In a letter to the Dutch Lower House of Parliament, 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 of the German State in TenneT Holding or TenneT Germany will be worked out.
According to the government, this scenario fits best within the formulated 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 cooperating closely with the shareholder and supports this next step, which is based, among other things, on the advantages of one, cross-border operating TenneT offers society and economy.
The Dutch and German governments are exploring all the possibilities, not just the financial ones
The Dutch and German governments have also signed and published a Joint Declaration of Intent (JDI) to stress the mutual 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 cooperation, to hold exclusive talks and negotiations in the coming months to work out the details.
More intensive collaboration on grid development, system integration and innovation
Over the past decade TenneT has already achieved major socio-economic benefits in its cross-border cooperation, such as greater security of supply, lower and less volatile electricity prices and many lessons learned in our sustainable offshore and onshore investments, leading to lower costs for society. TenneT knows like no other that the energy transition will be more successful and more efficient if we stop limiting our thinking to national boundaries and create yet more space for (international) collaboration and innovation. This is why TenneT strongly supports the intention of both the German and Dutch governments to intensify collaboration on grid development, system integration and innovation. In fact, if the two governments, who will perhaps both soon be shareholders in a single, cross border and integrated TenneT, work more intensely together, the energy transition in Northwest Europe could prove cost efficient. TenneT is preparing for its pioneering role in the energy transition, and closer collaboration with the German government, both in financial terms and in terms of the energy policy, is very much a part of that.
TenneT with complete top team in shape for the next phase of growth
TenneT has been busy getting our internal organization in order over the past twelve months. The company has brought more focus to the strategy, set up a new organization and processes to be able to grow further, and initiated further development of TenneT’s (leadership) culture with a focus on cooperation, courage, and responsibility.
By 1 July, TenneT will be as solid as a rock: a full team in in excellent condition. TenneT is pleased that this top team has a good balance of German and Dutch colleagues, male and more than 30 percent female colleagues and a good diversity of thinking from TenneT and from the market.
The beginning of the negotiating stage, a careful process that needs time
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 between 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: TenneT Holding or TenneT Germany. All parties are aiming for an outline agreement before the end of the year. Of course, TenneT will be making an important and active contribution to this process. There is frequent and good contact with TenneT’s Dutch shareholder (the Ministry of Finance), the Dutch energy policymaker (the Ministry of Economic Affairs and Climate) and the German government. In doing so, TenneT will continue to give the highest priority to its pivotal role in the energy transition and the interests of all its stakeholders: its customers, communities, business partners, bondholders and employees alike.
Because this process is complex and beset with uncertainties, TenneT has decided to issue Green Hybrid Bonds before the end of the year, in accordance with our financing plan. Fifty percent of these Green Hybrid Bonds will be regarded as equity. By doing so, TenneT can ensure that its good credit rating is guaranteed for 2021; it will give the company time to follow the process through carefully. Moreover, in his letter to the Lower House of Parliament, the Minister says that, if necessary, capital will be provided for both the Dutch and the German parts of TenneT to maintain the company’s credit rating, which means TenneT has a guarantee for 2022 too.