TenneT invests 30 percent more in electricity grid expansions

• TenneT drives forward grid expansion and maintenance with investments of EUR 4.6 billion in the first six months of 2024, marking an increase of over 30 percent compared to the same period last year.
• Underlying revenue in the first half-year of 2024 decreased by EUR 744 million to EUR 4,050 million.
• Underlying EBIT increased by EUR 72 million to EUR 1,002 million in the first half of 2024, highlighting the company's robust operational performance.
• Despite a challenging labour market, TenneT is on track with a net growth of almost 600 FTE in the first half of 2024.

In the first six months of fiscal year 2024, TenneT increased its investment activity, spending EUR 4.6 billion on growth compared to EUR 3.5 billion in the same period last year. The increase is mainly related to higher investments in TenneT's 2GW offshore Program and several onshore projects where milestones on progress have been met.  

TenneT enhanced the pace of its work to deliver grid capacity for customers and prepare the electricity grid for the clean energy system of the future. Strengthened by the increased investments in assets, TenneT maintained a high grid availability in the first half of 2024, delivering – even during times of intensive work on the high-voltage grids and grid expansions – an important contribution to the security of electricity supply. TenneT remains resolutely focused on delivering, together with its partners, for its customers by building the grid faster and utilize the grid better.

 

Key underlying results (in EUR million)

	30 June 2024	30 June 2023
Revenue	4,050	4,794
EBIT	1,002	930
Investments	4,591	3,475

Included in the underlying revenue is reimbursement of costs made for ancillary services. In the first half-year of 2024, the overall costs for ancillary services such as redispatch, grid losses, reserve power plants and control power decreased, resulting in lower underlying revenue. Furthermore, revenue decreased due to lower regulatory rates for return on equity in Germany. This decrease is partly offset by an increase of revenue due to increasing ongoing investments, resulting in a growing regulatory asset base and higher onshore and offshore revenue.
The earnings for the first six months of 2024 were higher than in the same period last year. Underlying EBIT increased by EUR 72 million to EUR 1,002 million, due to the larger asset base resulting from TenneT's growing investments and, partly offset by decreased result of our non-regulated joint ventures due to lower auction receipts.

The long-term credit ratings of TenneT Holding B.V. remained unchanged in the first half of 2024 and were reconfirmed by both S&P Global Ratings (A- / stable outlook) and Moody's Investor Service (A3 / stable outlook).

 

Strong expansions high-voltage electricity grids for green economic growth

Looking ahead, the European energy transition is unfolding at pace. For the period until 2045, TenneT plans to construct over 3,500 kilometres of new grid connections on land and at sea in Germany, and 2,500 kilometres in the Netherlands. This requires significant expansion of TenneT's onshore grid with hundreds of new transformers and dozens of new high-voltage substations, while also building an integrated offshore grid in the North Sea.  

TenneT CEO Manon van Beek says: “To achieve the 2030, 2045 and 2050 climate milestones and meet our customers' immediate needs, we fully facilitate the electrification of industry, businesses, homes, hospitals, and public transport by delivering new infrastructure. According to plan, we will further scale up our investments in expanding and maintaining the network on land and at sea in 2024. The half-year figures show that we are well on our way. The energy transition requires a high level of acceptance and space to build. This remains a critical issue, and we will work even more closely together with national and regional authorities to have space available in a timely manner. Until then, we need to work with our customers on flexibility solutions, enabling us to use and share the available capacity in the best feasible way. Next to acceptance, affordability is an important and complex issue where we engage in as the investments over the next two decades are also intended for generations to come. Not investing in the power grid is not an option as the social and economic cost of grid congestion, redispatch cost and not having access to electricity are much higher than the grid investments required.”

 

Alternative structural funding solution planned for German activities  

On 20 June, discussions between TenneT Holding and the Kreditanstalt für Wiederaufbau (KfW), acting on behalf of the Federal Government of Germany, regarding the full sale of TenneT Germany, were terminated. The end of negotiations triggered a reconsideration of the disclosure and presentation policy of TenneT Germany as held for sale. Furthermore, the contribution received from the shareholder – the Dutch state - for an amount of EUR 1.6 billion last year has been reclassified from current financial liability to equity as the shares in TenneT Germany will not be transferred to KfW. The latter was a condition for distribution of the EUR 1.6 billion to the shareholder and that condition will not be met as the negotiations were terminated.

“Although I regret the termination of the negotiations on the complete sale of TenneT Germany to the German state, TenneT is simultaneously fully committed to the investment agenda in the Netherlands and Germany, which amounts to EUR 160 billion for the next 10 years”, says TenneT’s CFO Arina Freitag. “The expectation after the first six months of 2024 is that we will achieve our target of investing EUR 10 billion in 2024 with good progress in projects both on land and at sea. TenneT has started preparations for alternative financing. TenneT Holding – as previously announced – prepares tapping into public and/or private capital markets for a structural funding solution for its German operations. The German government is committed to support such alternative solutions. In the meantime, TenneT and the Dutch state have agreed upon a EUR 25 billion shareholder loan facility to support the planned investments in the Netherlands and Germany for 2024 and 2025.”

 

Key accomplishments in H1 2024

• The Dutch grid operators published their investment plans in April. They describe the projects needed over the next ten years. TenneT expects to carry out almost 700 infrastructure projects. These include grid extensions, replacement investments, offshore wind farm connections and reconstruction projects.   
• Likewise, in Germany, the four German grid operators, presented their Grid Development Plan (NEP) 2037/2045 (2023) to the Federal Network Agency (BNetzA). The current NEP contains scenarios for the years 2037 and 2045 and describes an electricity transmission grid for a climate-neutral energy system for the first time. 
• Important progress was made with SuedLink, the long-distance high voltage direct current (HVDC) onshore connections in Germany, with the start of construction for the second of four converters. This one is in Brunsbüttel, North Germany.  
• TenneT secured the first planning approval decision for the Bavarian section of SuedOstLink. The direct current (HVDC) SuedOstLink enables the transmission of renewable energies from the north and east to the south of Germany.  
• TenneT took an important step forward in its 2GW Program, with the start of production of cables for two of the new 2 GW offshore connections, BalWin4 and LanWin1. The new high-performance 525 kV cables make it possible to transmit 2 GW of direct current over long distances with low losses.
• In May, the jacket for the Hollandse Kust (west Beta) transformer platform was installed. The topside will be installed next year. The connection system will connect the RWE/OranjeWind wind farm that will be built in the coming years.  
• To make better use of the current grid, TenneT is applying Dynamic Line Rating to both 380 kV and 110-150 kV connections, a smart technology that provides up to 30 per cent more transmission capacity on an increasing number of connections.  
• To boost network capacity, use the grid more efficiently, and combat congestion, the province of Utrecht, together with TenneT and regional grid operator Stedin, announced a range of new grid-enhancing measures like grid-conscious charging of electric vehicles, grid-efficient installations in existing buildings and deployment of controllable power generation.
• To bring down emissions during project construction, TenneT used green hydrogen for drilling in the construction of a new high voltage line between the Woensdrecht substation and Bergen op Zoom. TenneT also tunnels cable systems with fully electrically power drilling rigs.
• Safety and people remain at the forefront of TenneT’s priorities. Nevertheless, TenneT’s Total Recordable Injury Rate (TRIR) is above target level. The company continues to work diligently to perform better and to achieve its zero-harm ambition.
• TenneT successfully issued a dual tranche green hybrid bond of EUR 550 million with a coupon of 4.625% and a non-call period of 5.25 years and EUR 550 million with a coupon of 4.875% and a non-call period of eight years, respectively. Proceeds will be invested in eligible green power transmission projects in the Netherlands and Germany.  .