TenneT posts €100m loss

TSO's debt up 37% as it invests in German offshore grid

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Spiralling debt and interest charges are hitting TenneT, which describes itself as the single biggest investor in Germany’s energy transition in its 2012 annual report.

Operating in the Netherlands and northern Germany, the Dutch-owned transmission system operator (TSO) is one of Europe's largest. Last year, its debtload rose by 36.9%, to €3.5bn. Worryingly, the cost of financing this debt grew at a faster rate, by 57.5%, reaching €115m.

But TenneT’s revenue grew as well, by 16%, reaching €1.8bn last year. Thanks to its substantial investment programme, the value of TenneT’s assets also increased,by 40.4%, to €6.6bn.

Intense pressure

A key factor behind TenneT’s deteriorating financial position last year was its responsibility for building a comprehensive offshore network in the German North Sea. The network will link offshore wind farms to Germany’s onshore grid.

Throughout 2012, TenneT was under intense pressure to build the offshore network as quickly as possible. Perceptions of slow progress attracted fierce criticism and prompted several offshore wind developers to place projects on hold.

It galvanised Germany’s energy regulator into developing a more coherent plan for grid connecting offshore wind farms. The federal government also fast-tracked legislation that limits TenneT’s liability in the face of cable delays and malfunction due to negligence. TenneT welcomed both moves.

"The ultimate success of [the new cable liability legislation] still needs to be proven," notes TenneT in its annual report. But the TSO is generally pleased with the act. It is keen to reassure investors that the new law limits its liability "in the event of delayed connection or unavailability during operations, to €17.5m per connection per event in case of simple negligence and to €110m per year in total".

Six offshore converter platforms are currently under construction in three countries – the Netherlands, Germany and the United Arab Emirates – notes TenneT’s annual report. It is building seven offshore wind cable clusters "in a responsible manner", it asserts.

Investment forecast

The company forecasts a total investment requirement over the coming decade of €13bn, with €8bn of this earmarked for Germany. Its partnership with Mitsubishi for the construction of up to four export cables is a recent positive move. Further such partnerships with others will be essential.

Other noteworthy details in TenneT’s 2012 accounts refer to a €15m increase in expenses, directly due to "increased offshore activities" and a €22m increase in staff expenses, primarily arising from its offshore network construction programme.

In the Netherlands, TenneT’s offshore wind-related activities focus on ensuring grid connection for the Noordoostpolder wind farm, part of which (144MW) will be located offshore.

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