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UPDATE 1-TenneT to boost investment in German offshore grid
March 19, 2014 / 5:26 PM / 4 years ago

UPDATE 1-TenneT to boost investment in German offshore grid

* German offshore grid investments to rise 3 bln euros

* One billion euros of equity already committed

* TenneT would favour adjacent grid operators for alliances

* Expects to get German certification from regulator (Adds detail on foreign cross-participations, German regulator)

By Geert De Clercq

AMSTERDAM, March 19 (Reuters) - Dutch state-owned grid operator TenneT said on Wednesday it has increased planned investments in its German grid by about three billion euros, bringing more North Sea wind power onshore.

The move boosts its total investment budget for the next decade to 16 billion euros.

Following its acquisition of E.ON’s Transpower grid in 2010, TenneT owns 40 percent of the German electricity grid and plays a key role in Germany’s post-Fukushima shift from nuclear to renewable energy.

In its 2013 earnings statement TenneT said it will invest 11 billion euros ($15.30 billion) in the German grid in the coming decade - of which 7.5 billion offshore and 3.5 billion onshore - up from an estimate of 8 billion last year.

It also confirmed it will invest 5 billion in Dutch grids.

“The extra investments will mainly go towards our German offshore grid connections,” a TenneT spokesman told Reuters.

TenneT’s offshore investments focus on laying a network of subsea cables to connect windmills to shore, as well as convertor stations that convert their direct-current power to the alternate current used in homes.

In 2013 it invested 1.3 billion in the German offshore grid.

TenneT said it is expected to deliver 8 gigawatts of connection capacity for wind farms on the German part of the North Sea this year and the years to come.

It added it had also taken the first steps - with partner TransnetBW - towards the development of the 800 km direct current SuedLink line, which will provide combined capacity of 4 gigawatts to ship power from the windy north to Germany’s industrial south.

ALLIANCES

A TenneT spokesman said that the possibility of forming cross-shareholding alliances with other European Transmission System Operators (TSOs) could help further integration of Europe’s energy market.

“Obviously we would first look at TSOs that have networks adjacent to ours,” he said, adding that he expects no agreements this year as Dutch energy legislation will have to be updated before this can happen.

TenneT CEO Mel Kroon told Reuters in November that the most obvious candidate for a cross-shareholding would be Belgium’s Elia, which in 2010 bought a 9,800 km east German grid from Sweden’s Vattenfall.

Elia’s grid borders TenneT’s and a linkup would create a contiguous electricity platform. Another prime linkup candidate would be Amprion, whose 11,000 km west German network is surrounded on three sides by TenneT’s grids.

An alliance also could help TenneT fund its German investments, as the finance ministry has also ruled out an IPO, which limits TenneT’s financing options.

Critics say the investments are a stretch for the relatively small and unlisted Dutch firm, whose government shareholder also rules out funding German grid investments with Dutch taxpayer money.

Chief Financial Officer Otto Jager said TenneT had already attracted about 1 billion euros of equity commitments for its German offshore activities, which he said has created a solid financial basis for its German investment portfolio.

The firm has obtained a total 576 million euros in equity financing from longtime offshore partner Mitsubishi Corp and 384 million from Copenhagen Infrastructure Partners (CIP) for the DolWin 3 offshore project.

“Combined with a strong shareholder to support our Dutch activities, we look towards the financial future of the company with confidence,” Jager said on Wednesday.

Two years ago, German regulator BNetzA refused TenneT EU-mandated certification, saying TenneT was unable to prove it had the funds to fulfil its obligations as a grid operator. The lack of certification - which TenneT is contesting in court - does not suspend TenneT’s operations but creates legal uncertainty.

A TenneT spokesman said that since the regulator made certification dependent on the financing of offshore connections, the fact that the company has found funding for all its projects should unblock the case.

“We do not expect having to wait much longer for certification,” he said. ($1 = 0.7188 Euros) (Editing by William Hardy)

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