 TenneT explores the potential sale of its German operations to the German State (1)-vwv6d.png)
TenneT currently operates the Dutch and German high voltage grid, and in recent years has developed into one of the largest operators of offshore wind transmission networks worldwide. The company’s capital investments are funded primarily through debt - emerging as one of the largest green debt issuers in the EU - along with equity, in order to maintain a strong credit rating. TenneT's equity funding requirements for this decade are rising, and it has noted the Netherlands government's preference for funding TenneT's Dutch activities, currently estimated to cost ~€10bn. The company is evaluating a structural solution for the equity funding requirements of its German activities, believed to be ~€15bn. TenneT initiated talks with the German State on a possible stake sale in TenneT Deutschland in Oct ’22, according to media reports.
In Jan '23, Germany published plans on how it plans to achieve its target of quadrupling its installed offshore wind capacity to 30 GW by 2030 and increasing it to 40 GW by 2035. The country also plans to increase the share of renewables in its power mix to 80% by 2030, and reach climate neutrality by 2045. However, several analysts have pointed out that bottlenecks in the domestic transmission system could impact the buildout of renewables. The clustering of generation capacity in Germany’s northwest leads to challenges in transmitting large volumes of electricity to other parts of the country. Media reports suggest that ~4% of the total renewable electricity generated in Germany in H1 2022 was unusable due to the grid’s lack of transmission capacity.
By 2030, TenneT expects to invest €30bn to connect ~40 GW of offshore wind capacity in the Dutch and German North Sea, to the respective power grids. The company seeks to align its investment strategy with the forecasted buildout of renewables, to serve as a major support system for Western Europe’s decarbonization. The company has issued more than €12bn of green bonds since 2019, including more than €6bn of bonds tendered during 2022.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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