 |
In terms of area and circuit length, TenneT TSO GmbH is the largest of the four German transmission system operators.
September 2025 |
250904 |
ENERGY CHRONICLE |
The Dutch state-owned network operator TenneT has sold 46 percent of its shares in Germany's largest transmission system operator, TenneT TSO, which it previously owned in full, to an international investor consortium. As announced on September 24, the consortium consists of the Norwegian sovereign wealth fund Norges, the Dutch pension fund APG, and the Singaporean sovereign wealth fund GIC. The consortium is led by the Norwegian sovereign wealth fund Norges, which will hold a 21.8 percent stake in TenneT TSO in the future. The sale of the shares will take place by way of an increase in the equity capital of Tennet TSO GmbH by up to €9.5 billion. The transaction now agreed is to be completed in the first half of next year. Among other things, it still requires the approval of the regulatory authorities.
|
|
In terms of area and circuit length, TenneT TSO GmbH is the largest of the four German transmission system operators. |
The capital increase is intended to alleviate the chronic financial difficulties of Tennet TSO, which operates extra-high-voltage lines with a circuit length of more than 14,000 kilometers in a network area covering more than 140,000 square kilometers, stretching from the Alps to the Danish border, and is also responsible for the grid connections of wind farms in the German North Sea. TenneT TSO is thus significantly larger than its Dutch owner, which was able to acquire its German subsidiary from the E.ON Group in November 2009 at a bargain price of around one billion euros (091101). A few months earlier, the group had spun off the extra-high-voltage grid sold to the Netherlands from the assets of its subsidiary E.ON Netz GmbH and renamed it “Transpower” (091005). For this reason, TenneT TSO is still based in Bayreuth, where E.ON Netz GmbH was located until 2014.
Because the parent company was significantly smaller than the subsidiary, the Dutch were unable or unwilling to provide sufficient support to their new acquisition when it soon found itself overwhelmed by the obligation to connect new offshore wind farms in the North Sea. In November 2011, the German TenneT TSO even sent letters to the Federal Chancellery and the Ministries of Economics and the Environment, in which it made a kind of declaration of insolvency and stated that it was unable to fully meet its obligations as a grid operator for financial reasons (111104). As a result, the Federal Network Agency refused to grant it the certification required by law for almost three years (121105 and Hintergrund).
In the meantime, the costs of the necessary expansion of the transmission grid have become even higher as a result of electricity trading and the energy transition. Against this backdrop, the Dutch company TenneT announced on February 10, 2023, that it was considering selling its subsidiary to the German state. It said it needed €10 billion in capital to finance its own activities, while the capital requirements of its German subsidiary were estimated at €15 billion. It would certainly be the best solution if the governments in The Hague and Berlin owned, controlled, and financed their respective national electricity grids themselves. TenneT therefore intends to enter into talks with the German government about a complete sale of its German subsidiary “on acceptable terms” (230201).
In fact, the best solution from the outset would have been to merge the four operators of the German extra-high-voltage grid into a single state-owned grid operator, as is the case in all other EU countries. The opportunity to do so arose when the three major electricity companies E.ON, Vattenfall, and RWE sold off this part of their grid business for a total of only €2.6 billion between 2009 and 2011. The reason for the sell-off at bargain prices was the regulations that came into force at that time on the unbundling of the generation and grid/distribution business areas and the associated regulation of grid operation. The companies therefore expected only comparatively modest profits in the extra-high voltage sector, which were of interest at best to pension funds and similar investors who placed particular emphasis on a state-guaranteed return. At the same time, they hoped to gain more by investing the proceeds from the sale of the grids in the construction of new power plants. Only EnBW refrained from selling its transmission network operator TransnetBW at that time (see Hintergrund, November 2023).
Since EnBW was already almost 100% publicly owned, the four operators of the extra-high voltage grids could have been merged with minimal financial outlay to form a national transmission grid operator responsible for the whole country, as is the case in all other EU states. Instead, the federal governments at the time (Merkel 1 and Merkel 2) left it at four transmission system operators, which remained after the liberalization of the electricity market from an original number of more than twice as many “interconnected networks,” each with exclusive control and supply areas (see Chart). Politicians were content to oblige these four network operators to cooperate as efficiently and cost-effectively as possible (100301). With this structure, the German transmission grid is therefore an antiquated unique case in Europe.
The offer to sell TenneT, backed by the Dutch government as the
owner, gave the federal government the opportunity to at least partially
correct the mistakes made more than a decade ago. With the complete
acquisition of the German TenneT subsidiary, it could have significantly
expanded the assets it already owned through its holdings in 50 Hertz (180709) and TransnetBW (231108).
However, the extra-high-voltage grid stretching from the Alps to the
North Sea was no longer available for the €1.1 billion that TenneT had
once paid E.ON for it. After all, it had grown by a good three thousand
kilometers in the meantime and had also swallowed up a lot of money in
other ways, which, together with the guaranteed returns for the Dutch
owner, was included in the grid fees and ultimately paid for by
electricity consumers. Above all, the purchase price consisted largely
of €16 billion in debt, which would have reduced the net proceeds for
the Dutch to €4 billion.
|
|
Until
1997, there were nine transmission system operators and nine control
areas in Germany. Over the next five years, this number fell to four. By
2010, three of them had been given new names. |
Nevertheless, the €20 billion that TenneT quoted as the purchase price would still have been comparatively cheap if the German government had taken the opportunity. At the time, however, the traffic light coalition government in Berlin was far too preoccupied with internal coalition disputes over budget planning to be able to continue negotiations on the purchase of Tennet TSO (which had begun a year and a half earlier at the request of the German government, as Dutch Finance Minister Steven van Weyenberg later revealed). One month after the official announcement of the offer, TenneT therefore published a press release on May 15, 2023, stating that it was already looking for alternative buyers. This was intended to put pressure on the governing coalition and signal that there were other interested parties if the FDP continued to block the deal. (240501)
Meanwhile, FDP chairman and Federal Minister of Finance Christian Lindner insisted on his strict rejection of the purchase, even though the 20 billion would not have directly burdened the federal budget, but only the financing costs. The acquisition was to be handled by the federally owned KfW Bank, as was already the case with 50Hertz and TransnetBW. But the FDP was also unwilling to accept the financing costs, which is why the negotiations that began at the end of 2022 ultimately failed.
In the meantime, the traffic light coalition has broken up prematurely and the FDP, which was mainly to blame for this, has disappeared into well-deserved parliamentary oblivion for the second time (see Hintergrund, November 2024). The new federal government, consisting of the CDU/CSU and SPD, would be quite inclined to resume negotiations on a stake in TenneT TSO. It already made this clear in the coalition agreement, which states on page 35: “We are examining strategic state investments in the energy sector, including in network operators.” The Dutch government also remains interested in German participation in TenneT TSO. On September 18, Dutch Finance Minister Eelco Heinen announced that the German government had once again expressed interest in a minority stake and that he supported this.
However, this minority stake will then be significantly more expensive than the price that was being negotiated until the FDP sabotaged the talks. This is because the entry of the international financial consortium that has now been agreed is based on “a company value of around €40 billion on a cash and debt-free basis.” This is twice as much as the approximately €20 billion that the traffic light coalition government would have received for all shares in TenneT TSO if the SPD and the Greens had had a more reasonable coalition partner than the FDP.
