By law TenneT is responsible for the reliability, safety and security of supply of the Dutch high-voltage grid. Installation of the offshore grid is now also a formal task of TenneT. In the years up to and including 2025, TenneT expects to have to invest between five and seven billion euro in maintaining, renovating and if necessary enlarging the grid in the Netherlands. Approximately one third of this amount is needed to connect offshore wind farms.
Important for economy and society
TenneT's investments are of great importance to the security of (power) supply and thus society. By enlarging and strengthening the onshore grid and installing the offshore grid, TenneT makes a key contribution to a sustainable, reliable and affordable supply of energy. Moreover the investments being made by TenneT are necessary to be able to fulfil the arrangements contained in the National Energy Agreement and the Cabinet’s sustainability ambition.
Scale of capital injection
In the letter to the House of Representatives on 12 July this year, minister Dijsselbloem said that a number of basic principles had been applied to determine the amount of the additional capital increase. The same principles are embodied in government policy on state-owned enterprises. The minister wrote that the first basic principle was to retain TenneT’s creditworthiness. It means TenneT will remain financially healthy and retain sufficient possibilities to raise money on the capital market. This is of great importance to the financing of the company’s investment programme. In its shareholder role the State will contribute only to investments in the Dutch part of the grid administrator’s operations. The shareholder will not provide capital until actually needed by TenneT. The additional equity of €1,190 million will be divided into four tranches spread over four years. TenneT intends to draw down the first tranche of €150 million early January 2017. In 2019 the State will examine whether the fourth tranche of €410 million is still necessary (in its entirety).
Return
TenneT will use the capital increase for investments in the Dutch grid. On these investments TenneT achieves a return higher than the interest expenses payable by the State. As a shareholder the State benefits through higher profit distributions. So in addition to the societal benefits of TenneT’s investments the State also obtains a financial advantage.
