The planned acquisition by Berlin of the German subsidiary of the Dutch public electricity grid operator TenneT, a key step in its energy transition projects, has failed due to budgetary constraints, the company announced on Thursday.
Negotiations End Without Agreement
Negotiations between TenneT Holding, headquartered in the Netherlands, and the German public bank KfW, the financial arm of the German state, for the complete acquisition of TenneT Germany, “ended (Thursday) without result,” according to a statement from the German subsidiary.
TenneT, the largest of the four grid operators of the “electricity highways” in Germany, is valued at around 20 billion euros according to the German press, making it a substantial investment.
Berlin informed the Dutch state that “it could not carry out the planned transaction due to budgetary challenges,” the company said, without providing further details.
Budgetary Crisis and Political Fallout
The deal between the two states seemed finalized in the fall of 2023, before a shock ruling by the Federal Constitutional Court in mid-November, leaving a 60 billion euro hole, triggered an unprecedented budget crisis in Germany.
Within the governing coalition led by Chancellor Olaf Scholz, Liberal Finance Minister Christian Lindner has since been hunting for savings to keep the budget within the constitutional rule that limits debt.
The company is notably responsible for transporting electricity produced by wind turbines in the north of the country to the southern regions that consume it.
This is a strategic activity in the eyes of the German state, which wants to successfully transition to renewable energy.
Alternative Solutions and Funding Challenges
Economy Minister Robert Habeck (Greens) expressed disappointment over the failed negotiations with TenneT during a trip to Seoul, the South Korean capital.
Berlin is now aiming for an alternative that could take the form of a minority stake by the state in TenneT as part of a consortium.
The blow is also hard for TenneT Holding, which is preparing to turn to public or private capital markets to find a long-term financing solution for its German activities.
The group remains supported by the Dutch state shareholder, which recently granted it a loan of 25 billion euros covering financial needs for 2024 and 2025.