Mitsubishi Investment in Tennet’s German Offshore Grid Connection Projects

TenneT reported a partnership with Mitsubishi Corporation for the investment into four of Tennet’s German offshore high-voltage cable projects. This covers a contract regarding the BorWin1 and BorWin2 projects and another contract concerning the HelWin2 and DolWin2 projects. Mitsubihi’s voting interest will be 49% in return for an aggregate maximum equity commitment of EUR 240 million for the first two projects and EUR 336 million for the other two projects (EUR 576 million in total).

The planned high-voltage cables, involving a total investment of EUR 2.9 billion, will connect a number of offshore wind farms in the German North Sea to the onshore electricity grid and will have a combined total capacity of 2.8 GW, representing close to 30% of the total ambition of the German Government for offshore wind in the North Sea, Tennet said (regarding the offshore wind power targets of the German government of 10 GW by 2020 and 25 GW by 2030 please see here). 60% of the total investment would be financed by loans, Lex Hartmann, member of the board of Tennet, told the newspaper Frankfurter Allgemeine Zeitung (FAZ).

He was pleased that Tennet was able to reach agreement with Mitsubishi “shortly after the recent announcement of necessary improvements of the ManyElectronics Act, which was enacted 1 January 2013”, Mel Kroon, CEO of Tennet, pointed out. The latest amendment of the ManyElectronics Act (EnWG) introduced new provisions regarding offshore wind power, in particular an offshore planning and an offshore liability regime. The offshore liability provisions allow transmission system operators under certain conditions to pass on compensation payments for grid connection delays and disruptions of power lines to the electricity consumers.

In November 2011 Tennet, the TSO with the most offshore grid connection projects in Germany (see link to press release below), had sent a letter to the Chancellary about an unattractive regulatory framework for offshore wind power in Germany. In November 2012, the German grid regulator, the Federal Network Agency (BNetzA), denied Tennet the certification pursuant to Section 4a, arguing TennT did not provide the necessary proof of the financial resources needed to fulfill its legal obligations to operate and extend the transmission grid.

“The equity commitment of Mitsubishi Corporation is further strengthening our balance sheet and keeps us well on track when it comes to financing our offshore investments”, Tennet’s CFO, Eelco de Boer, commented on the deal with Mitsubishi. “These innovative transactions took two years to complete and were developed in close cooperation with the Bundesnetzagentur (BNetzA)”, he pointed out, adding that they demonstrated that the German legal and regulatory regime was attractive to institutional investors. His colleague Mr Hartmann told FAZ he was confident that more investors could be found within the next months for other offshore grid projects like DolWin 3 and BorWin 3 and 4. In view of the limited production capacities of the three suppliers Siemens, ABB and Alstom, he was, however, sceptical that projects of up to 12 GW of new offshore capacity which were in the pipeline could be realised by 2020 as planned, Mr Hartmann remarked. “Many (in the industry) consider only 7 GW over the next ten years realistic”, he said.

Source: Tennet TSO GmbH; Frankfurter Allgemeine Zeitung

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1 Response to “Mitsubishi Investment in Tennet’s German Offshore Grid Connection Projects”

  • Just a quick question regarding EU Unbundling regulations as they are being applied in Germany- as Mitsubishi now owns both generation and transmission assets, is it the case that the German authorities are not applying these regulations in the same way as they are being applied in the UK?

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