Tennet is a co-operator of the important north-south power line. The federal government was in long-term negotiations via KfW to purchase the German part of the power grid. Now the sale has failed due to budget problems.
The Dutch electricity network operator Tennet has ended the years-long negotiations on the sale of its German business. The talks with the state development bank KfW were discontinued after the German government informed the Dutch state “that it cannot carry out the planned transaction due to budget problems,” Tennet announced today. No comment was initially available from the Federal Ministry of Economics.
Negotiations with the Dutch government about the state-owned company had dragged on for years. Last year, insiders estimated the value of Tennet’s German business at 20 to 25 billion euros.
Significance for the energy transition
In March, an agreement seemed within reach. The Reuters news agency learned at the time from a person familiar with the matter that KfW would probably handle the billion-dollar deal. The idea at the time was to sell shares to private investors in a second step, while the federal government would retain a blocking minority in the long term.
Germany and especially the Ministry of Economic Affairs were very interested in an acquisition, as Tennet builds and operates the important north-south electricity highways for the energy transition.
From the North Sea to the Austrian Border
Economics Minister Robert Habeck (Greens) recently once again advocated the takeover of the Tennet electricity network and stressed: “I still think it makes sense for the state to ensure that such important infrastructure remains in good hands.”
However, in view of the billions of dollars in deficit, difficult negotiations are currently underway within the federal government over a draft for the 2025 federal budget and medium-term financial planning. Several departments do not want to comply with the austerity targets set by the Ministry of Finance.
Tennet is one of four German transmission system operators 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. This costs many billions. Tennet took over the German part of its network from Eon in 2010.
Enormous investments needed
The owner of Tennet’s parent company is the Dutch state, which actually wanted to sell the German part of Tennet. The company is wary of the billions of euros needed to invest, the majority of which would be in Germany.
In its plans for the next ten years, Tennet expects investments of up to 160 billion euros, most of them in Germany. The company therefore made public its desire for the federal government to take over its German transmission network in February 2023.
FDP energy politician Michael Kruse said: “The Dutch desire to withdraw from the German power grid is a clear alarm signal. If even democratic states are no longer prepared to invest in the grid in Germany under the current conditions, then that says a lot about the current investment climate in Germany and why an economic turnaround is urgently needed.”
Netherlands “disappointed” by failure of negotiations
Dutch Finance Minister Steven van Weyenburg said he was “disappointed” that the negotiations had failed. Various alternatives were now being considered. “Tennet is preparing concrete options for a private sale, a partial sale or an IPO of Tennet Germany,” van Weyenburg wrote in a letter to parliament. He added that the German government had informed him that it would support such scenarios.
Tennet, however, stressed that it is sticking to its investment plans in both countries. The company is supported by the Dutch state, which recently granted Tennet a loan of 25 billion euros for 2024 and 2025. The company will also continue to try to use public or private capital markets to finance its German activities.