TenneT supply chain

This is the process of producing electricity from energy sources, such as fossil fuels, wind and sun. Generation is the starting point in the journey of electricity before it reaches end users.

‘Conventional’ power plants produce electricity by burning fossil fuels like coal and natural gas. Nuclear power plants also fall into this category. These plants are still producing the biggest share of power. In Germany, for example, around 60% of electricity is generated by conventional power plants, while in the Netherlands this share is approximately 80%. Across Europe, the average share of conventional power plants in total power generation is approximately 70%. As more renewable electricity is generated, some countries are reducing their reliance on conventional power plants. For instance, in Germany, the government aims to close down all nuclear power plants by 2022. By the year 2040, half of the European electricity shall be generated by renewable energy sources.

Renewables is an abbreviation for renewable energy sources, such as sunlight, wind or biomass. Pushed by demand from the general public and local authorities, the energy mix is undergoing a rapid transition from the use of fossil fuels towards renewable energy sources. As it comes from natural sources, renewable energy generation is highly (but not exclusively) dependent on the weather. However, thanks to increasing capacity, the amount of wind or solar energy generated is constantly increasing. This makes the important task of balancing supply and demand a particularly challenging task for Transmission System Operators like TenneT. As the primary responsibility of a TSO is to guarantee a reliable energy supply and avoid power outages, TenneT is working hard to improve the smooth integration of green electricity into the grid.

Electricity import means that one country can buy power from another when its electricity demands cannot be covered by its own production. Electricity is imported when trading prices on international power exchanges (plus cost of transport) are lower than domestic wholesale prices or the cost of domestic production. The import of electricity relies, among other factors, on international extra-high voltage connections, so-called interconnectors, operated by TSOs like TenneT. With its international-connections, TenneT is helping to develop a European interconnected grid, making it easier and more cost-effective to transmit electricity across national borders. Furthermore, interconnectivity increases the security of supply, because it allows countries to support each other in times of distress or imbalance on the grid.

Once electricity has been generated, it is then fed into the grid in order to be transported and distributed.

As a transmission system operator (TSO), TenneT is responsible for the transmission of electricity at high and extra-high voltages. While TenneT is the only TSO in the Netherlands to fulfil this role, the high voltage grid area in Germany is divided between four companies: TenneT, Amprion, 50 Hertz and TransnetBW. According to the European standard, TenneT transmits electricity at a frequency of 50 Hz. One of the most important tasks as TSO is to continuously maintain this frequency, by ensuring a constant balance between electricity supply and demand. TenneT's electricity transmission infrastructure extends from the sources of generation to the supply networks, where it is passed on to consumers as household electricity. In transformer stations TenneT connects high and extra-high voltage connections to the distribution grids. Here, high voltage is converted into medium and low voltage, making the electricity safe for use by consumers, for example in production plants and private households. To keep electricity flowing smoothly and without disruption, TenneT continuously performs critical tasks, such as maintaining the voltage level, resolving transmission hindrances, compensating for grid losses, contracting control reserves and managing and maintaining the national high-voltage grid. To do this, TenneT often has to collaborate closely with regional distribution system operators (DSOs) as well as with other TSOs in European countries.

As TenneT by law is the only TSO serving the Netherlands and large parts of Germany, its core business lacks competition. Therefore, it is important that its key tasks are regulated by independent regulatory bodies. In Germany, this task is fulfilled by the Federal Network Agency (BNetzA), in the Netherlands by the Authority for Consumers and Markets (ACM). Their role is to balance the interests of consumers, businesses and system operators against the need for affordability, security of supply and sustainability. As part of this, regulators incentivise TSOs to make their operations as efficient as possible, while also setting limits for how much return they can make on their invested capital.

Transmission refers to the process of transporting electricity through the high and extra-high voltage grid. Transmission grids bridge the often long distances from where electricity is generated to where it is consumed. Electricity is carried in the grid at very high voltages – 110 kV and higher in the Netherlands and 220 kV and higher in Germany. Distribution is the next link in the chain, taking electricity along the high, medium and low voltage grid to end users. This is done by distribution system operators (DSOs). In the Netherlands, distribution is at a medium voltage of 50 kV while in Germany it typically starts at a high voltage level of 110 kV. Locally generated energy, such as solar energy, is mainly fed directly into medium and low-voltage grids.

Industrial users are the largest consumers of electricity. This can be attributed to the fact that electricity accounts for around a third of energy consumption of large industrial plants in energy-intensive industries, such as chemicals, paper, steel, aluminium, copper and textiles. Large industrial plants are often directly connected to the high and medium voltage grid.

After industry, private households are the second largest consumers of electricity. However, as the share of renewable electricity grows, households are no longer just consumers of electricity – they can also help to produce it, with solar panels, for instance. In this way, a growing number of electricity consumers are becoming ‘prosumers’ – producing electricity either for their own consumption or to feed it into the electricity grid or sell it on electricity exchanges.

The export of electricity relies, among other factors, on international extra-high voltage connections, so called interconnectors, operated by TSOs like TenneT. With its international-connections, TenneT is helping to develop a European interconnected grid, making it easier and more cost-effective to transmit electricity across national borders. Furthermore, interconnectivity increases the security of supply, because it allows countries to support each other in times of distress or imbalance on the grid.

This is the process of consuming energy, in whatever form, including electricity.