News Release from TenneT TSO GmbH


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TenneT intensifies investments for energy transition

TenneT is accelerating the realization of large-scale sustainable electricity projects in the Dutch sector of the North Sea and on the German mainland / Investments total EUR 904 million in Dutch and German high-voltage grids in the first half of 2018 (first half-year 2017: EUR 750 million)

Image: TenneTImage: TenneT

TenneT continues to make important strides in facilitating the energy transition in the Netherlands and Germany. In the Netherlands TenneT is working on a tight schedule to develop an offshore electricity grid that, by 2030, will connect a total of 11.5 gigawatts (GW)1) of offshore wind energy capacity to TenneT’s onshore high-voltage transmission grid. In addition TenneT is making solid progress on the onshore projects to ensure the transport of sustainable generated electricity. In Germany, TenneT is preparing tenders for earth cables for two projects called SuedLink (700 km) and SuedOstLink2) (580 km). These direct-current (DC) ‘electricity highways’ which will be constructed using underground cables will have a combined capacity of 6 GW (comparable to the capacity of six nuclear power plants). From around 2025 onwards they are expected to transmit large volumes of sustainable wind energy from the north of Germany to the major consumption centres in the south of the country.

TenneT CEO Mel Kroon commented: “The energy transition is gaining momentum, also in the Netherlands. While the Netherlands has been trailing behind Germany until now, it is expected to catch up soon. This will create an entirely new situation in which TenneT, market parties and end consumers of electricity will be dealing with large-scale, weather-dependent generation of wind and solar energy. This not only requires the construction of new infrastructure – such as grid connections for many offshore wind farms and high-capacity onshore connections – but also the development of innovative hard- and software systems for real-time coordination of the variable supply of green electricity. With its central position in the energy transition and in collaboration with all its stakeholders TenneT can look forward to a fantastic challenge.”

Underlying operating results

Underlying revenue in the first half of 2018 stayed equal at EUR 1,996 million (H1 2017: EUR 1,966 million). Higher compensation for feed-in management costs (costs to avoid oversupply of electricity on the grid) was partly offset by lower revenue to cover offshore operating expenses in Germany.

The decrease in EBITDA in the first half of 2018 (EUR 699 million) compared to the first half of 2017 (EUR 796 million) was mainly due to a regulatory change in the Netherlands. In order to maintain the balance between supply and demand in the electricity transmission system, TenneT concludes contracts with electricity suppliers to obtain reserve emergency capacity. The regulatory reimbursement method for these so-called ‘system services’ has been changed from 2017 onwards from a “pass-through” system to a “budget-based” system. Due to an increase in the required volumes and higher prices, actual costs exceeded the amount TenneT was allowed to recover through its tariffs (and hence revenue) during the first half of 2018.Based on past practice , the 2020 regulatory budget for these types of expenses will be based on the actual cost incurred in 2018.

TenneT successfully appealed against the change in the regulatory reimbursement system as of 2017 onwards. On the 24th of July the 'College van Beroep voor het bedrijfsleven' (CBb) published its interim decision with respect to TenneT's appeal. On a large number of important items CBb ruled in favour of TenneT which means that the Dutch regulator ACM will have to translate the consequences of this ruling into the current reimbursement method.

Key underlying results 3)

(Amounts in millions of euro) 30 June 2018 30 June 2017
Revenue 1,966 1,966
EBITDA 699 796
EBIT 362 478
Investments in tangible fixed assets 904 750


(Amounts in millions of euro) 30 June 2018 31 December 2017
Net interest-bearing debt, adjusted 8,156 7,687
Equity 5,366 5,469
Total assets 21,020 20,412



In March 2018, TenneT issued additional green bonds in two tranches with a total value of EUR 1.25 billion. Both bond issues will be used to finance investments in the transmission of renewable electricity from offshore wind farms to the onshore electricity grid. Two Dutch offshore projects (Borssele Alpha and Borssele Beta) have been newly included in the portfolio financed through the issue of these bonds. This portfolio currently also encompasses nine offshore projects in Germany. The Green Financing page on TenneT’s website provides an overview of the eleven offshore projects to be financed through the issue of ‘green’ debt instruments. To date, TenneT has issued EUR 6.25 billion in green bonds.

The increase in the issue of green bonds and loans is in line with TenneT’s large investment portfolio of approx. EUR 28 billion for the next ten years. TenneT CFO Otto Jager commented: “The energy transition largely determines the pace and value of our investment programme, in which we also include green financing instruments to reflect our commitment to social responsibility. Apart from attracting debt, additional equity will also be required because of the size of our investment portfolio. We are continuously engaged in talks about our financing needs with our shareholder, the State of the Netherlands.”

TenneT recently paid out EUR 147 million in dividend over 2017 to its shareholder. This brings the cumulative paid-out dividend from 1998 onwards to EUR 1,052 million.

TenneT’s senior unsecured credit ratings have remained unchanged, namely “A-“ rating / stable outlook from Standard & Poor’s and “A3” rating / stable outlook from Moody’s Investor Service.

Background information

Strong growth in offshore wind energy

In March 2018, the Dutch government clarified its ambitions for the development of offshore wind farms in the 2024-2030 period in its ‘Offshore Wind Energy Roadmap 2030’ (Routekaart Windenergie op Zee 2030). In the period up to and including 2023, TenneT will connect a total of 3.5 GW of offshore wind energy capacity. Based on the Roadmap, this figure is expected to grow to 11.5 GW by 2030. Initially, TenneT’s standardised 700 MW Alternating Current (AC) concept will be used. As wind farm zones like IJmuiden Ver are located much further out to sea, Direct Current (DC) connections will be considered in the long term, possibly in combination with an artificial island that could accommodate converter stations and could be connected to the UK electricity market via wind energy locations in UK territory. This solution would allow subsea cables for wind energy transport to also be used for trading electricity between the Netherlands and the United Kingdom, thereby considerably increasing the efficiency of such connections. TenneT is currently investigating the feasibility of this scenario together with European energy company Vattenfall.

For the longer term, TenneT is working with energy provider innogy – which also operates on the European energy market – to investigate the design options, financial models and legal requirements for connecting offshore wind energy using interconnectors in a North Sea Wind Power Hub system.

In the German North Sea, TenneT currently has ten offshore grid connection systems with a total capacity of 5,332 megawatts (MW) for transmitting wind energy from sea to land. As such, TenneT has now achieved more than 82% of the federal government’s expansion target of achieving 6,500 megawatts of offshore wind capacities by 2020. By the end of 2023, TenneT will successively complete three additional grid connection systems, increasing the total transmission capacity in the North Sea to 8,032 MW. By 2027 the transmission capacity in the German North Sea will increase to almost 11,000 MW, as TenneT prepares two more connections by 2025, and expects a third one by 2027 according to the draft version of the land development plan of the German Federal Maritime and Hydrographic Agency (BSH).

Cross border integration of electricity grids

TenneT is advocating cross border grid integration driving further cost reduction for society. For example, TenneT is calling for western German North Sea wind farms to be linked to the Dutch electricity grid in the future. One such cost-effective solution could be a connection to Eemshaven. Because this grid connection point is located directly on the coast, it would be possible to save 100 kilometers of underground cables in Germany and thus around 200 million euros, while at the same time bypassing bottlenecks in the German electricity grid on land. The necessary legal certainty could be achieved through a German-Dutch Treaty, which would stipulate that German wind farms will continue to be subject to German and offshore liability regulations.

Energy transition requires new energy system

The strong growth in solar and wind energy requires not only investments in onshore and offshore electricity connections, but also a different energy system based on extensive electrification of our industrial sector and green hydrogen generated through electrolysis. This system is aimed at ensuring the efficient use of large volumes of renewable electricity, and supporting sustainable developments in other sectors where sustainability presents more of a challenge.

As a bulk consumer of natural gas, the industrial sector is well-placed to pursue large-scale electrification. This will further increase the demand for electricity, which will be met by future offshore wind farms. The use of green hydrogen, produced using sustainable electricity instead of natural gas, will also drive demand for electricity. Green hydrogen will also provide flexibility (because it can be stored) and, in that way, will contribute to the security of supply. In addition, green hydrogen will enable sectors like land- and water-based transport to dramatically reduce their CO2 emissions. According to an analysis commissioned by TenneT, the production capacity for green hydrogen could grow tenfold every five years and investment costs could be reduced by 40 percent every five years. The cost reductions are necessary to make the use of green hydrogen possible. Mel Kroon: “Following the successful development of offshore wind energy, we now need to focus on promoting the production of green hydrogen in order to facilitate long-term energy storage and make the industrial and transport sectors far more sustainable. A tendering system like the one successfully applied to offshore wind energy could serve as a model for the development of green hydrogen.”

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1) 3.5 GW pursuant to the National Energy Agreement for Sustainable Growth (Energieakkoord voor Duurzame Groei (2013)) and 7 GW pursuant to the Offshore Wind Energy Roadmap (Routekaart Wind op Zee) 2024-2030 (2018).

2) SuedLink is being developed by TenneT and TransnetBW, and SuedOstLink by TenneT and 50Hertz.

3) Contrary to the International Financial Reporting Standards (IFRS), the so-called ‘underlying’ figures reflect regulatory assets and liabilities in connection with TenneT’s regulated activities. This means that amounts resulting from past events and that are allowed or required to be settled in future grid tariffs are recognized as assets or liabilities.

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TenneT, grid operator, onshore, offshore, Germany, Netherlands, electricity, investment, energy transition

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