Transition from gas transport to sustainable energy infrastructure

Gasunie is accelerating the energy transition in the Netherlands by readying its infrastructure over the coming years and by working closely with various parties. For this purpose, it will be investing significantly towards achieving a sustainable society. Ambitious plans are in place to transform the current gas infrastructure company into a sustainable energy infrastructure company by 2030. This is stated in Gasunie’s annual report published today. In 2030, in addition to the transmission of natural gas, the focus will be on the safe, reliable and affordable transport of green gas, hydrogen, CO₂ and heat. By bringing parties together, working together and connecting these parties to its infrastructure, Gasunie is laying the groundwork for the market to achieve the ambitious climate goals of the Netherlands, Germany and the European Union.

Han Fennema, Gasunie CEO: ‘As a sustainable energy infrastructure company, we need to make anticipatory investments to get our infrastructure ready for the future energy system.
In thirty years’ time, our network will be transporting green hydrogen, green gas, heat and CO₂, in line with demand in the market and society. Reliability and safety remain our top priorities.
The investments and transformation are necessary if the Netherlands and Germany want to become climate-neutral by 2050. By 2050, some 30 to 50% of the energy supply will come from gaseous molecules, enabling energy to be stored economically and transported over greater distances. Our infrastructure will be linked to the electricity grid at many points. There, green electricity can be converted into gas at any time, and vice versa, according to supply and demand.’

At the same time, it will take several decades before natural gas no longer has a role to play in north-western Europe, Fennema says when commenting on the 2020 annual report published today. ‘In 2030, the Netherlands will still have 75% of the current annual demand for natural gas. We are working hard to make this possible while also investing huge amounts of money in this area. In 2022, NAM will be turning off the gas coming from the Groningen field, so we must ensure that we can receive sufficient foreign gas in our network and make it suitable for domestic use through quality conversion. Additionally, we need sufficient gas storage in the region for the Dutch market.’

The most ambitious project Gasunie worked on in 2020 concerns the development of a national transport network for hydrogen, the ‘hydrogen backbone’, which will require a 1.5-billion-euro investment. For this network, Gasunie is repurposing existing gas pipelines as these become available due to declining demand for natural gas. This backbone could be in place as early as 2026. Thanks to this hydrogen infrastructure, the Netherlands and northern Germany can be the market leaders in Europe for the global hydrogen market, just as they are now for natural gas. This hydrogen backbone connects the large industrial hubs to factories that will soon be producing blue and green hydrogen. This will enable major companies to wean themselves off natural gas, massively reduce their carbon footprint and maintain jobs, their export strength and innovation capacity for the Dutch economy. 

Janneke Hermes, Gasunie’s CFO: ‘We finance most transition projects together with customers and other partners, with additional help from government grants to cover start-up risks and punitively high front-end costs. Currently, we have earmarked a total amount of € 7 billion for our share of the investments required, spread out over the period from 2021 to 2030. That’s almost the same amount as the total value of our current assets. However, we will also borrow substantial amounts, for example by issuing green bonds.’

Due to economic stagnation and the warm winter in 2020, demand for natural gas fell slightly in north-western Europe. Combined with the global excess supply of LNG, this led to low gas prices and full gas storage facilities. Gasunie transported 1,085 TWh in 2020, a 1.9% drop compared to 2019. In 2020, 4% less gas flowed through the company’s Dutch pipelines, mainly due to lower demand from Belgium and Germany. Consumers and smaller businesses used 6% less gas, while power stations needed more gas. Through our network in Germany, Gasunie transmitted 6% more gas in 2020. As they phase out coal and nuclear power in Germany, in line with government policy, demand for natural gas is expected to increase slightly over the coming years. In the past year, despite the COVID-19 pandemic Gasunie was able to provide 100% security of supply for gas transport.

Gasunie’s revenue in 2020 increased by € 94 million. This increase was largely due to the first pipeline of the EUGAL pipeline project being commissioned and shifting gas flows in Germany, resulting in greater demand for transport capacity at Gasunie Deutschland.

Operating expenses were up € 21 million on last year, mainly due to the increase in activities as part of the energy transition. Energy costs of gas transport were up € 26 million on last year. This is mainly due to the declining share of gas from the Groningen field. The replacement gas from abroad must be brought to ‘Groningen quality’ at conversion facilities. The price of the energy required to keep our gas networks at the desired pressure has also risen.

The operating result increased by € 355 million compared to last year. The main reason for the increase is a reversal of an impairment loss of € 300 million recognised in the past. This reversal is mainly due to a decreased IFRS discount rate. Without this reversal, the increase is € 55 million. 

The result after taxation is € 188 million higher this year. Gasunie’s tax burden was significantly higher than last year. The envisioned corporate income tax adjustment has been reversed.

More information: Gasunie Investor Relations

If you don't have time to read our annual report, have a look here and we take you into the past year: