Letter from the Chairman
Iñaki Alzaga

The energy sector and the gas system along with it are in a state of ongoing transformation.

In this context, Nortegas has reaffirmed its role as a key player in the transition toward a more sustainable, efficient, and resilient model.

Our commitment as a company goes beyond the role we currently play in the energy framework. We aim to be, and indeed are, an active part of the solution to global challenges such as economic decarbonization, security and independence of the energy, and territorial cohesion. Nowadays, the more than 8,000 kilometres of gas network that we operate, along with the people who make up the Nortegas group, play a decisive role in achieving this goal.

Letter from the CEO
Juan Villar

We all share a clear vision: to provide energy solutions through our infrastructure that not only enhance the competitiveness of our customers and ensure security of supply but also accelerate the decarbonisation of the economy and promote the development of a fairer and more sustainable society.

In 2024, the energy sector has continued to operate in a geopolitical and economic landscape marked by uncertainty and volatility.

In this context, we believe it is essential to recognise the fundamental role natural gas continues to play in our society, supplying energy to around 8 million users with security and reliability, even under the most demanding conditions.

Alongside these strengths, green gases are emerging as a real alternative to achieve a secure and cost-effective energy transition, among other reasons they make use of existing infrastructure, such as ours at Nortegas.

I would like to highlight that throughout this year; we have made solid progress in advancing our strategic plan.

Finally, I would like to express my sincere thanks to all the people who make up Nortegas. Their professionalism, dedication and innovative spirit make it possible to deliver an exceptional service to our customers, through both our natural gas infrastructure and our green gas solutions.

The role of Nortegas and its role in the energy transition are guided by our mission, vision, purpose and values, which are supported by four strategic pillars: decarbonisation, digitalisation, growth and sustainability. Each business initiative, from biomethane to digitalization, adheres to these principles to ensure that our strategy is aligned with the company’s long-term goals.

In this context, the main areas of strategic focus of the company are:

Evolution of domestic and comercial energy demand

In a challenging energy context, 2024 has been a key year to continue consolidating our growth strategy.

Despite the unusually high temperatures over the past few years, the demand from our domestic-commercial customer base has improved, compared to the 2023 year, reaching a total natural gas consumption of 7,1 TWh.

With the aim of better understanding our clients’ needs and expectations, NORTEGAS has conducted a survey that has provided the following data on consumer preferences:

• • Customers particularly value the comfort, reliability and low level of maintenance required by their current gas – powered systems.
• • 90% have not considered changing their heating system over the past three years and more than the 80% are not considering alternative technologies to their current boiler, despite price volatility in the latest years.
• • When they need to renew their current thermal system, 9 out of 10 would prioritize easy and cheap solutions to install, such as a gas boiler.
• • Moreover, most customers would choose solutions based on biomethane to decarbonize their current natural gas consumption.
• • Half of the surveyed customers would be willing to pay a little more on their bill if the gas were renewable.

Evolution of industrial energy demand

The industrial segment, which accounts for 70% of the gas transported through our net, has begun a path of demand recovery in 2024 after the impact experienced in 2022 and 2023 due to the prices shock.

Around 70% of this industrial demand comes from hard-to-abate sectors, meaning their production processes require high temperatures that cannot be met through only electrification.

This positions renewable gases as a key solution to ensure the competitiveness, sustainability, and resilience of our industrial clients in the territory.

Traditional business

Nortegas Strategy for the distribution business is based on 4 main pilars:

In 2024, Nortegas’ gas business continues to demonstrate solid and resilient growth, successfully adapting to a challenging geopolitical and regulatory environment.

This growth has enabled Nortegas to remain above the market average, standing out in terms of supply points and active customers.

Service quality remains a cornerstone for Nortegas, and the company’s commitment to customer satisfaction is reflected in the 2024 results, with a satisfaction index of 8.5.

The report “New Deal, a new reinforcement commitment to the efficient and effective decarbonization of the Spanish economy”, published by PwC in 2024 October, reinforces the NORTEGAS strategy for the transformation of gas distribution renewable gases and their key role in the decarbonization of the thermal needs of homes, businesses and industry, through the following conclusions:

New business

Green gas or biomethane:

Green gas (or Biomethane) is no longer a bet on the future and has become a tangible and expanding reality.

Biomethane production potential in Spain is estimated at 163 TWh. There are currently 15 plants in operation and 266 connection requets in the system, representing a short-term injection potential of 4.6 TWh.

Nortegas, from the Biogas Bussines Unit, will promote the achievement of the objectives included in initiatives such as REPowerEU and Fit for 55, which are accelerating biomethane deployment, reinforcing the value of distribution infrastructures in the long term, developing this new business from the experience and capacity that NORTEGAS has developed throughout its history with natural gas and with the same values of safety and sustainability as strategic priorities.

Hydrogen:

Nortegas also plays an active role in the development of hydrogen valleys within its areas of influence.

The geographical areas where Nortegas operates meet these requirements, as they are strategic industrial clusters. In the Basque Country, the company leads the infrastructure vertical of the Basque Hydrogen Corridor (BH2C), driving initiatives such as a 2 km hydrogen pipeline, the first hydroduct built in Spain, and other projects including H2SAREA and, more recently, H2BIDEA and H2EAT. In Asturias, NORTEGAS is currently undergoing permitting procedures for the first section of the hydrogen valley, while in Cantabria, Nortegas is part of the Hydrogen Roundtable, among other related initiatives.

Complementary services

The replacement of diesel and other fuel, such as coal, -based boilers with natural gas boilers is one of Nortegas’ key tools for contributing to decarbonisation in a pragmatic way, embedded in the daily lives of its customers.

This process not only enables a significant reduction in emissions but also improves energy efficiency.

Avoided emissions since the start of the boiler replacement activity:

Energetic and regulatory context

Key regulatory progress toward gas system decarbonization

In 2024, the European Union has taken a decisive step in shaping the future energy landscape with the approval of the Gas Package, composed of Directive (EU) 2024/1788 and Regulation (EU) 2024/1789.

The new framework recognises the role of gas distributors in the energy transition by validating the current gas market as a model to be followed for the development of the hydrogen market.

Hydrogen infrastructure regulation

The Gas Package defines and structures the roles of agents in the future renewable hydrogen system and lays the regulatory groundwork for the development of these networks.

Other relevant legislation in 2024

We are prepared to take on our role in the new renewable gas scenario. Our technical experience across all key gas distributor activities: development, engineering, construction, operation, maintenance, supply registration and measurement, among others, always ensuring the safety of installations, people, and supply, enables us to confidently face the challenges of the transition.

Digital transformation

Digital transformation at Nortegas drives operational efficiency and enhances customer relations.

Digitalization of customer relationship

In 2024, significant growth is achieved in the digitalization of customer interactions. Customer registrations through the private web area have increased by 23%, while web-based operations have grown by 62%.

Smart meters and digitalization

In 2024, although the ministerial order for its massive deployment is still pending, Nortegas remains committed to their efficient deployment.

This improves energy efficiency, reduces gas bills, and increases safety by quickly detecting incidents.

Operational efficiency and robotization

In 2024, Nortegas has continued advancing the efficiency of its distribution networks, focusing on safety and the reduction of the environmental impact of its operations.

Robotization contributes to greater operational efficiency by reducing time and human errors in repetitive tasks. In 2024, 15 processes have been robotized, with improvements also achieved in the accuracy rates of previously implemented processes.

Sustainable value generation

Double materiality

At Nortegas, the principle of double materiality is applied as the foundation to guide our sustainability strategy and prioritize the most relevant issues for the company and its stakeholders.

During 2024, an update of the previous year’s analysis has been carried out, incorporating an in-depth study of the context in which Nortegas operates, including its critical factors, regulatory environment, value chain, and stakeholder expectations.

Material matters 2024

Through our initiatives and commitments, we aim not only to meet global standards but also to advance toward an inclusive, fair, and responsible energy transition.

Active listening

Nortegas maintains continuous, structured, and cross-cutting dialogue with its stakeholders, understanding that only through relationships based on trust, active listening, and transparency is it possible to progress toward a just, inclusive, and sustainable energy transition. This management is led by the sustainability area and was strengthened in 2024 with the update of the materiality analysis.

Contribution to the SDGs

Climate Change

Nortegas reaffirms its commitment to the energy transition and the fight against climate change, by reducing its carbon footprint, promoting renewable gases and improving energy efficiency.

Thanks to the optimisation of measurement, control and monitoring systems, scope 1 and 2 emissions have been significantly reduced since 2019, exceeding international reduction targets.

Nortegas has also refined its scope 3 calculation, expanding its inventory with new categories and improving the accuracy of its measurements.

TCFD Framework

Since 2021, Nortegas has integrated climate-related risks and opportunities into its corporate strategy, following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The company regularly updates these risks and opportunities with a proactive and adaptive approach, focused on the energy transition through renewable gases. This approach guides its R&D and investment strategies in line with long-term decarbonisation goals.

Nortegas is committed to conserving biodiversity, adopting a due diligence approach to protect ecosystems and minimize any potential environmental impact in the areas where it operates.

In line with ISO 14001:2015, Nortegas ensures the sustainable use of resources and the minimisation of waste across all its facilities.

Nortegas recovers 100% of its waste and promotes biomethane as part of its circular economy strategy.

Talent

The enterprise is committed to talent management that fosters professional development, engagement, and well-being as key elements to building a motivating work environment, environmentally friendly and aligned with the challenges of the energy sector.

Nortegas actively takes part in job fairs and maintains partnerships with universities that allow the identification and support of future professionals in the sector.

In the field of work-life balance and well-being, Nortegas has continued to foster measures that allow a healthy balance between personal and professional life.

The company’s safety culture is promoted through awareness campaigns, departmental meetings, direct consultations with staff and tools such as the safety minute.

The program “Nortegas Saludable” promotes well-being through workshops on nutrition, conflict management and healthy habits.

Compulsory training in 2024 has responded to four criteria: current regulations, dangerous tasks, emergency management and new risks. The collaboration with the Zaragoza firefighters to train in good practices with hydrogen stands out, anticipating the risks arising from these new lines of activity.

Social Action

Nortegas promotes its social action through the corporate volunteer program “ImplicAcción”, which focuses on supporting vulnerable groups, employability and educational development.

In 2024, the involvement of 123 volunteers, including family and friends of the workforce, has made it possible to develop 15 initiatives with a direct impact on more than 300 people.

In addition to promoting external social commitment, Nortegas is firmly committed to a diverse and inclusive internal culture through training actions such as Cultural Awareness: How to develop your cultural awareness and sensitivity, and training pills on cultural diversity, inclusive language and LGBTQIA+ rights+.

In 2024, more than 190 people participated in awarenessraising sessions, dedicating a total of 280 hours of training.

Nortegas’ governance model is based on the principles of ethics, responsibility, and transparency, ensuring robust management aligned with best practices.

Ethics and compliance

The Ethics Channel provides an accessible way for all stakeholders to report conduct that may contravene the company’s values or applicable laws.

The company also operates an Internal Reporting System, updated in 2023, and strengthens safeguards against retaliation and allows anonymous reporting, enhancing trust and transparency in the system.

The company also upholds a strong commitment to human rights across its organization and its value chain.

In 2023, the first phase of human rights due diligence was carried out, identifying and assessing risks in key areas such as human resources and procurement.

Risk Management System

Nortegas´ Risk Management System is aligned with UNE-EN ISO 73:2010, ISO 31000:2018 and UNE-EN 31010 standards, enabling the identification, assessment, evaluation, and monitoring of risks.

This structured approach integrates risk management into strategic processes, strengthening the company’s ability to anticipate and respond to potential impacts.

Cibersecurity and information protection

Cybersecurity becomes ever more critical for Nortegas due to the need to protect its systems from threats. The company conducts annual risk assessments and maintains an incident response plan including specific protocols and regular drills to improve its effectiveness.

Nortegas also runs a cybersecurity training program, which includes in-person crisis management workshops, phishing simulations, and automated tests, strengthening employee awareness and capability in this area.

Compliance with the GDPR is achieved through a Data Protection Policy approved by the Board. A culture of data protection is fostered through ongoing training and regular internal and external audits.

Sustainable financing

Nortegas has integrated sustainability into its financial strategy through its Sustainable Financing Plan, in line with ESG objectives.

Nortegas’ performance against these metrics influences the cost of its sustainable financing, closely aligning its financial and sustainability targets. These sustainability indicators are verified by an independent third party.

Incoming statement

During the year, energy demand experienced a gradual recovery, with a rebound in domestic consumption compared to 2023 and continued growth in new connection points.