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Securing supply and facilitating the integration of sustainable energy sources into the high-voltage grid require substantial investments and flexible access to equity. Over the next 10 years, TenneT expects to invest approximately EUR 35 billion in onshore and offshore grid connections. It is our role to ensure our capital expenditures are efficient and our responsibility to keep the costs of power transmission and system services as low as possible for end-users. We seek to balance the financial interests of our stakeholders with our obligation to ensure electricity remains affordable and available to all.


In 2018, we issued additional Green Bonds and successfully signed a United States Private Placement (USPP) transaction to fund our extensive investment programme. We work with our regulators to ensure our investments are as efficient as possible with project-specific efficiency assessments and reference grid analyses, which had positive outcomes. In our LEAN and continuous improvement programme, we performed scans to gain a better insight into the drivers affecting our productivity and implemented over 100 improvement initiatives.

Underlying results

(EUR million)20182017Difference in €Diference in %
Operating expenses3,4393,11932010%
Profit for the year443531-88-17%

Monitoring and managing the performance of our business is based on underlying financial information and not on IFRS-reported financials. Underlying financial information involves the recognition of regulatory receivables and payables, which – based on the current regulatory framework – can be recouped or are to be returned through future grid tariffs (see section 2 of our consolidated financial statements). Under IFRS, reimbursement/settlements through future grid tariffs may not be taken into account. As a result, the balance of any expense or income is not recognised as a regulatory asset or a liability under IFRS.

Operating expenses

During 2018, rising grid and depreciation expenses from increased investments, caused our operating expenses to increase. In Germany, we had higher redispatch costs caused by bottlenecks due to grid investments of neighbouring TSOs as the expansion of wind energy plants forced us to temporarily suspend the feed-in of renewable energy sources. Cold reserve costs in Germany are lower due to decreased use of Austrian power plants caused by congestion management on the German-Austrian border.

In order to maintain the balance between supply and demand in the electricity transmission system, TenneT concluded contracts with electricity suppliers to obtain emergency reserve power. Due to an increase in the required volumes combined with higher prices, the costs for emergency reserve power increased in the Netherlands.


Regulation in the Netherlands and Germany compensate for the depreciation of our investments and allow us to make a return on the capital invested in our regulatory assets. As this asset base has grown in the past few years, this revenue increased in 2018.

Revenues are also influenced by regulatory decisions and changes. Following a CBb-decision in July, the Dutch regulator changed the regulatory treatment of system services back from a "budget-based" system to a "pass-through" system. This resulted in higher revenue compared to 2017.


Underlying EBIT decreased from EUR 897 million in 2017 to EUR 806 million in 2018 which can mainly be explained by the special items in both years. The 2018 offshore reimbursement in Germany exceeding the actual costs considerably decreased compared to 2017. In addition, there have been smaller retrospective regulatory changes and a write-off of the Wintrack II assets to fair value, decreasing the 2018 EBIT.

The overall decrease in EBIT is partly compensated by the EBIT growth in our asset base, causing a higher return on capital in Euro terms. 


Capital expenditure (capex) totalled EUR 2,253 million in 2018. This is slightly less than planned, although represented an increase of approximately 30% compared to 2017 (EUR 1,774 million). Investments increased mainly due to offshore projects in the Netherlands. 

At the end of 2018, our main projects under construction are:

  • Germany: BorWin3, DolWin6, SuedLink and SuedOstLink
  • Netherlands: Randstad 380 and the "Net op Zee" (Borssele Alpha + Beta)
  • Cross-border: COBRAcable (Netherlands - Denmark), NordLink (Germany - Norway), Hamburg Nord-Kassø (Germany - Denmark) and Westküstenleitung (Germany - Denmark)

We have updated our 10-year investment programme. At this moment, we expect to invest approximately EUR 35 billion in the next 10 years. Investments in the portfolio in the Netherlands amount to EUR 7 billion offshore and EUR 5.5 billion onshore. For Germany these amount to EUR 16 billion and EUR 7 billion respectively. The amount of these investments have increased approximately EUR 7 billion compared to the amount reported in our 2017 integrated annual report. The main driver for this difference is related to Wind op Zee 2 (EUR 5 billion). Other factors causing this increase are related to changing planning of projects, inflation and increased investments in our existing grid. 

TenneT’s investment plans are strongly influenced by the climate ambitions and resulting energy agendas of the Netherlands and Germany, in particular as it relates to the timing and location of additional renewable energy sources. In addition, a wide range of ongoing technological developments, such as energy storage, energy conversion and digitalisation, may impact the energy system in general, and the operation, build-out and maintenance of the electricity grid specifically. This requires extensive scenario analysis and flexibility in the investment plans of TenneT, including regular reassessment of its entire investment portfolio.

For more detailed information on these and our other projects, please visit the dedicated project section of our website.

Return on invested capital

When measuring the value we deliver to our financial stakeholders, we use the rate of return on invested capital (ROIC) as our key performance indicator. Our target is based on an average of the long-term returns as stipulated in, or implied by, Dutch or German regulations. For 2018, ROIC decreased compared to 2017, due to our decreased EBIT (see "EBIT" paragraph for further details) and increased invested capital. The main driver for the decline is the (relative) decrease in allowed regulatory return on invested capital in the Netherlands. The ROIC of 5.9% significantly exceeded our minimum target of 4.1%.

Capital structure and financing

We seek to maintain a solid financial position, with sufficient flexibility and resilience to manage any necessary or required changes to our operations as well as any regulatory amendments. To carry out our extensive and ongoing investment programme, we need sufficient funding and full access to the financial markets under favourable conditions. Senior unsecured credit ratings for TenneT Holding B.V. remained unchanged in 2018 and were reaffirmed by Standard & Poor's (A- / stable outlook) and Moody's Investor Service (A3 / stable outlook).

CSR rating agency Oekom assessed our social, environmental and governance performance, resulting in our overall CSR rating remaining unchanged at level B (status Prime). In June 2018, we obtained a MSCI "A"-rating.


On 13 August 2018, the European investment Bank (EIB) purchased EUR 100 million hybrid securities, reaffirming its support for the NordLink interconnector between Germany and Norway, after the loans to TenneT and Statnett in 2017.

Net debt position

Our net debt position increased from EUR 7,687 million in 2017 to EUR 8,712 million in 2018. This mainly reflects the higher net funding provided for our capital investment programme.

In June 2018, TenneT successfully completed another green bond issue, worth EUR 1.25 billion, under its Green Bond programme. The issue was split into two tranches – a EUR 500 million tranche, with a 10-year maturity (coupon of 1.375%) and a EUR 750 million tranche with a 16-year maturity (coupon of 2.000%).

In December 2018, we successfully signed an EUR 500 million United States Private Placement (USPP) transaction, consisting of a tranche of EUR 160 million, with a 10-year maturity (coupon of 1.610%) a EUR 295 million tranche with a 12-year maturity (coupon of 1.830%) and a tranche of EUR 45 million, with a 15-year maturity (coupon of 2.01%). The settlement is carried out at 24 January 2019. 

The green bonds relate to investments in the transmission of renewable electricity from offshore wind farms to the onshore electricity grid. The eleven offshore projects financed with the proceeds from the green bonds are examples of how we use green financing to invest in the infrastructure we need to support the energy transition.

For more information on our capital management policy, procedures and financial risks, see note 6 (Capital structure and financing) of our consolidated financial statements. For more information on our green bonds as included in our separate Green Finance Report.

As TenneT is set-up as a private company with a societal role, we need to carefully balance our financial and societal interests. 

We face the ongoing dilemma of balancing public demand for better electricity infrastructure with financial constraints. Because TenneT’s investments are mainly publicly funded, we ensure our investments in the high-voltage grid are efficient, as defined by the regulators. If the additional costs of a project cannot be recovered via grid fees, there are limits to how much TenneT can invest. For example, in 2018, TenneT announced it would not press ahead with a pilot project to install a 3.4 km underground ‘super cable’ in the Dutch city of Enschede. The superconducting high-voltage system would have had benefits for the city and was welcomed when announced, but further planning made it clear that the cost of such a project would be prohibitive.

For our solvability reference is made to note 6.1 of the consolidated financial statements.


1Attracting equity & debt to finance investments facilitating the energy transition is an area of focus.We have regular contact with our financial investors and are working on further broadening our green bond program and extending our investor base to the USPP. We are in discussions with our shareholder about the level and timing for payment of additional equity


The significant amount of investments requires additional equity to secure a sufficient credit rating. In parallel, investments by the Dutch state are critically assessed by society and politics. We work closely together with the Dutch Ministry of Finance and continuously work on alternative solutions for financing.

Our revenues are based on the regulatory framework in the Netherlands and Germany. With the growing sentiment on the energy bill tension on the reimbursement system increases. Adverse changes in the regulatory system might impact our performance. For more information we refer to the regulatory risks in the risk paragraph.


Looking ahead, we face the challenge of realising a very large investment portfolio. For the next ten years, we expect our asset base to keep growing, increasing our depreciation and revenues. This growth will also increase our operating expenses, as we work to attract more staff, leading to an increase of overhead costs. We plan to compensate for this rise through more focus on cost management and operational excellence by streamlining the organisation and improving our decision making processes.

Regulatory changes will also impact the development of our revenue. In Germany, revenue is expected to decrease due to unification of grid fees and a new offshore regulatory framework in which the operational expenses are treated as pass-through instead of a fixed percentage. In addition, there is a discussion on the regulatory treatment of the onshore operational expenses, which could impact future revenues.