German state seeks to further strengthen role in energy sector after Uniper

Germany is negotiating with the Dutch government on a full or partial takeover of TenneT, one of Germany’s four transmission system operators. Among other things, it expects the takeover to accelerate grid construction, which is significantly delayed by opposition from local residents.

Only a few months have passed since the takeover of Uniper, one of Europe’s largest energy companies, and since early December there have been reports of another acquisition by the German state. This time, it could involve transmission system operator TenneT.

TenneT operates transmission systems in the Netherlands and Germany. However, it is owned solely by the Netherlands. Both governments have nevertheless confirmed that each is interested in developing the grid on its own territory.

For Germany, this may be an opportunity to make grid operations more efficient, particularly with regard to its further expansion. Germany has long struggled with grid development, and construction has so far not accelerated significantly.

However, the energy crisis has shown that when rapid infrastructure development is truly necessary, it is not impossible. Germany demonstrated this through the commissioning of floating LNG terminals, which contributed greatly to managing the energy crisis. Since the end of February, when the war in Ukraine began, three floating terminals have already entered operation off the German coast.

The main reason for changing the ownership of TenneT’s German operations is the need for further investment required on the German side. The company needs at least EUR 15bn for the necessary investments. For the German government, which has spent up to hundreds of billions of euros in recent months to mitigate the effects of the energy crisis, this may nevertheless be too high an amount.

Neither side has yet mentioned the terms under which the transfer of the company would take place. However, the parties prefer for the entire management of the German part of the grid to pass to the German government.

State involvement in the energy sector is now a frequently discussed topic. Private investors are often unable to meet certain priorities, particularly in the area of security of supply, that individual countries’ governments have.

While Germany has already taken over Uniper, the Czech Republic is increasingly discussing a transformation or other change in the ownership structure of ČEZ, which is responsible, among other things, for the construction of new nuclear reactors.