Despite the corona pandemic and due to extensive measures taken to ensure a safe and healthy work environment, TenneT made good progress in managing the complexity of connecting growing amounts of renewable electricity to the grid. At the same time, TenneT maintained a high security of supply of 99.99 percent for 42 million end users across the Netherlands and Germany.
Further integration pays off
TenneT, as Europe's first cross-border TSO, continued to facilitate the development of a borderless European electricity market. TenneT increasingly benefits from its integrated grid planning, management and operations approach. Manon van Beek, CEO: "Sharing best practices and lessons learned between our German and Dutch operations is paying off more and more in terms of an integrated approach to offshore and onshore grid expansion, better grid utilization due to European innovations and cross-border energy system planning."
Offshore, TenneT is on track to move the energy transition in the Netherlands forward making use of its extensive experience in Germany. Borssele Alpha recently saw its first power delivered by the neighbouring wind farm. Borssele Beta has become operational end of July, well before the formal delivery date of 31 August 2020. Therefore TenneT has now got fourteen offshore grid connections in operation, twelve in the German and two in the Dutch North Sea. The 12th offshore grid connection in Germany, Borwin 3, was completed in the first half of 2020. This brings the total connection capacity in the German part of the North Sea to over 7 GW, exceeding the German government's sustainability target of 6.5 GW by the end of 2020.
In order to reduce the impact of AC lines and to increase the public acceptance of those projects, Germany recently decided to start a couple of 380kV AC underground cabling pilots. TenneT benefits from the experience it gained in the Dutch Randstad with the construction of 380 KV underground AC lines. Furthermore this experience is also transferred to the large DC corridor projects like SuedLink and SuedOstLink. These huge -TenneT’ s largest- projects, which will be built completely underground, will be crucial to transport northern wind production to meet demand for electricity in southern Germany.
Scaling up and unlocking flexibility through innovation
“We’ve proven to be resilient to the challenges posed by the corona pandemic,” says Van Beek. “Our construction work on onshore and offshore electricity connections is progressing. As well as maintenance. Our investment agenda increased by 30% in the first half year."
On top of all grid expansion and maintenance efforts, TenneT is also investing heavily in innovations to better utilize and optimize the capacity and flexibility present in the existing electricity grids. In April, TenneT together with Terna (IT) and Swissgrid (CH) launched Equigy, a new European crowd balancing platform, supported by blockchain technology. This platform will enable millions of European prosumers to actively offer flexible capacity of their electric cars, domestic batteries or solar panels to grid operators for the stabilisation of the electricity system and thus financially benefit from the energy transition.
Van Beek continues: "On 1 July, we launched a new organisational structure with a new senior leadership team that will support the company’s growth and its role in the energy transition in the Netherlands, Germany and neighbouring countries. New departments will further focus on strategic partnerships, digitalization and energy system planning. The new organisation marks an important milestone in TenneT' s transformation, which also includes a sharpened strategy and more focus on leadership and culture.
TenneT expects to scale up to an annual invest volume of EUR 4 to 5 billion within the next few years. CFO Otto Jager explains: "We are going to connect growing amounts of renewable electricity to the grid while facilitating the development of a borderless European electricity market. In light of future equity funding needs, the ongoing talks with the German government about a possible equity participation, next to the Dutch State, are welcomed by TenneT."
Financial results and outlook
TenneT’ s financial performance in the first half year of 2020 remained solid. Underlying revenue of EUR 2,319 million increased by 7.1% compared to 2019 (EUR 2,166 million), mainly driven by a growing asset base and additional compensation for grid-related expenses. Underlying EBIT increased by EUR 7 million to EUR 414 million in the first half of 2020 (first half 2019: EUR 407 million).
Key underlying results (1)
30 June 2020
30 June 2019
In March 2020, TenneT raised EUR 250 million of funding from the European Investment Bank. The financing is linked to TenneT’ s Southwest 380 kV-west project, which will bring wind energy from the North Sea to users in the Netherlands and beyond.
In May 2020, S&P and Moody’s confirmed TenneT’ s A- / A3 long-term unsecured credit ratings, with a stable outlook.
In July 2020 TenneT issued EUR 1 billion of Green Hybrid Securities to further strengthen its balance sheet for the coming years, as 50% will be classified as equity by the credit rating agencies.
Jager commented: “With the hybrid issuance, we have a robust capital structure for the coming years, but, given our growing investment programme, it is prudent to already now look further ahead for additional equity capital as we are currently doing in cooperation with the Dutch and German state.”
(1) Contrary to IFRS, ‘underlying’ figures recognise regulatory assets and liabilities in connection with TenneT’s regulated activities whereas IFRS does not allow this. This means that amounts resulting from past events and which are allowed or required to be settled in future grid tariffs are recognized separately.