Over the course of 2023, Madrileña Red de Gas remained faithful to its corporate values, showing a strong commitment to expanding the business, in terms of both investment in infrastructure (with the construction of new networks) and attracting new supply points.

Numerous initiatives and projects have been carried out with excellent growth results, making MRG the gas distributor with the highest annual net growth, with more than 904,000 active supply points.

The emergence of new technologies and the requirements for energy efficiency in new buildings are shaping the overall market evolution.

With regards to LPG, the final phase of the project to transform more than 15,000 supply points planned for 2022 and 2023 was completed over the course of the year, facilitating access to energy that is cleaner, continuous and more reliable.

2.1 Residential market

Despite the constant attacks launched by other energy actors against fossil fuels in general and natural gas in particular, whether in the form of advertising or new technical and environmental regulations, Madrileña Red de Gas has maintained a positive balance in the growth of the company’s net points this year.

The company has brought more than 16,000 new natural gas installations into service, some as a result of the project to convert installations from propane to natural gas, and others due to commercial initiatives.

According to the final results of the Quarterly report on the natural gas market in Spain for 2023, published by the National Securities Market Commission (CNMV), which analyses issues such as the evolution of growth, market share, etc. of supply companies and DSOs in Spain’s natural gas market, Madrileña Red de Gas has strengthened its position as the natural gas distribution company with the highest net annual growth.

However, the investments made in infrastructure, new projects and different initiatives over the years mean that Madrileña Red de Gas has a huge volume of potential supply points, both in new installations and in the replacement market. This is confirmed by the evolution data for the vertical saturation market and the spontaneous market; both guarantee a sustainable future in areas of high penetration, such as the Community of Madrid, the company’s area of operations.

Madrileña Red de Gas has strengthened its position as the natural gas distribution company with the highest net annual growth

No major changes are observed in the remaining natural gas markets (horizontal saturation, vertical saturation, spontaneous and commercial premises), where an ongoing trend remains in place. It should be noted that the gas distribution geographical area is predominantly residential, and that the capillarity of the company’s network is such that there are hardly any areas without a distribution network.

This once again highlights the success of our commercial policy, based on innovation through new strategies and new channels to reach end users.

2.2Large consumers

Once again this year, the consumer market achieved the expected results. A total of 397 new supply points were reached this year, with an associated consumption of 180 GW/h.

Despite the difficulties at the beginning of 2023, resulting from unstable natural gas prices, the Madrileña Red de Gas team showed a great performance. It should also be noted that many sectors continue to rely on the benefits of this fuel.

These sectors include bakeries, a business requiring a highly efficient fuel source, such as natural gas, which also affords them greater control over their production process, as well as clean combustion.

Despite the difficulties at the beginning of 2023, resulting from unstable natural gas prices, the Madrileña Red de Gas team showed a great performance. It should also be noted that many sectors continue to rely on the benefits of this fuel

The Panificadora de Alcalá has been baking bread and producing speciality breads and breadcrumbs since it was founded in 1955. In June 2017, the bakery suffered a major fire that affected one of its main production halls, in Montevideo Street, in Alcalá de Henares. The company has addressed this tragedy by recovering the site of the destroyed warehouse, where they have implemented more modern processes, using the latest technology.

The bakery currently produces 250,000 loaves of bread a day for consumption throughout Spain, as a result of their agreement with Mercadona. To achieve this level of production, new natural gas ovens have been fitted with a regulation capacity that allows for a rapid rise in temperature.

Another sector where natural gas is indispensable, as demonstrated again in 2023, is the pharmaceutical industry. The versatility of gas makes it an ideal energy source at all stages of the production process – temperature control, drying and sterilisation.

Normon Laboratories acquired a 70,000 m2 industrial complex in Tres Cantos. Two new steam boilers have been installed in these new halls to increase the production of orals and injectables. Normon already has two production centres in the municipality of Tres Cantos, covering more than 100,000 m2 in total, ensuring it can meet its goal of doubling production and continuing to lead the generics market.

These two cases show that industries are still striving to minimise their carbon footprint and maintain their production efficiency thanks to the help of natural gas.

At Madrileña Red de Gas we continue to believe in natural gas as one of the most efficient solutions for domestic heating and hot water.

Madrid’s social care agency, the Agencia Madrileña de Atención Social, which is beginning to incorporate natural gas into its centres for the elderly, thinks the same way. One of these centres is the Gran Residencia, in the city’s Carabanchel district. Following a refurbishment, natural gas was chosen for use throughout (heating, hot water, kitchens and laundry). Plans are also in place to improve infrastructure and equipment, including the use of natural gas in three more centres.

Natural gas is also key in catering and small businesses, such as self-service laundries and hairdressers, which need a continuous and uninterrupted supply.

As a result, in 2023 a total of 240 new commercial premises have been connected.

These include the opening of the new luxury shopping centre in the Community of Madrid, located near Madrileña Red de Gas headquarters, which stands out for its architectural design and views of the development’s golf course, La Finca Grand Café, featuring restaurants helmed by the most renowned chefs in Spain, and which are already supplied with natural gas.

Over this past financial year, Madrileña Red de Gas has also, like the rest of the sector, had to combat the confusion generated by the new energy efficiency directive, (EU) 2023/1791, and the supposed ban on gas boilers.

Condensing boilers offer the potential to improve efficiency by reducing greenhouse gas emissions and energy consumption by up to 30%. This is a viable and affordable option for residential heating, and these boilers will play a key role in the process of transitioning systems to achieve 100% implementation of renewable sources such as green hydrogen

This directive focuses on the fuel type of heating systems, rather than on their technology. In no case does it indicate a ban on gas boilers from 1 January 2026 and their replacement by electric alternatives. What the directive states is that from that date onwards no support will be available for energy efficiency measures involving the direct use of fuels.

Condensing boilers offer the potential to improve efficiency by reducing greenhouse gas emissions and energy consumption by up to 30%. This is a viable and affordable option for residential heating, and these boilers will play a key role in the process of transitioning systems to achieve 100% implementation of renewable sources such as green hydrogen.

In this regard, we have no intention of dispensing with this technology, given the investment cost required for a typical heat pump installation, currently at around €18,000, which is equivalent to 90% of the average annual income of a Madrid resident.

At present, there are 1.8 million residential natural gas appliances in the Madrid region. Their replacement by heat pump systems would represent a cost of around €32.5 billion for users, which is unaffordable both in the short term and in the medium and long term.

This debate has resulted in misinformation and mistrust on the part of the end customer, with centralised boiler rooms in homeowners’ associations being the most affected by this lack of clarity.

Finally, thanks to the collaboration of The Marketing Hub, specific brochures were designed for each market, with sales arguments produced to help our sales teams market our product.

2.3New builds

If during 2022 the trend in new construction was already undergoing a change, in 2023 there was a consolidation of other solutions for the energy needs in buildings, such as aerothermal energy and geothermal energy.

In 2023, the trend towards the use of renewable, mainly aerothermal, systems in new buildings continued apace.

Madrileña Red de Gas has continued to work actively with developers, holding regular meetings with each one to show them that using a natural gas system now is the gateway to using hydrogen in the future. The main developments involve a hybridised approach between aerothermal energy and natural gas, as this brings wide-ranging benefits, such as:

• Improved energy efficiency, unaltered energy rating, lower life-cycle cost, reliability and improved service assurance.
• The launch of a specific campaign on new builds with financial contributions to help developers.
• The fact that having natural gas is the entry point for renewable gases in buildings. Interest in renewables is a guarantee for the construction of infrastructure in new urban developments.

Centralising boiler systems was the main trend in new-build markets in 2023.

Furthermore, in 2023 a total of 17 third-party networks were managed for future property developments, whereby a collaboration agreement signed with the land developers ensures that future networks will be built that are ready for renewable gases, and future hydrogen networks will also be introduced. This involves 14.4 km of distribution networks to supply more than 3,000 homes in the future. All urban developments in our distribution area have been covered by third-party networks.

2.4LPG Market

In 2023 Madrileña Red de Gas completed the final phase of the project to transform more than 15,000 supply points that were in planning for the 2022 and 2023.

In 2023, more than €3 million were earmarked for the reuse and expansion of networks, adaptations and modifications of installations, equipment transformation and decommissioning of storage centres

Specifically, in 2023, more than 3,500 supply points were converted to natural gas in the municipalities of Cubas de la Sagra, Griñón, Las Rozas de Madrid, Leganés, Moraleja de Enmedio, Móstoles, San Agustín de Guadalix, Sevilla la Nueva, Villanueva de la Cañada and Villanueva del Pardillo. Propane gas (LPG) was eliminated from six of them.

The operation was carried out by six leading companies in the sector, and 27 storage centres were converted to natural gas. Of particular note is the transformation of the ESTORIL II industrial estate in Móstoles, and the start of an operation in the Conjunto Zarzaquemada industrial estate in Leganés.

In 2023, more than €3 million were earmarked for the reuse and expansion of networks, adaptations and modifications of installations, equipment transformation and decommissioning of storage centres.

At the same time, progress continued to be made in the digitalisation and automation of the processes involved in generating orders to be executed in the field, as well as in resolving complaints, with a service time of less than 48 hours.

More than 3,000 homes are planned to be converted to natural gas. by 2024. This would complete the transformation of the municipalities of Leganés, Griñón, Villanueva de la Cañada and all the facilities where it is feasible to connect to the natural gas network. This is in addition to initiatives in the municipalities of Soto del Real, Miraflores de la Sierra and Los Molinos.

2.5Commissioning and digitalisation

The cross-sectional analysis of the data provided by the different company departments has detected that, in many of the requests for termination of supply companies, the lack of accessibility to housing in time has an impact on the volume of new registrations, as these are unregistered customers who still have supply in their homes. In 2023, addressing this issue became a priority, accelerating the dispatch of clearance teams in no-access areas. This helped to speed up and increase the volume of registrations, reaching a recovery rate of 14.43% of customers in this situation.

In keeping with the focus on improving customer service during gas installations, Madrileña Red de Gas was able to correct small defects in old installations that would otherwise have forced customers to make an unexpected financial outlay, with the company assuming the cost and all during the same visit.

This initiative also allows Madrileña Red de Gas, as distributor, to reduce the cost of intervention by reducing the number of visits required for commissions and connections.

Madrileña Red de Gas has remained resolute in its quest for process excellence. Following the development in 2022, when the management of technical documentation associated with new connections was transferred to the Virtual Office, further investment was made in 2023 to develop this application. There was also an insistence on including more administrative formalities in this process.

We continue to focus on grouping together any procedure that installation companies have to carry out with Madrileña into a single space, as we have the information on the exact status of the process requested.

By linking records created online to systems in real time, there is now full control over the information provided to the customer, reducing human error to zero in terms of the availability of the unified supply point codes (CUPS) provided. It has also helped to speed up including new supply points in these connection requests.

Having a good basis in place to manage gas outages at standard installations, in cases where the installation needs to be extended, has also helped to extend the process to include cases where the installation needs to be modified.

We continue to focus on grouping together any procedure that installation companies have to carry out with Madrileña into a single space, as we have the information on the exact status of the process requested.

It has also been observed in recent years that changes in regulations, municipal by-laws and square-metre land costs have led to an increase in the change of use from commercial premises to dwellings. These premises did not have gas supply, and now demand it.

As a result, there has been a growth in document management. Application of the regulations varies from one use to another, and it is a document to be taken into account to commission installations correctly. Providing this document online has allowed for greater traceability of these cases, fluid communication between the parties and the possibility of unifying the documentation associated with the supply point.

Being aware that there is always room for improvement in any process, and that adapting to changes is key to success, at Madrileña Red de Gas we continue to invest in digitalisation, with projects under way such as free access for installers to our potential supply points and our distribution network, and the inclusion of document management for large-consumption connections in the Virtual Office.

2.6New municipalities

Over the course of 2023, work continued and very significant progress was made to bring natural gas to new municipalities. Supply will begin to be provided in the municipalities of Casarrubuelos and Miraflores de la Sierra in the first half of 2024.

• Commercial prospecting has begun in the municipality of Casarrubuelos, which will ensure that the town’s natural gas network deployment can be programmed in the best possible way. Residents have shown great interest in having this supply, and the necessary coordination with the municipal authorities has already been advanced in order to cause as little inconvenience to citizens as possible.

  Given the type of installations and dwellings, adapting to natural gas will be available to all interested parties.

• Supply of natural gas to Miraflores de la Sierra will also begin in the first half of 2024. In this case, an LNG plant will be built following the dismantling of one of the municipality’s existing LPG plants and as a result of a recent major network join-up between the town centre and an area of housing developments.

  To ensure greater supply security, work will begin after the winter. Throughout 2024, Madrileña Red de Gas customers who currently have LPG will have their supply converted to natural gas. This will all be carried out in compliance with safety standards and at no cost to the customer.

It should also be noted that we are in the final phase of the procedures for the arrival of supply, through our infrastructure, to the municipalities of Los Molinos and Moralzarzal. The process is expected to be completed over the course of next year. Finally, the municipalities of El Boalo, Collado Mediano, Becerril de la Sierra and Navacerrada are all at different stages of the procedure.

2.7 Commercial initiatives

Generic campaigns throughout the territory

The 2023 financial year began with the launch of the new commercial campaigns, focusing on each particular market niche, and with which the company hopes to boost the number of pipelines and saturate existing ones. The goal is to have an impact on each home by providing specific offers that are of interest to them.

• A decentralisation commitment has been made with contributions of up to €800 / supply point.
• Multi-family campaigns are extended, with contributions of up to €550 / supply point.
• Commitment to photovoltaic/aerothermal hybridisation + natural gas, with contributions of up to €450.
• Single-family campaigns are extended, with contributions of up to €650 / supply point.

To help and support the commercial channel’s marketing, the Sales Plan for the horizontal saturation (HS) market was launched in 2023:

• A commitment to network expansion in the HS market.
• With new and improved commercial contributions to the channel.
• With annual target and six-monthly review.

Launch of new digital social media campaign

In 2023 the digital campaign was published on Facebook and Instagram, targeting 37 municipalities. The goal: to capture supply points in the HS market.

Telemarketing campaigns

In collaboration with the Intelcia group, telemarketing campaigns were extended during the first half of the year to mobilise all potential supply points in the vertical saturation and horizontal saturation markets.

Advertising actions

During 2023, different advertising initiatives were developed in digital and analogue media.

• Insertion of advertorial in the magazine Aquí en la Sierra, which covers the municipalities in the northern part of Madrid.
• Insertion of advertorial on green hydrogen and advertisement page in the magazine Agremia.(puede consultarse en: agremia.com/wp-content/uploads/2023/04/Revista-AGREMIA-207_red.pdf).
• Leaflets and posters aimed at different market niches

In collaboration with TMH Group, different advertising dossiers were produced to reach hard-to-access niche markets, such as LPG tanks owned by homeowners’ associations or boiler rooms with old and obsolete systems, where the best energy solution is to individualise the system.

Public offer 2023

With the campaigns carried out in 2023, we have managed to bring more than 200 installation companies with us on this journey, signing up to our 2023 public offer and the commercial plans advertised on the Madrileña Red de Gas website. The campaigns can be viewed here: madrilena.es/profesionales/campanas-comerciales/

Referral programme

In collaboration with TMH Group, the new Madrileña Red de Gas referral programme was developed throughout 2023. Available at the end of June, it was created to reward customers who recommend the company to one of their contacts. If the recommendation results in a new joiner, both the MRG customer and the contact receive a gift.

Because it was developed internally, without depending on a third party, the programme’s advantages are endless, as it is a tailor-made process, specifically developed for Madrileña Red de Gas with full integration, with no data shared with third parties. It is also self-manageable, easy to set up and fully automated (Member Gets Member).

Other actions

• Competitiveness studies: Various studies were carried out in 2023, including analysis of economic competitiveness/efficiency of natural gas in single-family homes, aerothermal and photovoltaic energy systems or their hybridisations, and analysis of competitiveness and energy rating for hydrogen and aerothermal energy systems.
• Our network of flagship premises was expanded to 12 centres.
• We upgraded our energy benchmarking tool.
• The marketing campaign was launched in Casarrubuelos, gaining more than 150 customers.

2.7 Distribution network

Once again this year, 100% of the maintenance plan established by current regulations and by Madrileña Red de Gas internal regulations were carried out on the 6,037 km of the gas network, auxiliary installations, the five satellite LNG plants and 92 existing LPG plants. More than 11,000 planned courses of action were carried out. These include:

Likewise, in coordination with the town councils of different municipalities in the Community of Madrid, 37 LPG plants were dismantled, following the transformation from LPG to natural gas, after emptying, burning, inerting and removing 63 tanks.

To this end, more than 45 road journeys needed to be coordinated with Repsol to transfer the gas emptied to the company’s main facilities, thus avoiding any emissions into the atmosphere. The waste obtained from dismantling operations was also transported to the treatment plants set up by the Community of Madrid, respecting the Madrileña Red de Gas environmental commitment. All of this was carried out without interfering with the usual activities of customers and residents of the municipalities where the LPG plants were located, and was in full compliance with all safety protocols, which meant that no accidents occurred.

In 2023, Madrileña Red de Gas decommissioned 226.34 km of LPG network, transforming it into a natural gas network.

As part of the action plans planned by Madrileña Red de Gas for 2023, the renovations, meshing and corrective actions necessary to maintain safety conditions in the network and guarantee supply in the natural gas and LPG networks were carried out, replacing materials such as steel, cast iron and/or copper with polyethylene piping.

In 2023, in accordance with regulations, and with the aim of removing as many copper and steel pipes from old LPG networks as possible from our gas networks, around 228 km were rendered inert, voided and, where necessary, renewed.

In collaboration with different companies, public bodies and customers, we responded to requests to set the gas network back to a recessed location due to new developments in different municipalities in the Community of Madrid, such as hospitals, roads, new buildings, etc. Nearly 1 km of setbacks were carried out on the gas network.

Special leak detection measures were also carried out in older networks, in line with the company’s policy of minimising methane emissions into the atmosphere.

In 2023, in accordance with regulations, and with the aim of removing as many copper and steel pipes from old LPG networks as possible from our gas networks, around 228 km were rendered inert, voided and, where necessary, renewed

Additionally, a total of 70 network models from all over the Community of Madrid were prepared, configured with winter consumption levels.

A total of 120 self-protection and emergency plans were also drawn up of the network and georeferenced connections belonging to each municipality/district, in A4 and A0 sizes. These maps are used to identify the network by pressure ranges (BP, MPA, MPB and APA) and gas type (NG/LPG), as well as showing all connections in the municipality/district.

This information will be used as part of the processes to improve the auto-protection and emergency management model.

Verification and measurement

At Madrileña Red de Gas we strive to adapt our industrial meter verification methods to the new ICT/155/2020 regulations, which are concerned with the metrological control of certain measuring instruments.

Madrileña Red de Gas has 7,462 meters and converters installed, of which 871 units were verified in 2023 in accordance with the new regulations.

We are also installing a new remote measurement system, with LaRaWAN communication, to be installed in high consumption supply points (less than 5GW/year).

Integration tests are also being carried out on the telemetering platform of converters with integrated telemetering from the supplier PLUM. If they work properly, the existing fleet of converters will be gradually replaced.

In terms of cartography, mapping was updated for the municipalities of Guadarrama, Galapagar, Hoyo de Manzanares and Las Rozas. Updates are also being carried out in Alcalá de Henares, Boadilla del Monte and Valdemoro. The municipalities of Collado Mediano and Casarrubuelos were also added to the mapping.

In Madrileña Red de Gas we have 156,351 network element connections, and there are another 166,174 connections associated with service elements (service connections).

In this regard, in 2023 a total of 649 works were transferred by GPCC and captured, with a total of 36,251 m and 1,695 connections.

Over the course of the year, work was carried out to implement the quality control tool, which accounts for continuity errors of elements in GDO.

The company continues to work on the project to improve SAP’s link with GDO for network connections. A line of work is being followed that associates SAP customers and GDO connections using spatial analysis.

In this way, addresses are matched between SAP and GDO, which allows us to obtain customer information on the GDO connections.

In 2023, analysis and matching were carried out in ten municipalities.

Control centre

Following the communications modernisation plan, Madrileña Red de Gas eliminated all the old Datalogger devices it had installed, replacing them with modern RTU remotes with continuous communication, which has improved the system’s operability.

Madrileña Red de Gas has 7,462 meters and converters installed, of which 871 units were verified in 2023 in accordance with the new regulations

All RTC lines have been deleted. Remote ones communicate via 3G or 4G modem, or via ADSL.

Surveillance camera communication has also been improved. The installed cards current communicate via 4G, and are located in a private VPN, optimising communication and imaging speed.

All planned ERM communication systems preventive measures were successfully implemented in 2023, as well as mobility for preventive and corrective measures for remote management orders.

The ERM physical balance page has also been improved to provide a better overview of the balances in the ERM consumption areas.

Emergencies

Through the 24-hour/365-day emergency service, 58,337 calls to the call centre were handled in 2023. A total of 10,712 emergency alerts were produced and dealt with, 4.5% more than in 2022.

Of these alerts, 1,249 were of priority 1, and were dealt with in an average of 27 minutes, with a compliance of 99.1% in less than one hour, which means that we amply met our 30-minute quality target, with 96% of cases resolved in less than one hour. The 4,410 priority 2 alerts were carried out with an average response time of 37 minutes.

In dealing with emergency alerts, 72 cases of fraud or manipulation were detected

In 2023 a total of 120 breakage reports of our distribution network by third-party companies were dealt with. For safety and environmental reasons, these incidents are resolved immediately.

The average response time is 39 minutes, thus minimising the potential risk situation in the emergency environment. The emission of leaked gas was limited to 1.12 GW/h, and costs were recovered in virtually all cases.

In addition, a total of 9232 preventive works were carried out by the company’s own emergency service, commissioned to optimise available resources: rectifying leaks from monitoring, mapping anomalies, valve inspections, meter inspections and surveillance of third-party works, among others.

In dealing with emergency alerts, 72 cases of fraud or manipulation were detected.

As in every year, Madrileña Red de Gas ensured all the material and tools necessary to carry out emergency activities were maintained in perfect condition, were fully calibrated and thoroughly checked.