German government may take a share in TenneT

27 May 2020

TSO Tennet and the Dutch and German governments are reported to be supporting a share deal that would involve German State participation in TenneT.

In a letter to the Dutch Lower House of Parliament on 19 May 2020, Finance minister Hoekstra presented his preferred scenario for meeting TenneT's capital requirement as a result of rising investments (due to the energy transition) and persistently low interest rates. Participation by the German State in TenneT is the government's preferred scenario, which has led to the conclusion that a minority stake in TenneT Holding or TenneT Germany will be worked out.

According to the government, this scenario fits best with existing political objectives and preconditions. The objectives are holding on to the advantages of TenneT’s cross border steering and lowering the financial risks for the Dutch state that the German operations involve. The preconditions consist of guaranteeing the public interests and national security. TenneT is co-operating closely with the shareholder, and supports this next step, which is based, among other things, on the advantages of one, cross-border operating that TenneT offers society and the economy.

However, the two governments are reported to be exploring other possibilities too, as embodied in a Joint Declaration of Intent (JDI) to stress common political interests. The JDI includes arrangements to expand collaboration on energy between Germany and the Netherlands and to continue exploring whether German state participation in TenneT is an option, bearing in mind that each state will only contribute equity to finance TenneT's investments in its own country. Both countries have agreed, with TenneT’s consent and co-operation, to hold exclusive talks and negotiations in the coming months to work out the details. The future is likely to include more intensive collaboration on grid development, system integration and innovation

The letter to the Lower House and in particular the signing of the JDI mark the beginning of an intensive period of trilateral talks and negotiations among TenneT and the Dutch and German governments. Matters like the price and terms of a possible transaction will need to be discussed. In addition to the valuation of the company, it also concerns, for example, the level at which the German State will invest if everything goes ahead. All parties are aiming for an outline agreement before the end of the year. 

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