Grid operator TenneT supports the possibility of a minority stake of the German State to meet its capital requirement. Exclusive talks and negotiations between the involved parties will take place in the coming months to work out the details in order to aim at an outline agreement before the end of the year.
The Dutch grid operator is already operating in Germany where it is responsible for the construction and maintenance of the high voltage grid that is used to transport large quantities of electricity in large parts of the country. In the area of wind energy it is responsible for connecting a large number of offshore wind farms and is also involved with some of the related onshore connection activities.
The company estimates her current investment agenda for 2020-2029 to be within 40 to 50 billion Euro, of which around 30 % related to activities in the Netherlands and 70 % in Germany. The estimated capital requirement of TenneT for this period is 5.3 billion Euro. At the end of 2019 this was estimated at 4.75 billion Euro. The company is currently still fully owned by the Dutch State.
The option for participation by the German State was offered as a preferred scenario by Minister Hoekstra of finance in a letter to the Dutch Lower House of Parliament this week. According to the government, this scenario fits best within the formulated political objectives and preconditions. The objectives are holding on to the advantages of TenneT’s cross border steering and lowering the financial risks for the Dutch state that the German operations involve. The preconditions consist of guaranteeing the public interests and national security. TenneT supports this next step, which is based, among other things, on the advantages of one, cross-border operating TenneT offers society and economy.
Joint Declaration of Intent
The Dutch and German governments have also signed and published a Joint Declaration of Intent (JDI) to stress the mutual political interests. The JDI includes arrangements to expand collaboration on energy (such as on grid development, system integration and innovation) between both countries and to continue exploring whether German state participation in TenneT is an option, bearing in mind that each state will only contribute equity to finance TenneT’s investments in its own country.
The letter to the Lower House and in particular the signing of the JDI mark the beginning of an intensive period of trilateral talks and negotiations between TenneT and the Dutch and German governments on matters like valuation of the company but also on the level at which the German State will invest if everything goes ahead: TenneT Holding or TenneT Germany.
Green Hybrid Bonds
Due to the complexity of the process and the uncertainties related to it, TenneT has decided to issue Green Hybrid Bonds before the end of the year to ensure that its good credit rating is guaranteed for 2021 and to allow for enough time to follow the process through carefully. Moreover, in his letter to the Lower House of Parliament, the Minister says that, if necessary, capital will be provided for both the Dutch and the German parts of TenneT to maintain the company’s credit rating, which means TenneT has a guarantee for 2022 too.