for energy trading could result in financial damage.

To mitigate these risks, energy trade and business operation centre related activities are run on a separate, duplicated ICT platform and periodic recovery tests are carried out for critical systems. A Cyber Security Task Force is in place to monitor the adequacy of ICT security. We actively collaborate with external organisations such as the NCSC and EDSN and specialised companies are used for assessments and operational monitoring of the IT systems. Awareness of Eneco employees with respect to the importance of information security has our ongoing attention. In 2015, we implemented the Security Incident & Event Monitoring (SIEM) system and also set up the Eneco Privacy Board. The activities of this Board include providing advice and ensuring compliance with our privacy standards in connection with new cases. Furthermore, ICT security incidents are discussed during security meetings with other grid operators. Additional assurance with respect to the effectiveness of implemented measures is obtained by means of audits and certification.

Modern employee participation

Employee participation is important at Eneco Group. This is also something that we do together and in a modern way. Modern employee participation means that the works councils have a limited number of members and that members can only serve a limited number of terms. We use specific role profiles that specify what is expected from works council members and stimulate their development. For consultation processes, we create theme groups consisting of a few works council members in combination with a number of employees with a specific expertise.

Better and faster employee participation processes

The key to modern employee participation is for the board to involve employees in participation processes at an early stage in order to establish a common basis for assessing the issue or opportunity. Weighing the different options and choices together, results in a faster participation process, better decisions and wider support for the ultimate outcome. Employee participation bodies were involved in all of the important themes in 2015, including major investments, organisational changes and labour conditions.

The Central Works Council works together with management on the implementation of ongoing changes in the company. More and more, we apply a gradual approach instead of major restructurings, which place a high demand on the organisation and, in general, take a long time to complete. This approach enables us to focus on what really matters: our customers and the achievement of our strategy.

Financial policy

Transformation and return on investment

Eneco wishes to be relevant to its customers and society, now and in the future. In connection with this, we provide information on our performance in the following three areas: the financial health of our company, our contribution to the climate and the environment and the way in which we involve our staff in our mission and vision.

Reaching a balance between risk and return and preserving the financial health of the company are essential for the realisation of our ambitions and for the transformation of Eneco. We have selected a number of key indicators that represent our achievements in this respect. Value creation is also expressed in terms of the reduction in carbon emissions realised in collaboration with our customers and partners. Furthermore, it is important that we create wide support for our strategy within the company. Our employees’ commitment to and involvement with our vision for the future - the degree in which they can relate to this vision and their willingness to contribute – are very important to us, because these are the people who implement our mission: Sustainable energy for everyone. This paragraph relates to the financial component.

Financial
What did we aim to achieve in 2015?

Our target for 2015 was a credit rating of at least A- and a 3.3% Return On Average Capital Employed (ROACE).

What have we achieved?

In 2015, we maintained our A- credit rating, which is a good result in view of the financial pressure on the energy sector.

In 2015, our ROACE amounted to 3.7 percent, which is 0.5 percentage points lower than in 2014 (4.2%) and 0.4 percentage points above our 3.3% target for 2015.

Credit rating: stable A- status

Creditworthiness is one of the key indicators on which we base our financial policy. In 2015, Standard & Poor’s again awarded Eneco the status A- with a stable outlook. The credit rating differs from the other strategic KPIs in the sense that it is not influenced by Eneco. A report published by Standard & Poor’s that explains how the credit rating was established can be found on our corporate website.

ROACE under pressure

Return on Average Capital Employed (ROACE) is the key indicator that we use to provide transparency with respect to our return on investments in assets such as wind farms and grids. It is a widely-used ratio in capital-intensive industries like ours and a clear indicator of our ability to make money from our assets (such as our wind farms, gas plant, biomass plant and grids) in relation to the capital that we have invested in these assets.

The meaning of ROACE

One of the components in the calculation of ROACE is the operating result (EBIT1). The operating result of Eneco Group is influenced by external as well as internal factors.

External factors include the weather conditions and legislation and regulations (see the risks described elsewhere in this section). The weather in 2015 was relatively mild, but 10% less warm than in 2014. Weather-related fluctuations in customer consumption patterns affect the margin on the supply of energy as well as the difference between advance payments by customers and actual consumption. The tariffs for grid management are regulated by the government. Changes in these tariffs evidently affect the margins on the transmission of energy by the grid operator.

Internal factors that have an impact on EBIT include the introduction of new products and services on the market, investment decisions and cost-control measures. Eneco's focus on innovation in 2015 means that, in order to earn a return, initial costs must be incurred.

In the calculation of ROACE, the operating result is compared with the average capital employed. Eneco's investments in assets in 2015, which included investments in its electricity, gas and heat transmission grids and assets used for the production of sustainable energy such as wind and solar farms, amounted to €715 million. This has resulted in an increase of the capital employed. Three large wind farms were put into operation: Luchterduinen (offshore, Netherlands, 129 MW), Delfzijl-Noord (onshore, Netherlands, 62.7 MW) and Burn of Whilk (onshore, United Kingdom, 22.5 MW). The successful completion of these long-term projects is a milestone in the pursuit of our sustainability objectives.

In connection with the introduction of the smart meter, the investment programme for small volume meters was expanded significantly from € 31 million in 2014 to € 52 million in 2015.

Eneco invests in projects that are expected to yield sufficient return over their life cycle. Relatively new assets still have a high book value, which means that recently completed investment projects result in a sharp increase in capital employed. If the revenues are constant over the years, the ROACE is lower during the first years of operation of these assets than in the subsequent period in connection with depreciation of the asset over the years. This is a clear illustration of the challenge of combining the realisation of an acceptable financial return with innovation in an environment that is characterised by transformation. ROACE is also under pressure in view of the fact that capital employed encompasses amounts for assets under construction that do not yet contribute to the result. At the same time, working capital (part of capital employed) increased in 2015 in connection with the restitution of unused customer prepayments in connection with the warm weather conditions in 2014.

Outlook

ROACE is under pressure due to the effect on EBIT of the decrease in the permitted return on regulated activities, which is expected to continue, and the increasingly stronger competition resulting in a lower gross margin on energy. In addition, municipal taxes for encroachments on or over public land (precario) are increasing.

Eneco addresses this challenge by investing in production assets that generate a stable return, by developing new products and services to meet the current and future needs of its customers and by streamlining its internal processes to increase the effectiveness and efficiency of its operations.

Furthermore, we expect that the sustainable investment programme for the coming years and the rollout of smart meters will result in a steady increase of capital employed. Eneco will spread its risks by developing plans for investments in collaboration with customers and partners or by selling parts of projects, such as the development of wind farms, to investors.

Risks

Elsewhere in this section, reference is made to risks in connection with legislation, regulations and creditworthiness. Six of these risks are described below.

Risk: Independent Network Management Act and forced unbundling

The Dutch Supreme Court issued a ruling on the forced unbundling of Dutch integrated energy companies on 26 June 2015. The Supreme Court ruled that the articles relating to the mandatory group prohibition in the Electricity and Gas Act, also referred to as the Independent Network Management Act (Wet Onafhankelijk Netbeheer (WON)), are not in conflict with European Union legislation on the free movement of capital and freedom of establishment. The Supreme Court referred judgement on whether the forced unbundling is an infringement of the property right described in the First Protocol to the European Convention on Human Rights, to the Court of Appeal in Amsterdam. This Court must examine whether the Act is in contravention of that Article of the First Protocol. This procedure was brought before the Court of Appeal in Amsterdam in 2015. It is not known when the Court of Appeal in Amsterdam shall issue a ruling in this matter.

In the meantime, the Authority for Consumers and Markets (ACM) issued an enforcement decree as a consequence of which Eneco Holding N.V. must be unbundled by ultimately 31 January 2017. On 13 January 2016, Eneco Holding N.V. submitted a statement of objections regarding this enforcement decree. Although the result of this objection procedure is not yet known, Eneco must start preparations for an unbundling in accordance with the ACM's enforcement decree. In connection with this, Eneco is preparing an amended version of the unbundling plan that was submitted in 2009. The amended plan shall be submitted to the ACM in the first half of 2016.

There is a close relationship between the development of (local) production of sustainable energy by customers and the development of smart energy grids necessary to feed the generated energy into the grid. As an integrated company, Eneco Group can manage both of these factors necessary to increase the sustainability of the energy supply and to stimulate the transformation of the energy sector. Forced unbundling will slow down the development of a sustainable energy supply and the transformation, and will result in higher costs to society due to lack of coordination between production, consumption and the energy grid.

Risk mitigation

Eneco is in favour of the scenario in which either the legal provisions regarding the mandatory group prohibition are definitely declared non-binding or group prohibition is withdrawn. With this aim in mind, Eneco continues the legal proceedings. In view of the loss of employment and investment power, unfair competition with foreign -unsplit- energy companies and the challenges facing society with regard to ensuring a clean, reliable and affordable energy supply, Eneco also urges politicians to reconsider the points of departure that led to this legislation years ago. To be prepared for potential consequences, Eneco uses its financial framework to simulate the effects of possible unbundling. It is important that the company continues to grow to ensure that a possible unbundling shall result in two viable companies.

Risk: changes in rating method

Eneco's current credit rating has been issued by credit rating agency Standard and Poor’s. Eneco runs the risk of a negative adjustment of the credit rating of Eneco Holding N.V. resulting from changes implemented by Standard and Poor’s with respect to rating criteria, rating method or assumptions. A lower credit rating could affect Eneco Holding N.V.'s access to capital and money markets, financing costs, and the credit limit provided by parties in the corporate sector. The risk of changes in Eneco’s credit rating is mitigated by means of regular scenario planning and stress testing, assessments carried out and advice provided by experts and periodic information exchange with Standard and Poor's.

Risk: tariff regulation in the regulated domain

The rate that we, as a grid operator, are allowed to charge (regulated domain pricing), is essential for financing all the costs and investments associated with a reliable grid. Grid operation activities relate to the long term and require adequate and predictable pricing. Unexpected deviations create an unstable investment climate. The regulatory method is based on a system of yardstick competition that is used to benchmark regional grid operators. The company’s management participates proactively in consultation bodies that include the grid managers and the ACM and exchanges ideas on how the regulation should be structured.

Together with a number of other grid operators, Eneco lodged an appeal at the Trade and Industry Appeals Tribunal in connection with the method decision for the regulatory period 2014-2016. In its interim ruling at the beginning of January 2016, the Tribunal instructed the ACM to set a new WACC (an important component in setting the tariffs) for the regulatory period 2014-2016, before 12 February 2016. Current discussions between the grid operators and the ACM relate to the question of how the ruling of the Tribunal should result in adjustment of the WACC. It is not yet clear what the outcome will be.

Risk: profits in the metering domain

The tariffs that we, as grid operator, charge for the rent of small volume meters are based on the ministerial regulation on metering tariffs. This regulation specifies how these tariffs are set by the ACM. The maximum tariffs that the grid operators are currently allowed to charge are based of the tariffs of 2005 plus an annual adjustment for inflation on the basis of the consumer price index. The ACM has been monitoring the costs of carrying out the process of metering since 2011. The aim is to use the revenues from this process to finance the Large-Scale Rollout of smart meters. The ministerial regulation on metering tariffs ensures that the tariffs paid by consumers will not exceed the amount that is necessary to cover the costs and do not result in surpluss profits for the grid operators. It is possible that the ACM will include the revenues from the metering process in its future decisions on tariffs in order to achieve this.
Based on our current assessments, the revenues that we have realised thus far are sufficient to finance the rollout of smart meters without increasing the tariff. We expect that the ACM will offset any remaining surplus profit after completion of the large-scale rollout of smart meters, probably by means of lowering the tariffs.

Risk: large-scale rollout of smart meters

Just like all of the other grid operators, Stedin is required to have presented all of its customers with an offer for the installation of a smart meter and to have installed a smart meter at 80 percent of its customers before 2020. The smart meter is a digital, remotely readable energy meter that offers customers more insight into their energy consumption, thus making it easier for them to save energy. For the timely realisation of the requirement at predictable costs, Stedin is dependent on third parties such as the suppliers of the meters and the legislator as well as the attitude of customers. The uncertainties associated with these dependencies could lead to unforeseen expenditures and negative customer satisfaction. The Large-Scale Rollout programme ensures that the process of presenting customers with an offer for the installation of a smart meter and the installation itself are carried out in a controlled manner and in accordance with the requirements. As part of this programme, customers are informed of the advantages offered by the smart meter. The dependencies have been specified clearly and are being monitored closely.

Risk: claims relating to connection and transmission charges

Our grid operator has received a limited number of claims from customers with private networks demanding restitution of connection and transmission charges. These claims relate to the ruling of the Trade and Industry Appeals Tribunal that, until 1 January 2014, equal voltage grid-to-grid connections did not qualify as a connection according to the legal definition of the term 'connection'. This ruling has led to questions in relation to civil law that have not yet been answered.

Financial results 2015

Management report

2015 results

In 2015 Eneco Group made a net profit of € 208 million, maintaining the 2014 level (€ 206 million), and recorded revenue of € 4,282 million (2014: € 4,590 million), a fall of 7%.

Guido Dubbeld, CFO of Eneco Group: “The financial results were satisfactory. The company is reaping the benefits of several cost-saving programmes started in recent years, while our customers benefited from falling prices and a cut in tariffs for transmission of their energy. We are also seeing a decline in energy consumption by customers as a result of savings. At the same time, we maintained investment to make the energy supply more sustainable in 2015 at a high level of € 715 million. This is lower than in 2014 (€ 842 million) when work was still continuing on a number of large projects, such as the Leiding over Noord and Haringvliet, which are now in use.

By taking Delfzijl-Noord, Luchterduinen and other wind farms into commission, Eneco contributed 225 MW to the 535 MW of new wind energy facilities in the Netherlands in 2015. A new agreement with Air Liquide for the delivery of energy produced by Pergen, a power station that converts gas into electricity and steam for industrial use, had a favourable effect. This agreement solves the dispute that had arisen between the two companies. Furthermore, Eneco invested € 47 million in rectifying a design fault in all 60 wind turbines at the Prinses Amalia wind farm.”

Jeroen de Haas, CEO of Eneco Group: “We made progress in the past year on the transition to sustainability and developed new and innovative energy services for our customers. We collaborated with start-up Nerdalize on using computer servers to heat homes. We entered into an agreement with Tesla on supplying its PowerWall battery on the Dutch and Belgian markets and through start-up Jedlix we are now working with several car manufacturers on smarter and cheaper recharging of electric vehicles. We also invested in the start-ups Peeeks and Sustainer Homes. Peeeks has developed a promising system for better balancing customers’ usage against fluctuations in wind and solar power. Sustainer Homes converts shipping containers into self-sufficient homes, offering Eneco an ideal alliance for testing new sustainable techniques and smart domestic applications in practice. 225,000 Toon thermostats have now been sold and it is becoming a familiar fixture in sustainability-conscious households. During the year, Eneco also started delivering sustainable electricity to all the railway companies in the Netherlands under a ten-year contract signed in 2014. This means, for example, that all rail journeys by railway company NS passengers will be entirely sustainable in the near future. In June, Stedin started using a new type of charging station for electric cars. These can recharge electric cars’ batteries but also supply power from the battery to the grid, allowing a reserve of power to be created that can be used, for example, in the event of a brief power cut. Eneco Belgium launched a group offer of solar panels in the province of West-Vlaanderen, enabling Eneco customers and others to apply, without obligation, for the supply and installation of solar panels. Eneco wants this campaign to reduce reluctance to opting for solar energy. In the past year, Eneco also joined DE Unie, a supplier of and for local sustainable energy co-operatives, to support this rapidly growing movement. I am convinced that local initiatives play a key role in the transition to a fully sustainable energy supply in the Netherlands.”

A dominant feature of 2015 for Eneco was the Independent Network Management Act (Wet Onafhankelijk Netbeheer), a law passed in 2006 that requires Dutch energy companies to separate their energy and network businesses. The Dutch Supreme Court ruled in June 2015 that the Act was not in conflict with European Union law and referred the breach of property rights back to the Court of Appeal in Amsterdam for judgement. It is not yet clear when that judgement will be delivered. In the meantime, the regulator ACM has ruled that Eneco must be unbundled by 31 January 2017.

Result development

The gross margin on sales and transmission of gas, electricity and heating and related services rose by € 60 million (4%) to € 1,637 million, mainly as a result of the expansion of wind farms, the purchase of heat production assets in Utrecht, better results on trading activities and the buy-out and restructuring of energy purchase contracts. The weather also had a beneficial effect on margins. Although the final months of 2015 were extremely warm, the average temperature in 2014 was even higher and so more gas was sold in 2015. 2015 was also windier than 2014 and so we were able to generate more of our own electricity. Margins were strongly adversely affected by the further reduction in regulated tariffs for the transmission of energy, while the cost of transmission increased.

Operating expenses excluding depreciation totalled € 1,036 million. Despite the additional costs brought about by growth in our activities and an acceleration in innovation, this was € 80 million (7%) lower than in the previous year, partly as a result of non-recurring charges in 2014, such as the restructuring expenses and the buy-out of cross-border leases. The reduction is also a result of efficiency improvement programmes started at various business units in 2014 and a reduction in engineering projects for third parties. Amortisation and depreciation expense was € 495 million, an increase of € 150 million of which € 140 million was due to the reversal of impairment in 2014.

Operating profit (EBIT) came out at € 334 million, € 29 million (8%) lower than in 2014 (€ 363 million). Net financial expense fell € 26 million to € 74 million as there were fewer non-recurring items and lower interest-bearing debt.

Our production, trading and supply activities

The weather in the first ten months of 2015 was average. In contrast, November and December were exceptionally warm and, in addition, the wind was stronger than normal during those two months. On average across the year 2015 was not as warm as 2014, and it was windier. Both of these factors had a positive influence on our energy margin as in consequence our customers’ gas and heat consumption rose and more electricity was generated by our wind turbines, including by the new wind farms which came on stream in time for the windiest months. The decline in revenue was a result of lower prices to our customers, a fall in average consumption per customer as a result of savings and a smaller customer base for electricity, gas and heating. Our production of sustainable energy increased as new wind farms came on line. Available sustainable production capacity increased from 1,680 MW at the end of 2014 to 1,919 MW (enough to supply over 1,925,000 households) at 31 December 2015. On the other hand, it was disappointing that a permit for the construction of the Navitus Bay offshore wind farm (UK) was not granted.

Operating profit (EBIT) on our production, trading and supply activities was € 82 million (2014: € 75 million1).

Our network and engineering activities

The new regulatory period for regional grid operators started in 2014 and the tariffs we are permitted to charge customers for the transmission of electricity and gas will fall each year for three years. This is reflected in the revenue from our network activities, which again fell by € 71 million (6%) compared with the previous year. In contrast, the cost of transmission rose, putting further pressure on the margin on these activities. Operating expenses fell. Our network and engineering activities were combined organisationally in a project known as Revisie from 1 March 2015, so that we can offer our customers an even more effective and efficient service and create greater scope for investing in future-proof energy networks.

The average interruption in electricity supply was 82.8 minutes (2014: 103.9 minutes) and 97 seconds (2014: 124 seconds) in the gas network. The electricity supply figure was a little above target because of a major interruption on 26 June that affected over 130,000 customers in The Hague and Rijswijk.

Operating profit (EBIT) on network and engineering activities fell from € 310 million1 in 2014 to € 286 million in 2015.

Customers

On 1 January, Eneco started supplying electricity to all the railway companies in the Netherlands under a ten-year contract signed in 2014. Initially, 50% of the electricity supplied is generated from new wind farm in the Netherlands and neighbouring countries and this will rise to 100% from 2018, from which moment passengers will enjoy fully climate-neutral rail travel.

Stedin started using a new type of charging station for electric cars in June. These can recharge electric cars’ batteries but also supply power from the battery to the grid, allowing a reserve of power to be created that can be used, for example, in the event of a brief power cut.

Eneco Belgium launched a group offer of solar panels in the province of West-Vlaanderen, enabling Eneco customers and others to apply, without obligation, for the supply and installation of solar panels. Eneco wants this campaign to reduce reluctance to opting for solar energy.

In May, Joulz Energy Solutions started construction of the 150 kV Middenmeer sub-station. Joulz will be responsible for the entire development, including all engineering, procurement, construction and commissioning, and handover of the high voltage station. Joulz faced international competition in the tender stage.

Eneco installed 2,900 solar panels on the roof of the Kyocera stadium in The Hague, contributing to the municipality’s ambition to make the city climate-neutral. ADO Den Haag soccer club will use the roughly 600,000 kWh of green energy that the installation will generate annually. This is about 50% of the club’s annual consumption. Eneco invested in the development, construction and management of the installation, which is its largest solar power project to date.

We entered into an alliance for making the production process at Fujifilm, manufacturers of photographic paper and offset plates, run entirely on wind energy from 1 January 2016. Fujifilm uses some 100 GWh of electricity in its operations each year, comparable with the average consumption of about 30,000 households. Since 2011, Fujifilm has received a direct supply of power from five Eneco wind turbines on its own site in Tilburg, meeting 20% of its electricity requirements. The desire to make its entire operation CO2 neutral led to a new agreement, under which the company has taken all of the power generated by the five wind turbines in Eneco’s existing Anna Vosdijkpolder wind farm in Tholen since the start of this year.

Investments

In 2015, we invested € 715 million in continuing to make the energy supply more sustainable. The investment was even greater in 2014 (€ 842 million) when major projects which are now in use were still under construction. These are the Leiding over Noord (transporting residual heat from the Botlek to Rotterdam providing sustainable heating to households and businesses) and Haringvliet (construction of a 19-kilometre high-voltage link between Voorne-Putten and Goeree Overflakkee).

In 2015, Eneco invested € 260 million in the construction of wind farms. A number of large wind farms came on stream during the year, including Delfzijl-Noord (62.7 MW, nearly 50,000 households), which will supply power to Google’s new data centre, our second offshore wind farm Luchterduinen (129 MW, 150,000 households, with Mitsubishi Corporation), Aarlen Messancy (6 MW owned by Eneco, 3,800 households) and Burn of Whilk (22.5 MW, 18,500 households) in the United Kingdom. Work is continuing on the Libeccio (Belgium) and Moy (UK) wind farms, which are expected to start production during the course of 2016. We also invested in the improving and expanding district-heating networks (€ 105 million), including the acquisition of heat production facilities in Utrecht. We continue to invest in improving and expanding the gas and electricity networks (in total € 313 million) and the rollout of smart meters was scaled up in 2015 leading to 238,000 offers for the installation of these meters (investment of € 52 million). On 1 January 2015, we disposed of our high-voltage networks in Zuid-Holland and Utrecht to the national network manager TenneT, as required by law. The transaction for the Zuid-Holland network was completed at the end of 2014 and the formalities for the Utrecht network were settled at the end of 2015.

Outlook

We have confidence in the further development of Eneco Group. Nevertheless, market conditions are challenging and are expected to remain so for the time being. Against this background we are unable to present a results forecast for 2016. As it is expected that the budget made available for innovation will be fully utilised this year, we expect to allocate a new, higher budget in the second quarter.

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