Record investments, strong security of supply
Despite the global impact of the COVID-19 pandemic, TenneT made record investments of EUR 3.4 billion in 2020, making the company one of the largest investors in the energy transition in Europe. At the same time, TenneT delivered the highest level of security of supply of the past five years. In the course of 2020-21 TenneT is expanding its workforce by 30% to handle its increasing workload.
These are just some of the highlights from the 2020 Integrated Annual Report of TenneT, published today by the Dutch/German high-voltage electricity transmission system operator (TSO).
While renewable energy sources continue to grow rapidly, TenneT is building new connections, strengthening and expanding its grid and upgrading its system operations to meet the EU’s new target to cut emissions by at least 55% by 2030. At the same time, TenneT is making important contributions to pioneering work around future energy system planning in Northwest Europe, including market design, sector coupling and increased flexibility of electricity supply and demand.
"In 2020, TenneT set new records in terms of security of supply, investments and related financing and resourcing. Now, we are ready for a decade full of challenges. We are Europe's only cross-border TSO, firmly embedded in Northwest Europe with unique access to a vast amount of North Sea wind power. As such, TenneT has a key role in the growing European cooperation needed to facilitate the transition to a net-zero carbon world. This requires new concepts, new partnerships and swift action to create a more integrated and affordable European energy system", says TenneT CEO Manon van Beek.
Financial results
TenneT reported solid financial results again in 2020, with underlying revenue of EUR 4,450 million, an increase of 9% compared to EUR 4,084 million in 2019. Underlying EBIT (excluding special items) increased to EUR 796 million in 2020 (2019: EUR 753 million). TenneT anticipates paying a EUR 149 million dividend to its shareholder the Dutch State, bringing the cumulative amount paid over the last 10 years to EUR 1.2 billion. The majority of these dividends are attributable to TenneT's German operations.
Capex (investments) totalled EUR 3.4 billion in 2020, of which EUR 1.3 billion are related to projects in the Netherlands and EUR 2.1 billion in Germany. As a result of these investments, TenneT’s net interest-bearing debt position increased by 27% to EUR 12 billion, as of 31 December 2020.
Otto Jager, TenneT CFO, says: "We achieved another year of solid results, in line with the growth of our asset base. At the same time, we strengthened our capital base with the issuance of EUR 1 billion of green hybrid securities during 2020. We will continue a constructive dialogue with our shareholder in 2021, to ensure a durable equity solution for our increasing investment portfolio is implemented in a timely fashion."
| Key underlying financial figures (in millions of euros) | 2020 | 2019 |
|---|---|---|
| Revenue | 4,450 | 4,084 |
| Earnings before interest and taxes (EBIT) | 910 | 768 |
| EBIT, excluding special items | 796 | 753 |
| Investments in fixed assets | 3,412 | 3,064 |
| Net interest-bearing debt | 12,460 | 9,702 |
| Equity | 8,138 | 6,560 |
TenneT is proud of its position as a leader in sustainable finance. With more than EUR 10 billion of green debt and sustainable financing raised, TenneT is the largest corporate issuer of green debt instruments in the Netherlands. In addition to EUR 1 billion of green hybrid securities, TenneT successfully issued EUR 1.35 billion of green senior bonds in November 2020.
| Long-term rating | Short-term rating | |
|---|---|---|
| Standard & Poor's | A- (stable outlook) | A-2 |
| Moody's Investor Service | A3 (stable outlook) | P-2 |
KEY ACCOMPLISHMENTS IN 2020 AND CHALLENGES AHEAD
Scaling up the potential of renewable energy in the North Sea powerhouse
The North Sea holds large potential for offshore wind power for Northwest Europe and TenneT is helping to turn it into an international hub for green energy. In 2020, TenneT carried out a record number of innovative offshore activities and its offshore wind connections continued to grow. At the beginning of 2020, TenneT’s 12th offshore grid connection in Germany was completed, with BorWin3.
The potential of the North Sea, with an estimated wind capacity of 300 GW by 2050, will forge new cooperation between neighbouring countries. TenneT and National Grid Ventures will explore the development of a multi-purpose interconnector to simultaneously connect up to 4 GW of British and Dutch offshore windfarms between the two nations’ electricity systems. And in close cooperation with the German, Dutch and Danish governments, TenneT is also exploring a joint energy hub in the North Sea connected to these three countries. As the only European cross-border TSO, TenneT has shown its ability to operate innovatively and (cost-)efficiently by developing new standards in large projects in Germany and the Netherlands. A unique new international technical standard will be used to realise the 2 GW offshore programme planned by the Dutch and German governments, linking two grid connections to the wind farms, each one consisting of 2 GW. With this concept, TenneT is harnessing economies of scale and accommodating the offshore wind industry's desire for larger wind farms.
Offshore wind requires onshore grid expansion in an integrated approach
The significant potential of offshore wind requires extensive onshore grid expansion and reinforcement measures. Together with an increase in onshore wind and solar projects, 42 ongoing major projects were completed in 2020. After years of preparation, TenneT began the construction of two new 380kV electricity highways in the north of the Netherlands and in the southern Dutch province of Zeeland. In Germany, TenneT commissioned an important connection in the north, which will enable it to transport renewable energy to Denmark. Further steps were also taken in one of Europe's largest onshore projects, the SuedLink connection, aimed at transporting renewable energy from the North Sea to consumption centres in southern Germany.
Investment portfolio to grow further to meet operational challenges
The implementation of TenneT's ambitious investment portfolio – designed to meet the energy transition targets of the Dutch and German governments and the ambitions of industry – is demanding. For example, grid access applications by new customers in the Netherlands have seen a tenfold increase, led by operators of renewable electricity production. Connecting a growing number of new customers, often in locations with insufficient grid infrastructure, is causing constraints in grid capacity and requires substantial grid enhancements. At the same time, we endeavour to optimise maintenance on our existing networks, so we can continue to guarantee the high security of supply. In the coming years, we will remain focused on speeding up the implementation of our project portfolio and further improve operational excellence.
Innovative solutions needed to improve grid utilization and unlock flexibility
The energy system is increasingly finding new sources of flexible demand to match the volatile supply of renewable energy. TenneT is actively exploring innovative solutions with partners. For example, together with other European TSOs TenneT set up a European crowd balancing platform, Equigy, which gives TSOs and DSOs access to the flexible capacity available in small electric sources, such as electric vehicles, solar panels or heat pumps. TenneT is also involved in InnoSys 2030, a joint research project with TSOs, DSOs, control system manufacturers and research institutes to investigate ways of increasing the network's capacity utilisation.
Employment opportunities to build back better
In order to maintain and expand our onshore and offshore grid and contribute to the energy transition, TenneT is expected to recruit at least another 600 new employees in Europe in 2021 for its operations in the Netherlands and Germany, equating to 30% growth in personnel over the 2020-21 period. Demand for technical talent is growing, with high competition among employers. TenneT is working closely with secondary and higher vocational educational institutions to attract young people to its sector and also retrain with appropriate skills. In addition, TenneT will enter into long-term partnerships with multiple suppliers. The energy transition provides an opportunity to build back better and focus on green recovery after COVID-19.
