Negotiations about selling an electricity network to the federal government have been going on for a long time, and now a decision has been made. It is a setback for the federal government. What happens next?
The expansion of the electricity grids in Germany costs many billions – the Dutch grid operator Tennet therefore wanted to sell its German electricity grid to the federal government. However, the negotiations have now failed. The federal government has announced that it cannot carry out the planned transaction due to budget problems, Tennet announced.
The federal government is in the middle of difficult negotiations on the 2025 federal budget and medium-term financial planning; billions of dollars worth of holes need to be plugged. Economics Minister Robert Habeck (Greens) expressed his disappointment at the failure of the negotiations with Tennet.
A “Plan B” is now being sought. This could also involve the federal government acquiring a minority stake in Tennet. Tennet is one of four operators of the German transmission networks, the “power highways”.
Alternatives are being explored
Tennet announced that negotiations between Tennet Holding and the state development bank KfW on behalf of the Federal Republic of Germany regarding a complete sale of Tennet Germany had ended without results. Dutch Finance Minister Steven van Weyenberg was disappointed. The Dutch state will now have a budget gap of around 1.6 billion euros, according to a letter from the minister to parliament in The Hague.
The Dutch state owns the Tennet parent company. The costs of expanding the network in Germany had become too expensive for the Netherlands. Tennet had therefore made public its desire for the federal government to take over its German transmission network.
Various alternatives for the sale of the Dutch operator’s German power grid are now being examined, said Finance Minister van Weyenberg. “The preparations for this are in full swing.” Tennet is preparing “concrete options for a (partial) private sale or a listing on the stock exchange of Tennet Germany.” The German government has announced that it supports these alternative scenarios.
In the meantime, Tennet is sticking to its extensive investment plans in both countries and is being supported by the Dutch government, which recently granted Tennet a shareholder loan of 25 billion euros for 2024 and 2025.
Deutsche Netz AG?
The Tennet acquisition should be a significant step on the way to a German “Netz AG”, in which the federal government could hold shares in all German transmission system operators and gain more control over the expansion of the electricity grid.
Habeck said on the sidelines of a trip to East Asia in the South Korean capital Seoul that he regretted that it had not been possible to combine the four transmission system operators Tennet, 50Hertz, Amprion and TransnetBW into one company. This would have ultimately made electricity cheaper in Germany because synergies could have been created, for example in procurement.
It would have been important to avoid delays in the expansion of the grid, said Habeck. “Now the path that was actually planned has not been possible. But that does not mean that other paths should not be found.” The next step is to bring the transmission system operators together and provide them with strong capital. “Now we just have to think again from the beginning.”
State Secretary for Economic Affairs Philipp Nimmermann said the federal government remained interested in a strategic minority stake in Tennet Deutschland as part of a consortium.
Federal government already involved in two operators
The federal government has a 20 percent stake in the transmission system operator 50Hertz through KfW. The federal government has also acquired a 24.95 percent stake in the transmission system operator TransnetBW through KfW – the main shareholder is the EnBW Group.
Baden-Württemberg’s Finance Minister Danyal Bayaz is also on its supervisory board. The Green politician called the failed Tennet transaction a bitter setback and said: “I think the idea of a consolidated German Netz AG is the right way to go, given the gigantic planning, construction and financial dimensions of network expansion. A blocking minority should be held by the state, and the majority should be mobilized through private investors.”
High costs for network expansion
Tennet took over the German part of its network from Eon in 2010 and operates the network in the largest of four zones. The area stretches from the North Sea to the Austrian border.
As part of the energy transition, thousands of kilometers of new power lines must be built so that the wind power produced primarily in the north can reach large consumption centers in the south. The Federal Network Agency expects total investments of around 320 billion euros for the entire expansion of the electricity transmission networks by 2045. The costs of the network expansion will be passed on to all electricity customers via the network charges.
A spokesman for the Federal Network Agency said: “We see that Tennet wants and will continue to expand its networks on a significant scale. The investment conditions are attractive and we assume that Tennet will find alternative investors.”
Source: Stern
