Germany’s government is accelerating efforts to merge four high-voltage grid operators because it believes that’s the quickest way to modernize power lines for a coming influx of renewable energy, according to people familiar with the matter.
(Bloomberg) — Germany’s government is accelerating efforts to merge four high-voltage grid operators because it believes that’s the quickest way to modernize power lines for a coming influx of renewable energy, according to people familiar with the matter.
Chancellor Olaf Scholz’s cabinet is in talks with the Dutch government to pay more than €20 billion ($21 billion) for the local unit of Dutch operator TenneT Holding BV. Negotiations for stakes in rivals 50Hertz Transmission GmbH, TransnetBW GmbH and Amprion GmbH also are underway, with the eventual goal of forming a single unit, the people said, asking not to be identified because the discussions aren’t public.
The administration views former Chancellor Angela Merkel’s decision to privatize and split the grid as the reason for splintered management responsibilities, slow expansion and sluggish modernization, according to the people. Germany is pushing to secure affordable power and curb its dependency on Russian gas amid the worst energy crisis in decades. It also hopes to wean itself off fossil fuels and reach climate neutrality by 2045.
The Economy Ministry acknowledged discussions were underway with TenneT and TransnetBW. The Finance Ministry declined to comment.
The estimated price for expanding the transmission system alone is about €50 billion, the nation’s energy agency dena said last week. A critical part of that work would involve connecting wind farms in the north and east with industrial heartlands in the south and west. Power grids in most European Union countries typically are single systems owned by the state because they’re considered critical infrastructure.
Germany’s state-driven merger push doesn’t necessarily mean the future entity will be owned by the government, with private ownership being the preferred option, the people said. Spokespeople for TransnetBW and Amprion declined to comment on the plan.
Finance Minister Christian Lindner, whose pro-market Free Democrats are generally more skeptical of state interventions than Scholz’s Social Democrats and Economy Minister Robert Habeck’s Greens, backs the merger idea in principal. Lindner also sees no financing problems because any takeover investments in the grid sector aren’t counted toward limits on federal borrowing, the people said.
Germany and the Netherlands aim to seal an agreement about TenneT’s German unit by May, when high-level talks are scheduled in The Hague. TenneT said earlier this month it was exploring the sale because its owner, the Dutch government, is looking for alternatives to finance the business.
As for the others, Germany already bought a 20% stake in 50Hertz in 2018. The government’s in advanced talks to acquire a minority holding in TransnetBW, a high-voltage power grid owned by EnBW Energie Baden-Wuerttemberg AG, the people said. The state finance ministry, which manages a large stake in EnBW, had no comment.
EnBW has offered to sell 49.9% of the grid’s shares, and the nation’s development bank KfW has a call option to buy 24.95% of that.
Negotiations also are occurring with Amprion stakeholders, who signaled their support for the merger plan, the people said. Amprion’s investors include the insurance sector, pension funds and former owner RWE AG, which maintains a 25.1% stake.
With its minority stakes in the three grid operators, the German government could create a private network investment company now and then seek to increase those shares over time.
–With assistance from Stephan Kahl, Josefine Fokuhl and Kamil Kowalcze.
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