TenneT €20bn 10 year plan

                                                             "3,450MW Planned for 2023"

TenneT CEO Mel Kroon commented: “In many ways, 2014 was a notable year. Based on the unique experience we have gained in Germany, the Dutch Ministry of Economic Affairs has taken a directional decision to appoint TenneT as the operator of an offshore grid in the Netherlands. Between now and 2023, we plan to connect 3,450 MW of offshore wind energy to our onshore grid in accordance with the Dutch National Energy Agreement. We have been very active in the German sector of the North Sea for several years now, where we expect to realize over 7,100 MW of connection capacity for wind farms between now and 2019. As a result, TenneT will easily meet the German government’s offshore wind target of  6,500 MW by 2020.”

TenneT’s NorNed and BritNed subsea cables (interconnectors) once again achieved excellent results and proved their value, not just for the Netherlands but also for neighbouring countries. The investment decisions for two new interconnectors – COBRAcable and NordLink – have already been taken, and TenneT is expanding the cross-border capacity between the Netherlands and Germany at two locations. This contributes to the ongoing integration of the European energy market, one of TenneT's  main strategic objectives. Once these interconnectors are taken into operation, the Netherlands will have 7,650 MW of cross-border capacity at its disposal. This is more than 2.5 times the minimum target level defined by the European Commission, and appropriate to the Netherlands’ position as a key European energy hub.

TenneT CFO Otto Jager commented: “TenneT is financially well-equipped to tackle the next ten years. However, a point of attention remains. The rapid changes in the energy sector, as well as the energy transition and the associated extensive investment programme, require a robust regulatory regime for TenneT. Such a regime should strike the right balance between security of supply and an acceptable cost level. In order to maintain the high reliability level of our grid, investments must be supported by appropriate tariff structures, as is currently the case in Germany.”

High level of investments contributes to grid reliability and market integration
TenneT’s Integrated Annual Report 2014, which was published today, shows that TenneT is continuing to make substantial investments in its grid in order to (i) connect renewable and conventional electricity production capacity to the grid; (ii) ensure optimum grid availability (security of supply); and (iii) ensure the further integration of the Northwest European electricity market. Investments in tangible fixed assets totalled EUR 2,296 million in 2014 (2013: EUR 1,868 million), of which EUR 323 million relates to the Netherlands and EUR 1,971 million relates to Germany. The investments in Germany primarily concerned eleven offshore projects that were under construction in 2014.

TenneT’s operating result (EBIT) increased to EUR 725 million (2013: EUR 620 million) while revenue rose to EUR 2,305 million (2013: EUR 2,243 million), mainly as a result of TenneT’s growing asset base and  investments in Germany. In addition to the growth of TenneT’s TSO activities, the higher profit levels achieved by the BritNed cable (in which TenneT holds a 50% stake) also contributed to the EBIT increase. The EBIT in Germany increased by EUR 127 million to reach EUR 564 million. The EBIT in the Netherlands decreased by EUR 25 million to EUR 124 million, mainly due to a lower rate of return (based on the new regulatory regime for the 2014-2016 period) and higher depreciation costs.




To provide further support for its investment programme, TenneT successfully strengthened its equity position in 2014 (EUR 3,236 million at 31 December 2014, up from EUR 2,593 million at year-end 2013). In April 2014 TenneT reached agreement with the Danish infrastructure fund manager Copenhagen Infrastructure Partners (CIP) – supported by the Danish pension fund Pension Danmark – concerning a joint investment in DolWin3, a 900 MW offshore grid connection for wind farms in the German sector of the North Sea. CIP acquired a 49 percent stake in this renewable energy project for EUR 366 million. The agreement has resulted in a significant increase in TenneT’s equity position. CIP’s total additional capital commitment in this project amounts to EUR 384 million. Together with its partners Mitsubishi Corporation, CIP and the German KfW-IPEX-Bank, TenneT has created a solid financial base for its German investments in both onshore and offshore projects.

Dividend exceeds EUR 100 million
For 2014, TenneT will pay out  EUR 116.5 million in dividend to its shareholder, the Dutch state (up from EUR 98 million in 2013). The improvement in TenneT’s results is largely attributable to its activities in Germany and has led to a strong increase in dividends over the past few years. From 1999 to 2014, the Dutch state received nearly EUR 600 million in dividends.

Intensive investment programme
Over the next ten years, TenneT expects to invest approx. EUR 6 to 8 billion in its Dutch high-voltage grid (EUR 4 to 5 billion in onshore projects and EUR 2 to 3 billion in offshore projects), and EUR 12 to 14 billion in its German grid (EUR 7 to 8 billion in onshore projects and EUR 5 to 6 billion in offshore projects). Approx. 90 percent of these investments is earmarked for new infrastructure, with the remaining 10 percent being used to modernize TenneT’s existing asset base. In addition to offshore wind projects, significant investments will be made in a number of cross-border interconnectors, namely the Doetinchem-Wesel and Meeden-Diele interconnectors and the NordLink and COBRAcable subsea connections. In Germany the 800-km-long SuedLink connection between the north and the south of the country – essential for the transition to a sustainable energy supply – is scheduled for construction, while in the Netherlands the focus will be on the Randstad 380 kV North Ring and the South-West 380 kV project.

In close contact with our stakeholders
TenneT attaches great value to fulfilling its public and statutory tasks in a responsible and sustainable manner, fully in keeping with a TSO’s role in society. In performing its tasks, TenneT devotes careful attention to the interests of its stakeholders by being transparent and accessible and by making every effort to minimize the possible negative impact of its activities. In implementing the Corporate Social Responsibility policy, TenneT focuses these efforts  on four areas: market, society, environment, and employees.

The growing number of (construction) projects is resulting in closer contacts with society. Together with TenneT, policy-makers and government authorities must play a prominent role in gaining the public acceptance of infrastructure projects. In pursuit of this , TenneT organized hundreds of dialogue meetings for stakeholders and local residents during the year under review. The contacts and discussions were intensive, particularly with respect to the major projects SuedLink (Germany) and South-West 380 kV (Netherlands). Gaining acceptance among citizens in the Netherlands and Germany is important in order to complete key projects on time and within budget. These contacts with stakeholders regularly bring forward suggestions from individuals or groups. Clients (often government authorities) regularly revise their plans in response to these suggestions. TenneT will continue this proactive dialogue with stakeholders in 2015.

One key focus area in the dialogue between TenneT and its stakeholders concerns  the right balance between a reliable and secure electricity supply and a minimal environmental impact. It is an explicit objective of TenneT to reduce the impact of our activities on landscapes and ecosystems. Innovation plays an important role in achieving this goal, as evidenced by the introduction of the Wintrack pylon, which generates a significantly smaller electromagnetic field. Underground  cabling – as in the Randstad 380 kV project – can also help to minimize environmental impact. TenneT has initiated a number of projects in the German part of the Wadden Sea to preserve and develop the natural environment. Our commitment and ambitions in this area are underpinned by our collaboration with the Dutch NGO Natuur & Milieu, which was announced in 2014.

Because safety is among TenneT’s top priorities, ambitious targets are set for minimizing the number of accidents and incidents in collaboration with our suppliers. Although considerable progress was achieved in 2014, the number of cases of absenteeism due to work-related injuries (36 in 2014, down from 49 in 2013) and the number of high-risk incidents (76 in 2014, down from 103 in 2013) make it clear that further improvement is necessary.

Outlook
TenneT is looking forward to the adoption of legislation by which TenneT will be appointed as the operator of the offshore grid in the Dutch sector of the North Sea. Our offshore team in the Netherlands is at full strength to help achieve the Dutch government’s ambitions for the development of offshore wind energy. TenneT is working on the development of the Borssele Wind Farm Zone, the first such area designated by the Dutch government.

In Germany, TenneT expects a positive decision from the responsible authorities on the SuedLink connection that will link the north and south of the country. This project is an essential part of Germany’s transition to a sustainable energy supply, making sure that German society’s investments in renewable energy will actually benefit  the entire country. SuedLink  will also reduce the adverse effect of so-called loop flows on market available interconnection capacity. The expectation is that interconnectors will be used even more efficiently creating further integration of the European electricity markets.