EnBW sells electricity grid share for around one billion euros


The energy supplier had originally hoped for a higher purchase price when selling part of its electricity grids.

(Photo: dpa)

Stuttgart The energy supplier EnBW is making progress with the partial sale of its electricity grids. The group has now sold a minority stake of 24.95 percent in the transmission system operator TransnetBW for around one billion euros to a consortium of savings banks, as the Handelsblatt learned shortly before the transaction was completed on Friday.

The group of buyers is led by SV Sparkassen Versicherung. Other savings banks, smaller insurance companies and the Evangelische Landesbank are also involved. “The sale will initially bring us around one billion euros. Another billion if KfW uses its purchase option and takes over the second 24.95 percent of TransnetBW,” EnBW CFO Thomas Kusterer confirmed to the Handelsblatt.

This means that the electricity transmission network with the large overhead lines in the state of Baden-Württemberg will remain in public hands. The state and the Zweckverband Oberschwaebische Elektrizitätswerke (OEW) also have a joint interest of more than 90 percent in EnBW, which in any case remains the majority shareholder of TransnetBW.

EnBW has to invest more than 20 billion euros

Both savings banks and the state development bank KfW have made investment commitments of two billion euros each for the purchase price. “Overall, we can invest up to six billion euros more in green energy generation and grid expansion over the next five years,” said Kusterer. In addition, the group’s financing power is increased through borrowed funds. “In this way we are accelerating the energy transition.”

EnBW, one of the largest German energy suppliers, has enormous financing requirements. According to a study by the consulting company EY and the industry association BDEW, around 600 billion euros must be invested nationwide in the grid expansion for the implementation of the energy transition in order to be able to achieve the climate targets set by the federal government for 2030 their modernization.

>> Read also: Network operators calculate with more than 100 billion euros for network expansion

Significant sums are already being invested in the expansion of the transmission network: the network development plan up to 2035 shows that around ten billion euros in investment is required for TransnetBW alone; primarily for the major projects involving the high-voltage lines SuedLink and Ultranet.

In addition, in view of the planned shutdown of coal-fired power plants, around 20 gas-fired power plants have to be built in Germany to ensure regenerative energy production. EnBW wants to shut down its coal-fired power plants by 2028. Three gas power plants are being built or have already been decided. “By 2030, EnBW will invest a total of 20 billion euros net across all areas,” confirmed Kusterer.

The manager is considered a clever financier in the industry. For example, five years ago he managed to place a first green bond for 500 million euros. His Management Board contract has just been extended for another five years.

Rate hike and inflation weighed on sales

However, the final sales process that started in February was not as easy as expected. Originally, EnBW had hoped for a higher purchase price. Kusterer said there was still great interest in one of the last major regulated infrastructure providers in Germany. “However, the overall environment of rate hikes and inflation hasn’t helped, so it took a little longer than planned.”

The higher the interest rates and the investment costs, the less lucrative such investments become, especially since the return depends on the grid fees set by the state. That affected the purchase price.

Thomas Kusterer

The EnBW CFO is considered a clever financier in the industry.

(Photo: EnBW)

The EnBW CFO is therefore calling for an increase in network charges. “From our point of view, these must be raised so that the grid expansion becomes more attractive for investors, also in order to remain competitive in a European comparison,” said Kusterer. Germany needs a “reasonable risk-return profile” for investors.

Peter Schneider, President of the Savings Banks Association of Baden-Württemberg, had previously described the Transnet participation as “very interesting for the Savings Banks”. With the prospect of feeding in sustainably generated electricity, the grids will also be green systems in the future.

>> Read also: Higher returns for power grid operators? Netzagentur President Müller gives hope

Experts had expected the network to remain in the country. The issue of the reliability of the future partner was of central importance to EnBW right from the start of the sales process. According to information from negotiating circles, the price was not the only deciding factor. The buyers are blocked from selling for several years, and TransnetBW shareholders have a right of first refusal.

This is where the financially strong buyers come in handy. “In this way, we can now invest funds that we would otherwise have needed for the expansion of the large overland grids in the expansion of sustainable energy production and the increasingly decentralized and fragmented distribution grids and charging infrastructure associated with the energy transition,” said Kusterer.

The completion of the transaction is subject to the approval of the responsible antitrust authorities, which is expected in the course of the third quarter.

More: Energy industry insists on clarity about the construction of new gas-fired power plants

source site-12