Dutch government seeks to privatize Tennet


In a recent letter to the Dutch parliament, Finance Minister Wopke Hoekstra said he plans to privatize or sell off a stake in Tennet. The state-owned Dutch transmission system operator has a huge presence in the German energy market, where around 70% of its assets are concentrated.

Hoekstra said Tennet needs more equity to invest in grid upgrades, as new energy sources such as solar and wind are straining networks. He noted how Tennet acquired German high‑voltage grid operator Transpower from E.ON for €885 million in 2010.

Since then, Tennet has been maintaining the high-voltage grid on two sides of the border and the Dutch and German parts have become an integrated company,” he wrote.

In Tennet’s €35 billion investment plan for the 2019-2028 period, around €23 billion has been allocated to new investments in Germany, while €12 billion will likely be spent in the Netherlands. Hoekstra said Tennet needs about €4.75 billion through 2028 to remain creditworthy and financially sound.

Funds to support the company's Dutch operations have thus far come from Netherland’s state budget, while the financial needs of its German business have been covered by the unit's own operational cash flows and the sale of minority shares in German offshore projects.

“Given the size of the own funds requirement and the type of investments (large onshore projects), such financing does not offer a solution this time,” Hoekstra said, adding that a less favorable regulation scenario in Germany could even increase its capital requirements from €4.75 billion at present to €6.75 billion.

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In order to raise these funds, the government is planning to sell Tennet to a private party, or it may consider some form of cooperation with the German state. “In this context, discussions are taking place with the German government, among others,” Hoekstra wrote.

The Dutch government is convinced that a cross-border Tennet can become a driving force for the Netherlands to emerge stronger from the energy transition, as an increasing share of electricity from renewable energy sources must be transported over greater distances.

“Because the cross-border nature of Tennet in the Netherlands and Germany may offer further benefits for Dutch energy consumers in the future, the public interests seem to be served by maintaining this integration,” Hoekstra said.

In January, Tennet and Enexis said there was very limited capacity for more solar in the provinces of Groningen, Drenthe and Overijssel. In April, the two companies said they would boost the connection capacity available for solar over the next few years, particularly in the country’s less densely populated east. Later in May, Tennet announced the successful issuance of €1.25 billion in green bonds.

This year, Tennet and transport company Gasunie published the Infrastructure Outlook 2050 study, which claims that ambitious EU climate targets can only be reached through deeper integration of power and gas infrastructure, with power-to-gas supporting renewables.

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