TenneT tariff proposal 2024 published by ACM

The Authority for Consumers & Markets (ACM) published TenneT's tariff proposal for 2024. Electricity prices in Europe rose significantly from the second half of 2021. These high prices have continued into 2022, making them about five times higher than prices in the first quarter of 2021. These price increases also affect the level of TenneT's transmission tariffs in 2024.

In 2024, high-voltage (HV) tariffs increase by 79% - 81% and extra-high-voltage (EHV) tariffs by 117% - 128%. For an average household, this means that the TenneT share of the electricity bill increases from around EUR 70 in 2023 to around EUR 127 in 2024. For a typical small business, the TenneT share increases from EUR 413 in 2023 to around EUR 789 in 2024. These costs are paid to TenneT indirectly through the regional grid operator.

 

Further increase of costs for energy and capacity

TenneT’s tariffs are used to cover the costs of TenneT’s statutory tasks, such as investments in the national onshore and offshore high-voltage grid. Another important cost item is the so-called energy and capacity (E&C) costs. This includes costs for: redispatch (resolving transmission constraints), purchasing grid losses, reactive power and contracting of balancing capacity (FCR, aFRR, mFRRda). Higher electricity prices also lead to higher costs for the various E&C products in 2022. 

 

Over the period 2018 to 2020, total costs for E&C averaged EUR 280 million per year. In 2021, these costs were already around EUR 850 million; in 2022, these costs increased further to around EUR 1.7 billion. These costs are reflected in the 2024 tariffs. E&C costs are included in the transmission tariffs as estimates based on the historical average. Then, two years later, a post-settlement is made in the tariffs based on the actual costs. The higher post-settlement due to further increased costs in 2022 will thus be reflected in TenneT's transmission tariffs in 2024. 

 

Advance in 2024

The high E&C costs result in TenneT having to pre-finance a substantial amount for two years. Because of the impact on TenneT's financing capacity, the ACM announced that these costs will be reimbursed earlier in the tariffs from 2024 onwards. In doing so, the ACM has indicated that it will consider stable tariff development. On this basis, TenneT's 2024 tariff proposal includes an advance payment of 25% of the expected deficit for 2023.

 

Volume discount

The ACM announced on 24 May 2023 that it will abolish the volume discount (VCR) from 2024 because there is no longer a basis for this scheme. Because the VCR is not taken into account for the 2024 tariffs, the tariffs are approximately 8% lower compared to a situation with the VCR.

 

TenneT transmission tariffs as of 2025

The tariffs from 2025 are not yet easy to estimate. This is an effect of the volatility of E&C costs and the uncertainty of the extent to which the ACM wants to incorporate E&C costs into tariffs with an advance in 2025. However, tariffs are expected to develop in a less extreme manner than in 2023 and 2024. With the tariff proposal, TenneT announced that it aims to share a specific forecast for the 2025 tariffs in the second quarter of 2024 in a similar manner in which TenneT informed connected parties about the expected tariffs for 2024 earlier this year.

 

TenneT tries to limit its costs wherever possible and thus also the level of tariffs for its customers. For E&C costs, however, TenneT is highly dependent on developments in the electricity market.