EnBW transmission network: Baden-Württemberg sticks to partial sale

Status: 09.12.2022 2:31 p.m

Baden-Württemberg’s green state government is sticking to the planned partial privatization of an important “electricity highway”. Does this mean that the country is missing out on income for its own household?

Vby Ursel Sieber, rbb

At the end of 2010, Stefan Mappus (CDU) bought back the shares in EnBW from the French energy group EDF, which his party colleague Erwin Teufel had sold ten years earlier. The so-called Mappus deal went down in history as the “EnBW affair” because the then Prime Minister of Baden-Württemberg, Mappus, bypassed the parliament and probably paid too much.

Nevertheless, the purchase was basically the right thing to do, according to infrastructure expert Lukas Vorwerk from the TU Berlin. “At least Mappus understood that public ownership in the area of ​​critical infrastructure and in particular in the area of ​​energy networks is advantageous for the public sector,” says Vorwerk. “But you shouldn’t pay too high a price.”

“Swabian housewife will be delighted”

In an interview with the “Frankfurter Allgemeine Zeitung” in 2010, Mappus promised that EnBW’s annual dividend would be higher than the state’s financing costs. And in the end, the “Ländle” even has “added value in the millions” left over. Mappus’ conclusion: “The Swabian housewife will be delighted.”

In the first few years after the buyback, however, that was not the case: the state had to contribute around 300 million euros from the state budget. But that was not only due to the probably inflated purchase price, but also to the reactor accident in Fukushima and the subsequent decision to phase out nuclear power, which temporarily sent EnBW into a tailspin. However, the EnBW Group has long since recovered from this.

Since the “Mappus Deal”, EnBW has once again been in the hands of the state of Baden-Württemberg and its municipalities. The group also owns the heart of the infrastructure in south-west Germany: the 3,100-kilometer-long transmission network of the EnBW subsidiary Transnet BW, which is used to transport wind power from offshore wind farms in the north to the south. It is one of a total of four transmission networks in Germany, but the only one that is entirely in German public ownership.

The bidding process is ongoing

Ironically, the green state government wants to partially privatize this Transnet BW transmission network twelve years after the buyback of EnBW. A total of 49.9 percent of the shares are to go to private investors, the bidding process is ongoing – a suggestion that has come under criticism nationwide.

According to the scientist Vorwerk, the economic advantage of public ownership is particularly relevant for the network infrastructure: “The entire network area is heavily regulated by the state and in fact has a guaranteed return that is clearly above the financing costs of the public sector”. The guaranteed return and the risk-free investment also make the transmission network interesting for private investors.

“Where will the money come from?”

For this reason, numerous infrastructure experts and economists recommend that the green-led state government buy the 49.9 percent share in the transmission system that has been put up for sale. But the Green Prime Minister apparently thinks that is unthinkable. “Where is the money supposed to come from?” asked Winfried Kretschmann at the government press conference in mid-November. From the ARDPolitical magazine Contrasts When asked about this, the State Chancellery explained: “A purchase of the network by the state would also tie up state funds for years.”

“Completely wrong,” says infrastructure expert Vorwerk. This shows that the green state government does not understand or does not want to understand how state and infrastructure financing works. The purchase of the transmission grid would not tie up any budgetary funds: “The purchase of 49.9 percent of the transmission grid is not exactly clear in competition with other editions in the country,” says Vorwerk.

Borrowing for wealth growth

Tom Krebs from the University of Mannheim takes a similar view. Baden-Württemberg’s debt brake makes it possible to take out a loan for the purchase of critical infrastructure: This is considered a “financial transaction” because it involves an increase in assets. “That’s outside of the normal core budget and doesn’t restrict the country’s scope,” said Krebs. On the contrary: the investment in the transmission grid secures Baden-Württemberg additional income every year, for example for school renovations.

According to Krebs, behind the action of the green state government is “an extreme aversion to taking on debt”, even for investments: “That’s why you are even giving away income for the state budget,” says Krebs.

Why does the country want to miss out on the profits from the management of the transmission grid – this question from contrasts the State Chancellery of Prime Minister Kretschmann did not answer.

Partial sale contradicts green program

The Stuttgart Ministry of Finance has had a thick report since 2014, in which the infrastructure expert Nils Bieschke from the University of Weimar was also involved. Referring to this report, Bieschke strictly advises against privatizing a state-owned power grid or shares in it.

Before the federal elections, the Greens apparently saw it that way too. Because according to the federal election program, public influence on the transmission networks should be strengthened. How does the partial privatization of Transnet BW’s transmission network fit into this? On this question from contrasts the green party executive declined to comment.

Habeck wants to buy back the Dutch network

Upside down world: While the Green state government in Stuttgart is pursuing the partial privatization of the only state-owned transmission network, the Green Federal Economics Minister Robert Habeck is currently planning the partial buyback of another of the four transmission networks: It is about the Tennet transmission network, which is 100 percent owned by the Dutch state and wind power from Schleswig-Holstein to Bavaria.

Habeck now wants to acquire a majority stake in Tennet to ensure rapid expansion for the energy transition. In 2010, the E.ON Group sold its transmission network to the Dutch. On request from contrasts The Federal Ministry of Economics explained that the state-owned KfW is now also examining an entry into Transnet BW.

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