Integrated
Annual
Report 2020
TenneT Holding B.V.
Towards a new balance
Key figures 2020
Drive the energy transition
Secure supply today and tomorrow
Safeguard our financial health
2020: NL 2.7, GE 2.5
2019: NL 3.4, GE 2.8
2018: NL 3.0, GE 3.0
Energise our people and organisation
Healthy workforce
Absentee rate
Netherlands Germany
Diverse workforce
Diversity
(% female inflow of total inflow)
4.05
2020 2019 2018
33 31 28
NL 2.7
GE 2.5
33
30
2020 2019 2018
4.05 4.83 3.74
3.74
Internal Engagement Index 82%
2017: 85%
Reputation survey
Fairly strong to very strong
Healthy financial
operations
Adjusted underlying
EBIT group* (in EUR milion)
Satisfied capital
providers
ROIC group* (in %)
Safeguarded
capital structure
Adjusted FFO/net debt* (in %)
796
2020 2019
2019
2018
2018
2020
2020 2019 2018
11.3 12.9 14.1
5.1
11.3
4.0
8.5
796 753 826
5.1 6.25.1
Overarching indicators
Grid availability
Onshore (in %)
Grid utilisation
Grid loading
Future proof grid
Investments
(in EUR million)
99.9999%
2020: 99.9999%
2019: 99.9998%
2018: 99.9988%
In 2020, we have had various initiatives regarding Grid utilisation
and we are currently working on bringing it together in one key
performance indicator
2020 2019 2018
3,412 3,064 2,253
3,412
Environmental
impact % Greened
of our carbon footprint
Unlocked flexibility
Number of GW
of new flexibility
Impact on
energy system
Number of scalable/scaled
system initiatives
62.0%
2020 2019 2018
62.0 27.4 22.0
Progress has been made in 2020, with the launch
of the Equigy platform as one of the highlights.
Completed various scalable/scaled system
initiatives, such as the succesful completion
of three SINTEG projects.
* Reference is made to the chapter Secure a solid financial performance and investor rating
Safe workforce
Total Recordable Incident Rate group
(including contractors)
In this
year’s report
How we
create value
Performance 2020
Interviews with
our stakeholders
About TenneT
Page 14
Page 47
Page 9
Page reference to more
information elsewhere
in this document
Governance and risk
management* 76
Corporate governance structure 76
Risk and opportunity management
and internal control 78
Risk management and internal
control framework 80
Compliance and integrity 82
Risk appetite 83
Key risks 84
Financial statements 89
Profit appropriation 89
Consolidated financial statements 90
Notes to the consolidated financial
statements 97
Company financial statements 149
Company statement of income 150
Notes to the company financial
statements 151
Other information 155
Profit appropriation 155
Independent auditor’s report 156
Assurance report of the
independent auditor 165
About this report 168
SWOT Analysis 173
Company addresses 174
Key figures: five-year summary 175
Glossary 176
2020 at a glance 4
Letter from the Board 6
About TenneT* 9
Profile 9
Our strategy and value creation 10
About our connection
withourstakeholders
andtheworld around us* 18
Our stakeholders 18
The external developments
we(fore)see 18
The Sustainable Development
Goals and TenneT 20
How we addressed the effects
ofthe COVID-19 pandemic 21
Performance in 2020* 23
Deliver a high security of supply 23
Ensure critical infrastructure for
society 28
Create a sustainable workplace 36
Create value to transition to a
lowcarbon economy 42
Secure a solid financial
performance and investor rating 48
Solve societal challenges
withstakeholders andthrough
partnerships 52
Statements of the Executive Board 57
Our Executive Board 58
Supervisory Board Report 60
Remuneration policy 67
Board remuneration 69
Our Supervisory Board 74
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
Integrated Annual Report 2020 - TenneT Holding B.V.
3
* These sections reflect the director’s report as mentioned by Part 9 of Book 2 of the Dutch Civil Code.
2020 at a glance
Completion BorWin3
Our twelfth offshore grid
connection project offers 900
megawatts of transmission
capacity to bring the wind power
produced at sea by the two
connected wind farms to
onshore Germany.
2 gigawatt project
In order to be able to connect more powerful offshore wind
farms and thus bring more energy onshore, TenneT further
developed in 2020 the best practices from the German
900 MW HVDC and Dutch 700 MW AC grid connection
systems. This resulted in a worldwide unique 2GW
standard aimed to further reduce the costs of offshore
wind to minimise the spatial and environmental impact and
supports the vision towards larger offshore wind farms.
Top Employer
In 2020, TenneT received the Top Employer
certificatein the Netherlands for attracting young
talent through internships, traineeships and
workplaces for talented refugees.
Crowd balancing platform
TenneT launches Equigy, a platform which will enable millions
of European flexumers to actively offer flexible capacity of their
electric cars, domestic batteries or solar panels to grid operators
for the stabilisation of the electricity system.
Improve biodiversity
Together with partners from the coalition
“Groene Netten”, TenneT will actively
work to restore biodiversity around its
high voltage connections. Together, the
partners manage more than 800,000
kilometres of infrastructure in the
Netherlands.
New organisational structure
A new structure and senior leadership
team are launched, which will support
the company’s growth and its role in the
energy transition in the Netherlands,
Germany and neighbouring countries.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
4
Integrated Annual Report 2020 - TenneT Holding B.V.
Joint Declaration
The Netherlands and Germany sign a Joint Declaration
of Intent to explore the options regarding investments
and shareholding in TenneT and to develop a joint
approach to strengthen the capitalbase of TenneT.
Nordlink
In December we started the trial operation
of NordLink. NordLink is a 623 km long
subsea cable for the exchange of Norwegian
hydropower and German windenergy.
Large green debt issuer
TenneT sparks the hybrid market with a EUR 1 billion
Green Hybrid Bond. TenneT is one of the largest
corporate issuers of green debt in Europe, with over
EUR 10 billion of green debt issued.
Completion
Borssele Beta
Our second Dutch offshore
gridconnection project offers
700 megawatts of trans mission
capacity to bring the wind
power produced at sea by
theconnected wind farms
totheNetherlands.
Power line for
greenenergy
TenneT commissions the
“Mittelachse” power line in
Schleswig-Holstein, a new line
which transports seven times
the amount of green electricity
between the Elbe and the
Danish border.
Multi purpose interconnector
National Grid and TenneT explore the
feasibility of connecting Dutch and British
wind farms to the energy systems of both
countries via subsea electricity cables
called interconnectors. The development
would be the first of its kind for the UK
and the Netherlands in the North Sea.
New Chief
Operating Officer
The Supervisory Board has
nominated Maarten Abbenhuis
asChief Operations Officer (COO)
onthe Executive Board of TenneT.
He succeeds Ben Voorhorst,
whowill leave TenneT after an
impressive career within TenneT
oftwenty-five years.
EUR
1 billion
Green Hybrid Bond
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
5
Integrated Annual Report 2020 - TenneT Holding B.V.
Letter from the Board
Manon van Beek
Maarten Abbenhuis Tim Meyerjürgens
Otto Jager
Towards a new balance
We look back to an extraordinary year 2020 with important lessons for business and wider
society. For TenneT, 2020 highlighted once again that our employees are our most important
asset: amid unprecedented uncertainty caused by the COVID-19 pandemic they have proved
to keep the balance between delivering security of supply and meeting the demands of the
energy transition.
We are proud to have delivered on our mission to provide
arobust security of supply performance of 99.9999%
onshore grid availability and record investments of
EUR3.4billion to expand and maintain our critical
infrastructure. But we cannot rest and must work towards
anew balance of meeting the climate targets of 2050
whileaddressing thechallenges of making the energy
system future-proof. Withthe European Green Deal giving
aboost to the integration of large volumes of renewable
energies into theelectricity system, TenneT will continue
contributing to acleaner energy future. We are in
international cooperation and industry partnerships to tap
the energy potentials of theNorth Sea and develop new
solutions to provide green electricity at socially acceptable
costs. In doing so, we are playing our part to help
Northwest Europe become one of the most sustainable
andcompetitive regions in the world.
Europe has recently decided to step up its climate
ambitionand reduce its carbon footprint by 55% by 2030
compared to 1990. Further ahead, Europe aims to be
climate-neutral by 2050. To reach these goals, the electricity
infrastructure which sits at the heart of the transition to
anet-zero carbon world is undergoing a fundamental
redesign. With more fluctuating electricity generation and
increasingly difficult planning & licensing procedures as well
as deteriorating regulatory conditions, TenneT will need to
work towards anew balance between growth and stability,
between individual and societal needs and between
investment incentives and the cost of the energy transition.
To successfully meet the future challenges, in 2020
TenneTstarted a transformation with a new organisational
structureand a sharpened strategy based on four pillars.
Pursuing our new purpose ‘to connect everyone with a
brighter energy future’, we are helping build the sustainable,
affordable and reliable energy system of tomorrow.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
6
Integrated Annual Report 2020 - TenneT Holding B.V.
Energise our people
and organisation
TenneT’s 5,722 dedicated employees are our most
important and valuable asset. Due to the COVID-19
pandemic, 2020 was a balancing act for everyone in our
organisation, as we combined an extraordinary level of
activity and company growth with efforts to keep our
workforce safe, engaged and connected. More than 800
new colleagues were hired to contribute to the energy
transition. Over 30% of these are female, also in the senior
leadership team. A new organisational structure was
introduced and TenneT was once again certified as a Top
Employer. In an extraordinary year when normal working
became a real challenge, we are proud that employees are
highly engaged (82% positive) with their role at TenneT.
As safety is at the core of everything we do, we are keenly
aware of the risks associated with our activities and believe
that every safety incident is one too many. We deeply
regrettwo fatal accidents that occurred in 2020 with our
subcontractors. We are deeply saddened by these incidents,
and our thoughts go out to the families and friends of these
two workers. Early 2021, TenneT intensified the training
programme in collaboration with all partners to continuously
raise awareness and strive for improved safety leadership
on the road towards zero harm.
TenneT’s role in the future of society also brings new tasks
for our employees. We are growing fast and will focus
onspeeding up our work in the coming years by further
improving operational excellence. Employees are encouraged
to contribute by developing new solutions and work on
more efficient processes enabling them to provide an
excellent service. Our restated company values of ‘courage,
ownership and connection’ are the guiding principles for
this exciting journey.
Sourcing the talent we need to grow is an ongoing
endeavour in our organisation. For 2021 we plan to hire
over 600 additional employees. We are actively recruiting
ona highly competitive European market to attract
dedicated people and also work closely with sectoral
andregional educational institutions to train young
professionals for technical jobs.
Secure supply today
and tomorrow
Security of supply is of critical importance for all 42 million
end-users in our service area and the core mission of
TenneT. To keep our grid in balance is a growing challenge
for system operators such as TenneT with a growing
shareand volatile nature of renewable energy. TenneT is
proud to have achieved an onshore grid availability of
99.9999% in 2020.
Providing security of supply with increasing volumes of
renewable energies also requires substantial infrastructure
expansion. In 2020, TenneT made record investments in
grid construction, despite the challenges of COVID-19.
Ourportfolio is on track and with EUR 3.4 billion invested
inour network during the year, TenneT is one of thelargest
investors in Europe driving the energy transition. However,
the magnitude and fast pace of grid construction, combined
with the growing infeed of renewables, has also put our
operational implementation under increasing pressure.
Gridexpansion and maintenance is a highly challenging
work: not only does it demand a great deal ofresources,
but technical expertise is scarce and spatial procedures
aremore complex. It requires new forms of cooperation
with suppliers, intensive local community management,
long-term planning and continuous innovation.
On the road to the future, unlocking flexibility and system
integration will be essential to enhance the efficiency of the
energy system, reduce the need for grid expansion and to
keep the grid balanced. As a response, and together with
other leading European TSOs, we set up the crowd
balancing platform Equigy in 2020. By using blockchain
technology, the platform gives system operators access to
the flexible electricity available in consumer-owned devices,
such as electric vehicles or heat pumps.
Drive the energy
transition
The North Sea, with its offshore wind potential, will
undoubtedly become the new powerhouse of Northwest
Europe. With Europe aiming to achieve 300 GW offshore
wind by 2050, a further rapid and internationally coordinated
expansion of the North Sea grid is needed, demanding new
concepts and partnerships. TenneT is contributing to
develop this region which requires a balance to reconcile
regional, national and cross-border interests to forge new
alliances between neighbouring countries and stakeholders.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
7
Integrated Annual Report 2020 - TenneT Holding B.V.
In 2020, we carried out a record number of offshore
activities and our windfarm connections continued to grow
with the completion of the 12
th
offshore grid connection
inGermany, BorWin3. Towards 2030, TenneT has
committed to build at least fifteen new grid connection
systems, of which five additional grid connections of 2 GW
each in the North Sea. This will lead in total to an additional
18 GW generation capacity.
The future will see the coupling of energy markets through
interconnection and smart integration into onshore grids.
Driving this progress, TenneT announced a cooperation
agreement to explore the feasibility of connecting Dutch and
British wind farms to the energy systems of both countries.
We are also investigating joint energy hubs in the North Sea
with Denmark, in close cooperation with the German, Dutch
and Danish governments.
Safeguard our
financial health
TenneT’s financial results in 2020 were solid and proved that
we can keep a balance of strong and stable credit ratings
while embarking on record financing. In 2020 underlying
revenue of EUR 4.45 billion increased by 9% compared
to2019. Adjusted underlying EBIT group increased from
EUR753 million in 2019 to EUR 796 million in 2020.
TenneTcherishes its position as a leader in sustainable
finance. With more than EUR 10 billion of green debt
andsustainable funding available, TenneT is the largest
corporate issuer ofgreen debt instruments in the
Netherlands. In 2020, we successfully issued a green
hybridbond of EUR 1 billion and EUR 1.35 billion of green
senior bonds. Furthermore, we are proud to have won the
prestigious FD Henri Sijthoff award for outstanding financial
reporting with our Integrated Annual Report 2019.
Looking forward, TenneT is determined to maintain a solid
financial position as we prepare to facilitate an annual
investment portfolio growing to EUR 5 to 6 billion within
thenext 5years to drive the energy transition. In 2020,
exclusive talks were held about a possible participation
inTenneT bythe German state, to secure future long term
capital requirements. Also alternative options to attract
additional capital will be further explored in 2021 with our
shareholder and other stakeholders.
In addition to our capital requirements, we also call for a
review of the regulatory frameworks in both, the Netherlands
and Germany to make it future-proof and better suited to
drive the energy transition. With a growth-driven business,
TenneT is determined to continue investing responsibly and
to generate an adequate return in a low-interest
environment.
Towards a new balance
The energy transition is an enormous and compelling
challenge, demanding players like TenneT to master
complexity and agility. The time to shape the European
transition is now and it can only be solved with a
strongcommitment of the EU and its member states
toengage ina new balance of collaboration among
governments, market players, industries, regulators
andtransmission system operators.
Over the past decade, TenneT has achieved substantial
socio-economic benefits with its cross-border approach:
markets have been integrated and contributed to the
competitiveness of the Northwest European markets.
Forthe future, TenneT will embark on a new balance of
providing an unwavering high level of security of supply
while undergoing a structural system change. It will
endeavour to deliver grid expansion at an affordable
costforsociety. With investments reaching new records,
financialstability remains crucial for TenneT.
TenneT is ready to play its part for the next phase of
thetransition, with the public interest always as guiding
principle. We want to thank all our partners, stakeholders
and employees for their contribution in 2020. In particular,
we wish to thank our Supervisory Board members Pieter
Verboom and Rien Zwitserloot and our colleague in the
Executive Board, COO Ben Voorhorst, as they said farewell
to TenneT in 2020 after a long record of service and
tremendous contribution.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
8
Integrated Annual Report 2020 - TenneT Holding B.V.
Profile
Climate change is a threat to the world. In Paris, in 2015, global commitments were made
tolimit global warming. In Europe, commitments have been made to combat climate
change,too. By 2050, Europe wants to be the first climate-neutral continent. To this end,
theEuropean Commission has drawn up the European Green Deal, a programme covering
allsectors of the economy and involving major changes and investments.
The energy transition is a crucial part of these commitments.
As the first cross-border TSO, TenneT wants to play a
pioneering role in this transition to a clean, circular economy.
We have been showing successful examples of making an
active contribution to the transition to a sustainable, reliable
and affordable European energy supply for years. With
approximately 24,000 kilometres of high-voltage connections,
we ensure a secure supply of electricity to more than
42million end-users. TenneT is also one of Europe’s largest
investors in national and cross-border transport capacity on
land and at sea, bringing together the Northwest European
energy markets and driving the energy transition in Europe.
In both Germany and the Netherlands, we see the climate
ambitions reflected in our investment agenda. We are at the
beginning of our next growth phase with new and major
challenges. Integrating large amounts of renewable energy
into a newly designed energy system at a socially acceptable
cost is an important task. An energy system ‘built’ on
renewable energy sources – wind and solar – is much more
dynamic and complex. This leads to high demands on
thedesign of the grid and requires ambitious investments
and digital innovations. We are working with partners in
theenergy market to apply new, smart technologies and
implement system integration in the future.
In order to be prepared, we started the transformation of
TenneT in 2019. In addition to a new organisational structure,
we have sharpened our strategy, which provides direction as
a compass for making effective decision making choices.
Wehave also developed an inspiring goal, a promise and
clear starting points to guide us on our growth path.
Our purpose
To connect everyone with
a brighter energy future
Our promise
Lighting the way ahead together
Our principles
About
TenneT
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
9
Integrated Annual Report 2020 - TenneT Holding B.V.
About TenneT
Profile
Our strategy and value creation
Our strategy
Our strategy helps us drive the changes we believe are needed for the energy system today
and tomorrow. TenneT’s strategy consists of four pillars.
Our core tasks are to:
• Ensure a secure and continuous supply of electricity
asthe key objective of our operations.
• Provide transmission services by transporting electricity
along the high-voltage grid from where it is produced
towhere it is consumed.
• Provide system services to balance supply and demand
of electricity in the Netherlands and in a large part of
Germany.
• Facilitate a smoothly-running, liquid and stable electricity
market and support the large-scale, energy system
transition to renewable energy sources.
Our key activities
Securing the supply of electricity is our core task and main
responsibility. We aim to ensure a safe, reliable and secure
supply to more than42 million end-users, 24 hours a day,
365 days a year. We are committed to this core objective
today and in the future. Therefore we work together with our
stakeholders and through partnerships to shape the future
energy landscape. We believe that this requires a
multidisciplinary decision-making process in which we do not
only consider security of supply, but also how our decisions
affect sustainability and affordability. We face a constant
balancing act between these three dimensions, prompting
usto make decisions that optimise trade-offs between them.
Sometimes these dimensions can directly conflict with each
other, which makes it difficult to find the right solution.
Drive the energy
transition
Secure supply today
and tomorrow
Energise our people
and organisation
Safeguard our
financial health
As a green grid operator and thought leader,
developing innovative instruments and establishing
akey role in the energy data world.
By maintaining the grid to meet reliability targets and
operating it to its maximum capability. We will design
solutions for balancing the grid in the future, while
meeting societal objectives and realising our grid
projects as promised.
With an inclusive and safe environment where
people enjoy coming to work. We will build a
leadership model that empowers, inspires and
creates growth opportunities, so everyone can
perform at their best and work as one.
By implementing a regulatory framework to support
our strategy and by delivering a return in line with
what our capital providers expect, as well as by
raising the necessary external financing.
Strategic goals
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
10
Integrated Annual Report 2020 - TenneT Holding B.V.
Our principles
The energy transition is a challenge that requires new ideas,
new technologies and new behaviours that build on the
strong foundations we have laid. It requires us to do things
differently and to learn from each other because we know
that we do not have all the answers ourselves. As part
ofthe transformation, we also sharpened our principles.
These principles guide how we work together, also with
allour stakeholders.
Connection
We are involved and work actively with other parties, with
respect for opinions and differences. In the changing world,
close collaboration with other transmission system operator
(TSOs), distribution system operator(DSOs), customers,
governments and regulators is becoming more and more
important. This is not only on a national scale, but also on
European level, for example in the offshore development
and future sector coupling.
Ownership
We are accountable for our words, actions and decisions.
Our offshore portfolio is an example of how to bring
sustainable energy into the European system. We plan
annual investments growing to EUR 5-6 billion within the
next 5 years in contributing towards a sustainable Europe
in2050.
Courage
We are honest, open and clear about what we think.
Wedare to make decisions, take initiatives and are willing
tolearn from our mistakes.We embrace the European Green
Deal and challenge the implementation where needed.
Wetake action in joint EU projects such as the North Sea
Wind Power Hub and system studies together with Gasunie
to identify what is needed for a future reliable energy
system. In full-filling our tasks, bringing more renewable
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
11
Integrated Annual Report 2020 - TenneT Holding B.V.
energy sources to the grid we need to make decisions.
Ourfocus is on the difficult and delicate balancing act of:
sustainability, security of supply and affordability.
Our supply chain can be viewed from different perspectives.
Horizontally, on the left, the sources of electricity generation
are presented. In the middle we showhow we design, build,
maintain and operate the electricitygrid in the Netherlands
and the in a large part of Germanyand facilitate the
European energy market, through ourinterconnectors with
our neighbouring countries over landand sea. On the right,
we show the transport electricityto large industrial customers
and to DSOs who distribute itto end-customers. On the
vertical axis we illustrate theraw materials, such as steel,
copper and aluminium, whichare manufactured or mined
by third parties and used in ourprojects to build and
maintain our assets. These assets arecrucial to operate
ourgrid.
We want to be a green and responsible grid operator,
takingsteps to reduce our negative impacts and even
creating positive impacts, wherever possible. We also strive
to createa safe working environment while building and
maintainingour grid. The energy transition is one of the
most impactfulchallenges facing society. In the past
decades, TenneT has become a key player in the energy
market. In 2020, we implemented an internal transformation
programme to help us fulfil this pivotal role and prepare
forour next phase of growth.
As an independent European grid operator, TenneT
harnesses the expertise of its people and partners, in its
pursuit of a brighter energy future for everyone. To achieve
this, we need to offer new ideas and technologies. It also
demands that we do things differently, and that we learn
from each other, across industries, because we know
wedon’t have all the answers ourselves. It’s why we’re
happy to collaborate and share knowledge and experience
TenneT in the supply chain
Generation /
In-feed
Consumption
Designing, building,
maintaining and operating the grid
Raw material extraction and production of materials
Construction
Decommissioning
Transmission
and system
operations
industries
Large
Export
DSOs
Renewables
Renewables
Powerplants
Import
DSOs
Consumers/
flexumers
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
12
Integrated Annual Report 2020 - TenneT Holding B.V.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
13
Integrated Annual Report 2020 - TenneT Holding B.V.
Customers
Debt investors
Employees
Governments
Local communities
Media
NGOs
Other European TSOs
Shareholders
Suppliers
Stakeholders Input How we create value
Strategic partnerships
and our engagement with (project)
stakeholders
Our skilled and
motivatedpeople
Cables, lines, stations, offices and
interconnectors
Energy, natural environment and
materials to build, maintain and
operateourgrid
Extensive knowledge
of and experience with
operating the systemand
integrating energymarkets
How we operate
Regulatory return
(Green)Financing
To connect
everyone with
a brighter
energy future
Page 18
Secure supply
today and
tomorrow
Safeguard
our financial
health
Drive the
energy
transition
Energise our
people and
organisation
Intellectual
Manufactured
Human
Natural
Financial
Social and
relationship
Enable the energy market
Designing the energy system
Build the electricity grid
Maintain the electricity grid
Operate the electricity grid
Enable the core activities
2020 at
a glance
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Output
Deliver a high security of supply
With our knowledge and experience in operating the system and following up on our ambition
to further integrate European energy markets, we are able to provide a secure supply of energy.
In 2020, we have been able to achieve a 99.9999% availability of our onshore grid. The instances
wewere unable to secure supply, were the result of 3 interruptions. Our knowledge, experience
and vision with respect to an integrated European energy market is reflected in our grid and
the 16 interconnectors that have been realised as of 2020.
Societal impact due to
theavailability of our grid.
Equivalent number of
households that have been able
to receive green electricity
Create a sustainable workplace
Our goal is to create a working environment where our people feel safe and valued. We strive
to bring out the best in our people to help them develop themselves and organise this in a way that
energises them. That is why we track our absentee rate, which was 2.7 in the Netherlands and 2.5
inGermany in 2020. Next to this we monitor to what extent we are succesful in our efforts to be an
inclusive and diverse organisation (refer to page 36). And with respect to a safe working environment,
wetrack the Total Recordable Incident Rate (TRIR). We were unable to achieve zero safety incidents
thisyear, as we unfortunately also had 2 fatal incidents which has led to a TRIR of 4.1 in 2020.
Ensure critical infrastructure for society
With our assets, we ensure that we are able to fulfil our core activities and tasks. We keep building and
maintaining our grid to realise the critical infrastructure, which helps us drive the energy transition and
supports the economic development and human wellbeing of the people that live in our service area.
We expected to invest EUR 3,080 million in 2020, while we were able to realise 3,412 milion.
Create value to transition to a low carbon economy
We want to drive the energy transition, because we believe we are able to make a significant contribution.
Realising our investment programme and innovation portfolio will contribute to the climate targets in
the Netherlands and Germany, which is essential on the pathway to a low carbon economy. In 2020
werealised 1.6 GWh additional offshore capacity, increasing the amount of connected renewable energy
sources to the electricity grid in the Netherlands and Germany. At the same time, we ourselves have the
firm ambition to be climate neutral as early as 2025, so that we too will contribute to part of the solution.
In 2020 our (gross) carbon footprint was 2,448,640 tonnes CO
2
, which has been greened for 62.0%.
Secure a solid financial performance and investor rating
TenneT is a regulated company, that has an important societal role. That is why we strive to make
choices considering the impact on societal costs. To finance our grid investments, we raise the
necessary financing and meet the expectations of our capital providers. This is reflected in various
ways, such as our ROIC of 5.1, FFO/Net Debt of 11.3% and our adjusted underlying EBIT group*
ofEUR 796 million.
Solve societal challenges with stakeholders and through partnerships
Webelieve in the power of cooperation. Working together will help us achieve the next steps with respect
to the energy transition faster and better. Furthermore, in realising our future grid, weengage with our
stakeholders to consider societal objectives. That is why we also measure our reputation on abi-annual
basis. The outcome of this is a reputation that can be classified as ‘fairly strong to very strong’.
Outcome & Impact
* Reference is made to the chapter Secure a solid financial performance and investor rating.
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with a wide range of stakeholders and experts. This
approach will enable us to keep the lights on, while we work
with others to design and deliver tomorrow’s energy system.
How we create value
TenneT plays a pivotal role in society. By ensuring the
supply of electricity, we make a fundamental difference
tothe people working and living in the areas we serve. Our
work involves a wide range of stakeholders. Our relationship
with them may have been originated by law or contracts
(shareholders, governments, political parties and regulatory
bodies), by internal or external cooperation (employees,
suppliers, debt investors and rating agencies) or by the
nature of the services we provide (customers, the media,
NGOs, local communities and other European TSOs).
For more information about our stakeholders and how we
engage with them, is included in ‘Our stakeholders’ section
and on our corporate website.
The way we create value is represented visually on the
previous pages, using the concept of value creation as
described by the International Integrated Reporting Council
(IIRC). By means of the six inputs defined by this framework
(financial, manufactured, intellectual, human, social &
relationship and natural) we describe our input, output/
outcome and impact. This model is the basis of our
integrated annual report. Our inputs, through which we
create impact for society, are influenced by our strategy,
ourcore tasks, how we balance our decisions and how
weoperate. All of these are described in this chapter.
Moreinformation on the specific inputs, our related
outputs,outcomes and impacts are disclosed in the
chapter ‘Our Performance in 2020’.
The way we aim to create long-term value for the greater
good is defined alongside the six inputs from our value
creation model. Here we aim to:
Deliver a high security of supply. We have extensive
experience in operating the electricity grid and have a
clearvision on how to design the system to secure supply
efficiently and effectively. This is how we deliver on our
promise and fulfil our role to keep the lights on in a way
thatis sustainable for years to come.
Ensure critical infrastructure for society.We build
andmaintain the electricity grid, which has a vital role in the
lives of our stakeholders. With the materials and products
we use to build and maintain our grid, such as our cables,
stations and interconnectors, we realise the critical
infrastructure that enables us to transport electricity.
Thissupports the daily lives and activities of people and
businesses in the areas we serve.
Create a sustainable workplace.Our people are our
most important assets and essential to realising our ambitions.
Our programs and actions, how we train our people and
how we create an inclusive environment where people are
energised to work, help us create a stable, safe and
sustainable workplace.
Create value to transition to a low carbon economy.
Our aim is to drive the energy transition.Realising our
investment programme and innovation portfolio will contribute
to achieving the climate targets in the Netherlands and
Germany, which is essential to achieving a low-carbon
economy. Looking at our business from this point of view,
we createpositive impact by connecting renewable energy
sources to the electricity grid. This however does have an
impact and dependencies related to the use of energy
sources, the natural environment and the materials we need
to build, operate and maintain our grid.
Secure a solid financial performance and investor
rating.In order to create long-term value, we are focussed
onmaintaining a healthy financial position.Our main sources
of funding are our regulatory revenue and externally raised
capital, which is increasingly from ‘green’ financing.
Maintainingour strong creditrating by retaining a balanced
equity to debt ratio is essential to safeguard our financial
health, lowering our financing costs and delivering a return
oncapital that meets the expectations of our capital
providers.
Solve societal challenges with stakeholders and
through partnerships. We operate in a multi-stakeholder
landscape. We need to build strong relationships with our
stakeholders to fulfil our societal role. On the one hand, this
is visible in the connections we make as we undertake our
projects, such as engaging with local communities, NGOs
and local governments to gain acceptance. On the other
hand, we also aim to build new relationships through
partnerships. These forms of collaboration are essential
tofind the answers and innovations we need to shape the
energy landscape of the future. Our current relationships
and social connections help us achieve this and we aim
toexpand these further.
Our ambition is to show our societal impacts as part of our
value creation. We have succeeded in doing so for some
areas and are further developing other areas in the coming
years. This year, we started to show the societal impact in
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two important new areas: the societal value related to the
availability of our grid and related to connecting more
renewable energy to our grid. The latter is shown in the
tonnes of CO
2
emissions that we have been able to avoid
in2020 and the equivalent number of households that has
been to switch to 100% renewable energy in 2020. More
information can be found in the chapters ‘Deliver a high
security of supply’ and‘Create value to transition to a low
carbon economy’.
Explaining how our strategy creates value
Our Integrated Annual Report 2020 has been set up
alongside the outputs of our value creation model.
Theimage below shows how this is connected to our
fourstrategic pillars and where more information about
eachtopic can be found.
Strategic pillar
Overarching
• Stakeholder engagement • Internal engagement index
• Reputation survey
Chapter Topics in materiality matrix Key KPI’s SDG
Connectivity table
• Security of supply
• Responsible supply chain practices
• (Cyber) security
• Accessibility of our grid
• Grid availability
• Investments
Secure supply today
and tomorrow
Energise our people
and organisation
• Health and development or our people
• Diversity and inclusiveness
• Safety
• Talent attraction
• Absentee rate
• % female inflow
• Total Recordable Incident Rate
• Our own environmental impact
• Driving energy transition
• Stakeholder engagement
• Strategic partnerships
• Driving energy transition
• Sustainability performance
• # of GW of new flexibility
• # of scalable / scaled system
initiatives
Drive the
energy transition
• Financial health • Adjusted underlying EBITgroup
• ROIC Group
• Adjusted FFO/Net debt Group
Safeguard our
financial health
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About our connection with
ourstakeholders and the world
around us
Our stakeholders
TenneT is a key player in the European energy landscape.
Our vital role involves a wide range of stakeholders,
including shareholders, local communities, employees,
regulators, investors, NGOs, politicians, media, customers,
suppliers and other European TSOs. Strong collaboration
with partners is needed to drive the energy transition.
On a daily basis, we interact with our stakeholders and we
aim to manage our relationships in the best way possible.
Every two years, we conduct a survey to assess how
wellwe are performing in the perception of these key
stakeholders. The most recent survey has resulted in
a‘fairly strong to very strong’ reputation among them.
Furthermore, we strengthened our organisational structure
in 2020 so we can work more closely together with local
communities impacted by our projects. This helps us
connect even betterwith people that are living in areas
where we plan tobuild new infrastructure. In dialogues
(workshops, talks, events and online sessions) we are
building awareness andunderstanding. In these
interactions, we listen to the concerns of local stakeholders
to see how we can address them properly. We measure our
community relations efforts through stakeholder surveys.
To read more about our stakeholder outreach, please visit
our corporate website.
These are examples of how we interact with our stakeholders.
If you would like to know more about our stakeholders and
what we have done, please visit our corporate website.
The external developments we (fore)see
In this section we describe important developments facing
us now and in the future. Due to the nature of our business,
we need to look far ahead, as far as 2050. If we want to
realise our goals regarding these timeframes, we must start
preparing now.
Economic developments
We expect that volumes will increase due to the global trend
of electrification.That is reason why we keep on investing in
our grid to make sure that we are able to transport
electricity from where it is generated (e.g. from wind farms
at sea) to where it is consumed. In each scenario we
foresee, we need to significantly invest in our grid.
Furthermore, we see our customer base is changing. As
technical developments and government incentives make
renewable energy sources more accessible, our customer
base will include more so-called ‘flexumers’, identified as
consumers who also deliver electricity back tothe grid.
Political developments
Governments are stepping up their ambitions to tackle
climate change and accelerate the transition to a low
carbon economy. The European Commission announced its
‘Green Deal’ in 2019 with a new target to reduce its carbon
footprint until 2030 by 55% instead of 40%. This is an
important milestone on the path to becoming the first
climate-neutral continent on the planet by 2050. The Green
Deal is an umbrella for approximately 50legislative initiatives
touching on every part of TSOs business. It includes i.e.
theEU climate law, the EU offshore strategy, the EU sector
coupling strategy and the EU taxonomy legislation.
Withinthe current draft of the EU taxonomy legislation,
electricity TSOs’ investments are classified as“sustainable”
investments which has a positive impact onour strategic
pillar “financial health”. And the new US administration
decided to rejoin the Paris Agreement.
Elsewhere, China is raising its climate ambitions, as well as
Canada. And the new US administration decided to rejoin
the Paris Agreement. In2019, TenneT sharpened its
strategy to support the strengthened climateambitions of
the Dutch and German governments. Thisrequires close
cooperation with governments, regulators and other
stakeholders. Inthiscontext, the legislative and regulatory
frameworks inGermany and theNetherlands should help us
to fulfil our role, not slow usdown. However,in the energy
landscape, we notice thatcurrent developments in
technology, innovation and societal demand and
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acceptance are changing at a pace that ourregulators
cannot always keepup with.
To meet the 55% target set by the EU, both the Dutch
andGerman governments are expected to speed up their
CO
2
reduction efforts in the transition from conventional
electricity generation to renewables. In Germany, the
‘Kohleausstieg’ (coal phase-out) and shutting down of
coal-powered plants such as in the Netherlands are recent
examples. We see that the energy mix is increasingly
greener, as the contribution of solar and wind energy grows
each year. For TenneT, this means that many additional wind
farms will need to be connected and integrated into the
energy system before 2030. Clarity is already needed in
2021 on the designation of new offshore wind areas in
theNorth Sea. This creates new challenges. Many new
renewable energy sources, often at locations far away from
our existing grid, need to be connected. This also fuels
discussions about the need to maintain our high level of grid
redundancy, the so-called n-1 criterion. Another constant
challenge is to balance the grid with a higher infeed of
renewables, which is typically intermittent. In this context,
we must prepare for situations when there is no sun or wind
(‘Dunkelflaute’). We are therefore working hard to innovate,
invest in and support new technologies, such as better
weather prediction models, dynamic line rating, green
hydrogen and decentralised flexibility that we can call upon
for balancing the supply and demand of electricity. We also
are keen to unlock innovation through thestakeholders we
work with and to encourage governments and regulators to
remove barriers to help us find new solutions and
partnerships.
In the Netherlands, the cabinet serves in a caretaker
capacity as of January 2021. The result of this is that the
Dutch parliament decided on topics that are considered to
be ‘controversial’ and therefore are postponed for a new
cabinet to follow up on after the elections in March 2021.
Important topics for TenneT are fortunately not considered
to be ‘controversial’ and are not affected by the resignation
of the Dutch cabinet earlier this year.
Other developments (including megatrends)
The materials we usehave a limited supply.Resource
scarcity is a trend we take seriously. Therefore we include it
in our strategy with our circularity ambitions and our aim to
lead as a green and responsible grid operator. This helps us
ensure we are a sustainable and resilient company that can
serve our customers now and for generations to come.
We also see scarcity in human resources.Our people
areour most important asset. We are currently working
diligently on multiple levels to ensure we are best equipped
for future growth. With our Transforming TenneT programme,
we are able to face the challenges ahead. The scarcity of
technical talent, combined with demographic changes such
as the ageing society, are relevant risks for us which we are
actively working to mitigate.
The current COVID-19 pandemic is an unforeseen
development with a global impact. As with other businesses,
it has taught us new ways of working. The implications
andopportunities of working remotely affect our current
andfuture employees. The same goes for our potential
contractors in tender procedures. Information can be found
in our ‘Create a sustainable workplace’ chapter.
As we build our grid, the need for more critical infrastructure
is challenged by growing urbanisation and the scarcity of
available land routes. Space is getting tighter which requires
creative and innovative solutions. We are in continuous
dialogue with governments, NGOs, local communities and
other critical infrastructure companies to find acceptable
solutions. Fostering consensus, understanding and
acceptance among our stakeholders is crucial and it is not
always easy to find a balance between the needs of the
parties involved. Building a reliable, affordable and sustainable
grid requires us to take all demands into consideration to try
to find the right balance. That is the balancing act we need
to perform, all the time. This inevitably means that we need
to make choices. That is why we believe that we have a key
role to play in moving to a low carbon economy and driving
the energy transition. We will work together with our partners,
bring everybody to the table and work on solutions that last
for decades to come.
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The Sustainable Development Goals and TenneT
The Sustainable Development Goals were determined by
the United Nations as the new global goals where member
states should work on together which theyshould translate
to national policy. The aim is to create a sustainable future
for all people. The cooperation between governments and
other important partners such as businesses and NGOs
arekey in ensuring that we can achieve these goals together.
TenneT has embraced these Sustainable Development
Goals (SDG). In 2018, we assessed the way we aim to
contribute achieving those goals.
Our main globalchallenge
The world is facing major global challenges,
including climate change. This affects TenneT’s
core business. At the same time, this is the global challenge
our choices and business conduct have the most impact
on. That is why we have identified SDG 13 as the main
societal challenge we contribute to. How do we ensure
atransition to a sustainable energy system at a socially
acceptable costwhile maintaining security of supply?
Theimpact ofclimate factors is also becoming increasingly
important inour activities and business operations.
Ensure access to affordable, reliable,
sustainable and modern energy for all
To us, SDG 7 is one of the SDGs we feel that
wecontribute most with our core business activities. The
underlying targetwe contribute to is target 7.2: By 2030,
increase substantially the share of renewable energy in the
global energy mix. This is clearly reflected in TenneT’s
activities. Weare investing in connecting offshore wind
farms for around 26 GW. In 2020, two large offshore
projects were completed: Borssele Alpha near the Dutch
coast in the North Sea and BorWin3 in the German North
Sea, connecting an additional 1.6 GW of offshore wind
energy to our grid. Onshore, we are facilitating the fast-
growing supply of solar energy with grid extensions and
smart solutions. With this, we are able to contribute to the
increase of renewables in the energy mix in the Netherlands
and Germany and to drive the energy transition.
Build a resilient infrastructure, promote
inclusive and sustainable
industrialisation and foster innovation
Another main SDG our core activities can contribute to is
SDG 9. Our societal role is linked to target 9.1: Develop
quality, reliable, sustainable and resilient infrastructure,
including regional and transborder infrastructure, to support
economic development and human well-being, with a focus
on affordable and equitable access for all.
By ensuring that we drive the energy transition and by
operating as a European TSO, we support economic
development and human well-being by empowering society,
as our goal is to secure supply not only today but also
tomorrow. To ensure that our grid is reliable, sustainable,
resilient and of high quality, we invest in our grid. By
designing a grid that is able to secure supply now and in the
future, considering a changing energy mix. By building and
maintaining our grid and by connecting our grid to other
European countries around us, which helps us to operate
the grid and ensure ahigh grid availability for the areas we
serve. An example ofthis is the progress we made with
respect to NordLink, thefirst direct power connection
between Germany and Norway.The high-voltage DC link
will enable the exchange of 1,400 MW of renewable energy
– wind power from Germany and hydropower from Norway.
NordLink is thus making a contribution to the energy
transition in Germany and Europe. Completion is expected
in early2021, whichwill bring our total of interconnections
up to 16. Byincreasing the number of interconnectors, we
create more opportunities to import and export electricity.
This can benefit a more cost-efficient supply, as electricity
with a lower price on the other side of the border can be
imported and could create positive effects to make supply
of electricity more affordable.
Furthermore, we also continue to investigate the way we
can make our grid more resilient, for instance due to the
effects of climate change. Extreme weather conditions and
or chronic physical risks such as rising sea levels are factors
we consider. More information on this has been included
inour Key risks section.
Other SDGs
Next to this, we are aware that in the execution of these
activities, we also have an impact on other SDGs. This
relates to SDG 5 and SDG 8 when we look at policies
relating to our people (including our contractors) and SDG
12, SDG 14 and SDG 15 with respect to the choices we
make that affect our planet. SDG12 for instance, relate to
our circularity ambitions, which also has an effect on climate
change. Reducing the use of virgin materials, such as
copper, will have a positive effect on the planet and climate
change as this will avoid emissions in the extraction phase
for instance.
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How we addressed the effects of the COVID-19 pandemic
As the pandemic struck, we quickly adopted all measures
imposed by both the German and Dutch governments.
Asfor many other businesses, emergency public health
measures had a significant impact across our organisation.
We adapt to the new circumstances and implemented
innovative new ways of working to ensure business
continuity with minimal disruption. We are proud of how our
employees adapted to these new circumstances. In total,
103 colleagues became infected by COVID-19 in 2020.
To coordinate our response and manage new routines to
ensure our people stayed safe during the pandemic, TenneT
put its risk management measures into action. Specialist
teams were set up to handle the situation: a crisis team,
abusiness continuity team and a ‘plan ahead’-team.
What was the impact of COVID-19
onTenneT’sstrategy?
Securing supply today and tomorrow
To secure supply today and tomorrow, our maintenance
and construction projects are key. In this regard, the
COVID-19 pandemic presented further challenges in 2020.
For example, the limited availability of materials created
some initial backlog in our maintenance schedule.
Bysharing and moving essential supplies between projects
– such as steel for overhead lines – we tried to minimise
disruption as much as possible. We reached out to all our
contractors to keep in touch and help each other where
possible, for example when bottlenecks occurred or
planned deliveries had to be postponed. We appealed
toallour partners to remain reasonable and flexible and
supported them where possible.
Looking ahead, we might face possible delays to future
projects as public health restrictions have made the usual
planning and permitting process hard to sustain. This is
particularly true for our onshore projects, where the permitting
process relies on face-to-face stakeholder meetings in local
communities. In line with government safety measures, all of
these in-person meetings had to stop during the pandemic.
Some of these can now continue online, but the knock-on
effect from the delay in this essential pre-construction
activity will pose challenges. We did however demonstrate
good progress with online consultations in 2020.
Wesuccessfully held virtual tender meetings with potential
suppliers for our SuedLink, SuedOstLink and BorWin5
projects. This is the first time we have virtually engaged
withsuppliers during a tender process. The success of the
negotiations showed the possibility for this efficient way of
working in the future, requiring less travel time and expense.
Despite the challenges in 2020 caused by the pandemic,
we were determined to keep our investment portfolio on
track. During the year, we maintained the momentum of
ourambitious grid expansion and investment programme.
Driving the energy transition
Closures and emergency health restrictions in some of the
international ship yards where we construct our offshore
platforms put the timescale of several projects under pressure.
Fortunately these did not cause any critical delays. In many
cases, our teams locked down on-site – staying away from
their families on end to keep construction on track.
A fortuitous by-product of the restrictions imposed during
the pandemic had a favourable effect on some elements of
our CO
2
-footprint, due to fewer people travelling to work
and lower energy consumption at our offices.
Energise our people and organisation
During 2020, the pandemic impacted the roll-out of our
newTenneT organisation. The inability for colleagues to
meet in person was a particular challenge for the formation
of new teams. However, the pandemic also provided
anunexpected opportunity to accelerate the process of
change, helping to embed new ways of working faster than
might have been possible otherwise. For example, cross-
border teams in the new organisational structure quickly
adapted to remote working routines that foster virtual
collaboration. Leaders of the new units – including leaders
who had not previously led remote teams – have been
trained in the skills of motivating and collaborating with their
teams in a virtual setting.
Aware of the need to care for mental well-being during
thepandemic, we are also providing training in the
psychologicalaspects of people management, building
empathy, self-awareness and psychological safety
skills.Throughout this period, TenneT continued to recruit
and we welcomed 818new colleagues in 2020. Our
onboarding and application process was brought online,
sonecessary vacancies could still be fulfilled.
As well as giving our employees the opportunity to improve
their home office, we also paid attention to their personal
circumstances. We are conscious that working from home
involves specific challenges for different people, both physical
and mental. Making sure our people stay connected with
their colleagues and paying attention to work life balance
and exercise are particularly important in the new reality.
Tofacilitate this, we shifted our health and vitality initiative,
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Always Energy, into an online programme and provided
webinars and real-time engagement to ensure the wellbeing
of our colleagues was fully supported.
Safeguarding our financial health
Specific to the COVID-19 situation and this strategic pillar
isthe situation regarding our EEG levies.Together with the
three other German TSOs, TenneT is responsible for the
financial management of the ‘Renewable Energy Sources
Act’ (Erneuerbare Energien-Gesetz (EEG)), which has a
significant impact on TenneT’s cash flow, although it does
not affect our financial performance. Based on this law,
German end-users pay a levy to finance the green energy
transition in Germany. The EEG levy is used to subsidise the
EEG feed-in tariffs which are paid to producers of renewable
energy who receive a guaranteed price for their produced
green electricity exceeding the market price. The EEG levy
is determined based on forecasted renewable energy
volumes and electricity prices for the subsequent year.
To prevent negative EEG balances and the necessity
ofadditional short-term bridge financing, a liquidity buffer
isincluded in the EEG levy. TenneT raised an additional
12-month liquidity financing of EUR 1.5 billion and
uncommitted financing of EUR 0.5 billion in 2020 at very
low interest rates, to cover for the effect of significant
unforeseen variations in renewable energy volumes and
wholesale electricity prices. This will be revised in 2021.
Forward looking statements on COVID-19
The general expectation is that the impact of the pandemic
will decrease during 2021, especially with the roll-out of
vaccinations. Up to now we consider ourselves fortunate
that the effects are low, but the longer the lockdown
scenario stays, it might have an impact on our business.
Weremain focussed on strengthening the resilience of
ourpeople and we will closely monitor developments.
Looking ahead, the shift to virtual working has opened new
possibilities for attracting talent. Being located close to one
of our offices is no longer so essential, allowing us to draw
on a broader geographic and more diverse talent pool.
Forexample, we are now accessing labour markets in
Spain, Romania, Poland and other European countries.
Toextend this opportunity, we are undertaking a new
accelerator project in our People Unit to help us tap into
new talent pools, with an emphasis on building a more
attractive employer brand and using new communications
techniques to connect with potential candidates.
2020 at
a glance
Performance
2020
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and risk
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Deliver a high security of supply
TenneT has a crucial role to fulfil for society. We are entrusted with transporting electricity
andensuring a secure and reliable supply of electricity 24 hours a day, 7 days a week and
365 days a year.This is what energises and connects everyone who works at TenneT.
Performance
in 2020
We describe our performance in 2020 in the following
six chapters, each describing one of the sixoutputs/
outcomes as mentioned in our value creation model.
Securing a reliable supply of electricity every day, around
theclock, is not an easy task. TenneT operates the grid
inthe Netherlands and a large part of Germany and as
aEuropean TSO, we are also connected with other grids
inEurope via 15cross-border interconnections. These play
animportant role in strengthening the security of supply
inGermany and the Netherlands.
With knowledge and experience built over the last decades,
we are dedicated to the secure supply of electricity at
present and far into the future.
The challenges of doing so are growing. There is an
increasing appetite for and dependence on electricity
andwe operate in a more dynamic and volatile energy
landscape, with a higher proportion of renewable energy
sources coming into the grid. TenneT is ready to find
solutions to these challenges, through the strength of
ouremployees and partnerships with others.
Our performance in 2020
Our onshore grid availability
was one of our best
performances in the past
decade.
99.9999%
99.9996%
Target StatusPerformance Trend
Onshore grid
availability
2019: 99.9998%
2018: 99.9988%
Our offshore grid availability
was above target.
94.03%
93.97%
Target StatusPerformance Trend
Offshore grid
availability
2019: 93,2%
2018: 94,5%
Performance in
2020
Deliver a high security of supply
2020 at
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Performance
2020
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Securing supply today
We operate our grid from four control centres, two in
Germany and two in the Netherlands.From these locations,
we can operate the grid, monitor the stability and
performance of the network and internationally coordinate
beyond our borders. As a European TSO we have a shared
responsibility to ensure a stable electricity supply throughout
the continent.
Operating the grid to ensure a secure supply means
constantly maintaining the balance between real-time
supply and demand of electricity. In order to do this, we
must plan days, weeks and months ahead to make sure
that supply and demand are aligned. TenneT’s teams plan
and manage this balance on a daily basis, tackling
challenges as they arise.
One of these is the rising amount of renewable energy
sources (RES) being connected to the grid. In 2020, these
increased by 3%compared to 2019. Overall, RES in-flow
into our grid has increased by 40% compared to 2015.
The infeed of renewable energy can be volatile. If more or
less electricity than expected is provided, this can create
additional challenges for our system operations teams and
the market participants, such as generators, Balance
Responsible Parties (BRP) and customers. This occurred
forexample in June 2020, when we saw a steep increase
ofthe RES in-feed into our grid and the grid of the DSOs.
This required us to disconnect wind and solar farms to
avoid overloading our 150 kV network in the Netherlands.
To reduce the risk of this happening again, we are improving
our weather forecasting tools to make our RES predictions
more accurate.
Another example occurred on September15
th
2020, when
we faced a new challenge in a large part of the Western
European grid. In the early evening, there were very high
electricity wholesale and imbalance prices, caused by high
demand during high temperatures. This situation was
combined with a shortage of electricity production. Low
production was caused by very low wind infeed together
with a fast decrease of solar infeed caused by the sunset.
Conventional, gas and coal-fired electricity production could
not meet the required steep ramping up rates.
Thanks to the ongoing efforts of our teams, we maintained
our high security of supply in 2020, with an onshore grid
availability of 99.9999%. This is among the highest reliability
levels in the world.
Although we are proud of this achievement, it does
unfortunately mean there were still occasions when
weexperienced interruptions in our supply of electricity.
Onesuch instance occurred in March 2020, in our
Eindhoven-West substation. Although the outage lasted
only a few minutes it impacted almost 50,000 households.
Maintaining security ofsupply also depends on our ability
toexpand and modernise our grid and to keep it in the best
possible condition. To perform essential maintenance work
on our infrastructure, planned outages are necessary for our
people to work safely.As our project portfolio grows, we
need to be able to execute these planned interventions
andoutages more frequently. We also coordinate planned
outages internationally, to ensurecross-border connections
remain open at all times.
We report our onshore and offshore grid availability
separately, since they are technically different. Our offshore
connections have less built-in redundancy than our onshore
grid. We reported an offshore grid availability of 94.03%,
which was on target (93.97%) and higher than last year.
Although we are pleased to have achieved this, we also
regret instances where defects appear. An example of this
is the COBRAcable interconnection between Denmark
andthe Netherlands. In September 2020, a defect related
to the sea cable was discovered. As a result, it was cut at
adepth of 40 metres on the seabed and lifted up to find
theexact fault locations and to replace them. Following
thiswork, the COBRAcable was operational again at
thebeginning of 2021.
Securing supply tomorrow
As well as securing supply for consumers in our service
areas in 2020, we are also focused on fulfilling our
responsibility in the future.
An important requirement to achieve this in a fast-changing
energy landscape is finding new sources of flexibility to
balance demand and supply and manage grid congestion.
Until now, flexibility has been mainly sourced from fossil
fuelled power plants, which increases and decreases
production depending on the power system’s needs.
However, as the share of renewables in our electricity mix
isexpected to continuously grow in the next decades fossil
power plants will be less and less available for system
andgrid balancing. Hence, maintaining today’s high level
ofsecurity of supply requires the early development of
alternative flexibility sources.
2020 at
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2020
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We are working on new solutions to create more flexibility
and in 2020.We are becoming more dynamic and
innovative in the way we access flexibility in the markets,
using daily automated trading to tap into available power
inthe fastest and most efficient way.
As well as making more efficient use of the markets to meet
our flexibility requirements, we also pursue technological
innovations. An example is the launch of our Equigy project
in April 2020. TenneT, Swissgrid (the Swiss TSO) and
Terna(the Italian TSO) formed a consortium to develop a
standardised European electricity crowd balancing platform.
Supported by blockchain technology, the platform allows
TSOs to build flexible balancing reserve by tapping into the
power stored in decentralised devices, such as electric
vehicle batteries and heat pumps. By allowing TSOs to
access the electricity stored in devices like these, consumers
can take part in the energy system and be compensated
accordingly. In December, the four founding TSOs
established Equigy as a company.
Another important development to futureproof our systems
is our Control Room of the Future programme. This initiative
includes the update of our current operational system,
which is used by our controllers to execute all our transport
and system services. More information on this and other
projects can be found in ‘Solve societal challenges with
stakeholders and through partnerships’.
Facilitating the market
TenneT believes that an integrated European electricity
market best serves the people and businesses in our area.
It also allows neighbouring countries to work together for
amore secure and stable supply of electricity. Therefore we
work hard to connect our grid to the countries around us
and continue to expand and improve our interconnection
network. An example of this is our NordLink project.
Thisdirect current interconnector links German wind power
to Norwegian hydro power. This project has transported
itsfirst megawatts of renewable energy in final trials.
Completion is scheduled for early 2021.
Societal impact due the availability of our grid
Transporting electricity to large industries and via
DSOs to millions of households literally powers and
empowers society. This is our main task and also
our main societal impact as a company. Designing,
building, maintaining and operating a grid that is
available all the time is the most important impact
TenneT can have for society. To ensure that the
people living in the areas we serve are able to live
their lives and organisations can do their work.
Achieving this impact requires each part of the
energy supply chain to work together, therefore this
achievement is not just the result of merely our role,
but this is an estimated societal impact we make
together with others in the supply chain, such as
electricity generation companies and distribution
system operators. Nevertheless, having an electricity
grid that was available to supply electricity to its
customers for 99.9999% of the time onshore creates
value. To investigate how much value this creates,
we used academic research as a basis.
The supply of electricity has a certain value,
which we used in our assessment. This year, we
decided to start with the estimated societal value
as a result of the availability of the Dutch part of
our grid, as the research is related to the Dutch
situation. This assessment shows that the estimated
societal value created by the availability of our grid
surpasses thegross domestic product (GDP) of
the Netherlands, which was over EUR 800 billion
in 2019. This is because the supply of electricity
does not only create economic value, but also
broader and more intangible estimated societal
impacts, such as being able to enjoy leisure time.
For more information on this assessment and our
methodology, please refer to the Additional CSR
document on our website. We will continue to further
develop this and other societal impact indicators in
the next years and inviteother to help us with this.
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2020
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Cyber security
Delivering a high security of supply is only possible when
wehave taken all steps to ensure the integrity and stability
of our grid. This requires us to consider all risk scenarios,
including potential security threats ranging from copper
theftto terror or cyber-attacks. We treat the possibility
ofasevere outage resulting from security incidents and
attacks with the utmost severity. A successful attack cannot
be ruled out entirely, despite us having physical and digital
prevention measures in place that are continuously
assessed, optimised and tested. To this end, we develop,
align and carry out contingency plans together with
national authorities.
What could prevent us from realising our goals?
In 2020 the COVID-19 pandemic was the main challenge
toensure a secure supply of power. It is likely to continue
presenting challenges in 2021. In the first half of 2020,
TenneT was able to prove its level of preparedness.
However, the continuing public health measures and
ongoing uncertainty about duration may lead to a critical
increase of the sickness rate (physical and mental) within
companies in the power supply chain.
Aside from COVID-19, the further increase in the infeed
ofrenewables continues to present challenges for how we
operate our grid in its current form. Essential investments
are required to ensure our grid is future-proof and can
facilitate the energy transition. We continue to develop
newand innovative ways to improve our way of working to
secure supply of electricity today and tomorrow. TenneT has
defined and started multiple strategic initiatives to ensure
the preparedness of the grid. Uncertainty remains on
potential political decisions, on a national and/or European
level concerning the phase out of conventional energy
production and the future expansion of renewables. These
changes may influence (re-)investment decisions of power
producers, resulting in a shortage of electricity production
and thereby reducing the options for TSOs in the connected
European grid in the short term. However, in the long term,
this should help the evolution of a green grid.
New technology plays a crucial role in mitigating risks
related to security of supply. In particular, TenneT sees
opportunities in the field of digitalisation and resulting
possibilities in automation, robotics, prognosis and block-
chain technologies to improve the utilisation of the grid,
without increasing operational risk. In this regard, we are
exploring the potential of big data to improve our capacity
to predict the weather and assess levels of consumer
demand. Sophisticated data analytics can also help us
determine the condition of our assets and reduce demand
on the grid at peak times by connecting decentralised
batteries.
Technological innovation plays an important role in achieving
the ambitions of the energy transition. Although there are
many innovations in the energy sector, there are currently
nodecisive breakthroughs that will simultaneously guarantee
security of supply, affordability for society and competitiveness
of industry prices. It is not yet clear which technology
developments hold the most promise.
We assume it will most likely be a mix of digitalisation, big
data, market and price models, sector coupling, new types
of cables, lines and other assets to transmit energy.
As new technologies are introduced, either physical assets
or software solutions, there could be an increased risk of
outages caused by malfunctioning. TenneT demands high
quality standards from its suppliers and service providers.
As an additional measure, TenneT builds test procedures,
test periods and guarantee periods into its project planning
and supplier contracts. As such, TenneT is actively involved
in defining standards and developing partnerships with
market partners and suppliers.
An example of this is related to an increased demand for
underground cabling. As this is rather new technology
forextra high-voltage, both AC and DC, we partnered up
withothers in pilot projects. The level of maturity of these
projects is still to be proven, but with this, we are working
together with others to find new solutions.
In the longer term, these uncertainties can be added
tothose surrounding the level of European collaboration to
foster cross-border solutions, progress with sector coupling,
integrated decarbonisation and the ongoing politics of the
green industry.
In addition, cyber and terror risks remain an ongoing risk
across our sector. To ensure we can handle cyber-related
risks and any repercussions, we continuously work on
understanding our cyber risks (and how best to handle
them) in collaboration with internal and external allies.
Wehave ISO 27001 certification for information security
inplace in Germany and underway in the Netherlands.
Wealso carry out penetration tests and crisis management
exercises every year.
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2020
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Interview with our stakeholder
“ Safety
got a new
connotation
during
this strange
time”
Herman Harreman
Site Manager DolWin5
Deliver a high security of supply
Locked down in Dubai
TenneT colleague Herman Harreman
stayscommitted to critical project
duringlockdown
When the COVID-19 pandemic forced parts of
society to shut down in 2020, many of TenneT’s
specialists working in the field went into lockdown
on location, so they could continue to work on our
critical projects. With no possibility for travel, this
meant some of our people spending long periods
away from their families in far-away countries.
Herman Harreman, who has travelled extensively for
TenneT throughout his 27-year career, is an example.
When he said goodbye to his wife in January to work
on the construction of our HKZ Alpha and Beta
platform in Dubai, he expected to be home again
before long. Little did he know he wouldn’t see her or
his family again until October, as his team went into
lockdown in Dubai, with no possibility for overseas
travel. “Due to supply more than one million
households with clean wind energy per year,
HKZAlpha and Beta is a crucial project for TenneT
and society as a whole. The company needed the
team to stay to continue working on the project, so
it didn’t fall behind schedule. I was happy to do this,
but it was a challenging time. Our team of about
15people was effectively confined to solitary
lockdown, including three weeks when we could
not go out at all in Dubai.” Thanks to the team’s
dedication and commitment, the project was not
delayed by COVID-19.
Back home, the TenneT team did everything they
could to help Herman and his colleagues in the field.
“I stayed in very close daily touch with the COVID-19
crisis team at our head office, which made us feel
supported and connected. We also made sure we
had regular online gatherings among our team to
make sure everyone was doing ok,” says Herman,
who was officially in charge of safety. “The meaning
of safety in a broader sense took on a new meaning
for me during this strange time,’’ he adds.
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Ensure critical infrastructure for society
At TenneT, our unwavering task is to provide society with a secure and sustainable supply
ofelectricity, while driving the energy transition and facilitating the European cross-border
energy market.
Our extra high-voltage electricity grid forms the backbone
ofthis mission. It transports electricity over long distances,
providing power to homes and businesses across our
region. With the materials and products we use to build
andmaintain our grid, such as our cables, stations and
interconnectors, we create the critical infrastructure that
people and businesses depend on every day.
In the years and decades ahead, the decisions we take
todevelop the onshore and offshore electricity grid will play
a vital role in setting the pace of the energy transition.
Connecting more and more renewable energy sources to
the grid and safely transporting green electricity over long
distances is a technological and engineering challenge,
anda mission that we are proud to fulfil.
Despite the challenges in 2020 caused by the COVID-19
pandemic, we were determined to do our utmost best to
keep our investment portfolio on track. We sustained the
momentum of our ambitious grid expansion and investment
programme, continuing to meet the demands of the energy
transition, while maintaining a secure and affordable supply
of electricity. With annual planned investments growing to
EUR5-6 billion within the next 5 years, TenneT is heavily
investing in the energy transition in Europe, making an
important contributionto meet national climate targets
andto connect society to a brighter energy future.
We invested EUR 3,412 million in the Dutch and German
high-voltage grids in 2020, an8.9% increase compared
toEUR 3,064 million in 2019. We are proud that 2020 was
a record year of investment for TenneT, achieved under
challenging circumstances.
Despite the global pandemic, we worked hard to meet the
milestones of our grid expansion plan, with some projects
even completed ahead of schedule.
The way that our people lived up to our principles to achieve
this, particularly our teams in the field, was inspiring.
Ourability to stay on schedule, as much as possible, was
also helped by bringing in flexible labour from abroad and
by sharing and moving essential supplies – such as steel
foroverhead lines – between projects. With this level of
logistical agility, our principles of ownership, courage and
connection were truly demonstrated by everyone involved.
Of course, COVID-19 caused challenges and setbacks.
Closures and lockdowns in some of the overseas shipyards
where we construct our offshore platforms put the timescale
of several offshore projects under pressure, but fortunately
these did not cause any critical delays in 2020. In many
cases, our teams locked down on-site – staying away from
their families for weeks in order to keep our work on track.
Strengthened by this determination in the face of adversity,
we were able to complete and commission several key
projects on budget and on time and we also began work
onmilestone projects for the future.
During 2020 we submitted our onshore and offshore
investment plans to our regulator in the Netherlands, the
Authority for Consumers and Markets (ACM), which is a
Despite challenging
circumstances in 2020, we
consider ourselves fortunate
to have been able to invest
more than budgeted and
continue to make progress
with our investment portfolio.
Target StatusPerformance
3,412 3,080
Trend
2020 2019 2018
Future proof grid
Investments
inEUR million
3,0643,412 2,253
Our performance in 2020
2020 at
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2020
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Integrated Annual Report 2020 - TenneT Holding B.V.
bi-annual requirement. These plans contain the measures
and investments needed over the next years to keep the
quality and transmission capacity of the electricity network
in the Netherlands at the desired level.
The ACM approved the investment plan therewith
confirming the need and necessity of these investments.
ACM however also concluded that TenneT cannot solve its
capacity bottle necks in due time. Consequently ACM
reported in accordance with Article 22 of the Electricity Act
to the Minister of Economic Affairs and Climate (EAC) that
TenneT is not capable of timely realising its capacity
investments. In its communication ACM explained the
underlying causes and stressed the importance of all parties
working together to facilitate TenneT (and the other grid
companies
1
) to realise the investments on time.Further
details about our investment projects can be found on our
corporate website.
Our progress with respect to our offshore investment
portfolio
In 2020, governments at several levels set increasingly
ambitious climate targets. The European Commission raised
the bar by introducing a new target to reduce its carbon
footprint by 55% in 2030, replacing its original 40% target.
Furthermore, the European Commission also published its
offshore wind strategy as part of the European Green Deal,
with an ambition to create offshore wind capacity of 60 GW
by 2030 and 300 GW by 2050.
2019 2020
Our progress with respect to key projects related to our investment portfolio
Phase
SuedLink
SuedOstLink
NoordWest 380 kV
Westküstenleitung
Willemshaven-Conneforde
Mittelachse
Hollandse Kust Zuid
Borssele Beta
DolWin5
DolWin6
NordLink
BorWin3
Our investment process can be divided into three phases. The Initiation phase starts with identifying capacity constraints. At this stage, it is decided to
either accept the capacity constraint or to solve it with infrastructure. If the decision is the latter, the next phase is initiated. In the Planning & Licensing
phase other elements are considered, such as the spatial planning of the project. When a final investment decision has been made, permits are requested
and final design details are formalised. A project is tendered to award a contract for the Construction and Commissioning phase of the project. When the
project is administratively closed, it is formally completed.
1. Liander, Enduris and Enexis were also confronted with the Article 22 notification.
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2020
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National governments are also setting increasingly ambitious
targets for harnessing North Sea wind power and we
continue to push ahead with our investment programme
tohelp meet these goals. The German government has set
a target to connect 6.5 gigawatts (GW) of wind energy
tothe grid by 2020 and 20 GW by 2030. This corresponds
to the energy output of about 20 large power plants. TenneT
has already exceeded the 2020 target, as our offshore
connection systems provide more than 7 GW of offshore
wind energy to the onshore grid. By 2030, TenneT expects
to have seven more of these grid connections completed
inthe North Sea, which will lead to a total of more than
17GW generation capacity.
The Dutch government is also targeting further expansion of
offshore wind energy in the North Sea. In its Offshore Wind
Energy Roadmap, the government states that 10.6 GW of
offshore wind farms are expected to be built and connected
to the onshore grid by 2030. This would provide an amount
of electricity equivalent to 40% of the current electricity
consumption of the Netherlands.
In order to be able to connect more powerful offshore wind
farms and thus bring more energy onshore, TenneT pooled
and further developed in 2020 the best practices from the
German 900 MW HVDC and Dutch 700 MW AC grid
connection systems. The result is a new approach of
connecting future grid connections with a transmission
capacity of 2 Gigawatt (GW) by using 525 Kilovolt (kV)
HVDC systems. This new 2GW standard aims to further
reduce the costs of offshore wind to minimise the spatial
and environmental impact and supports the vision towards
larger offshore wind farms and a North Sea wide Hub-and-
Spoke system, combining wind power connection, coupling
of energy markets through interconnection and smart
integration into the main onshore grids.
TenneT has committed to deliver at least five 525 kV
high-voltage direct current offshore connections, between
2028 and 2030. We are creating a standardised way of
working for these projects which allows us to realise these
projects faster and at lower cost.
Offshore achievements in 2020
• At the beginning of 2020, the 12
th
offshore grid
connection in Germany was completed with BorWin3.
This brings the total connection capacity in the German
North Sea to over 7 GW. We are rapidly moving to the
next stages of our offshore developments.
Partnerships for North Sea offshore wind connection
For many years, TenneT has worked with partners
to nd solutions, including how we can harness
the full potential of offshore wind. An important
example of this is the North Sea Wind Power
Hub (NSWPH) consortium – consisting of TenneT,
Energinet and Gasunie. This started in 2016 to
explore how to connect and integrate, securely
and affordably, several hundreds of GW of
offshore wind in the North West European energy
system. In the summer of 2019, the consortium
presented its ndings in a series of concept papers.
Itconcluded that a modular hub-and-spoke concept
was technologically and economically the most
advantageous. This would consist of a sequence
of 10-16 GW hubs connecting offshore wind to
(and providing interconnection between) multiple
countries, combined with onshore or offshore
power-to-gas.In October 2020, the NSWPH was
awarded funding by the Connecting Europe facility
(CEF) for a maximum of EUR 14 million to develop
this project further. With this support, the NSWPH
will further explore the options for a rst international
hub and spoke project in the early 2030s. This will
be undertaken through detailed technical and energy
system related studies and extensive interaction with
stakeholders. In December, the Dutch and Danish
government signed an agreement of intent enabling
TenneT, Gasunie and Energinet to carry out further
research into a joint energy hub in the North Sea.
In 2020, TenneT also joined forces with National
Grid, the British TSO. Together weannounced a
cooperation agreement to explore the feasibility
of connecting Dutch and British wind farms to
the energy systems of both countries via subsea
interconnectors. The development would be the
rst of its kind for the UK and the Netherlands in
theNorth Sea.
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• In February, TenneT announced that two 2 GW offshore
grid connections will be built in the IJmuiden Ver wind
energy area, alongside the eight 0.7 Gigawatts (GW) AC
grid connections already planned. Grid connections like
this will be importantto help the Netherlands achieve its
target for 40% of all its electricity to come from offshore
wind farms by 2030.
• In July, TenneT received the ‘Grid Readiness’ certification
for Borssele Beta – a new high-voltage connection for
the offshore wind farms Borssele III, IV and V off the
southern coast of the Netherlands. It has a total capacity
of 700 MW, equivalent to the electricity consumption of
around 1 million homes. This essential project for the
energy transition was completed one month earlier than
planned, within budget.
• In August 2020, TenneT awarded contracts for converter
stations and cables for the longest offshore DC
connection to date – the 230 km connection for BorWin5
in Germany, with a transmission capacity of 900 MW.
• NordLink, the first direct connection between the
German and Norwegian high-voltage grids, reached
amilestone inSeptember as it transported the first
amountof renewable energy in final trials.
Our progress with respect to our onshore investment
portfolio
• Important progress was made with the strategically
important 700 km, EUR 10 billion, SuedLink project.
Thisis the largest infrastructure project for the energy
transition in Germany, connecting wind-generated
electricity from Germany’s north coast to energy-intensive
industry in the south of the country. The commissioning
of the cables for the link will take place in2026 at the
earliest. TenneT andfellow German TSO TransnetBW
have opted to use plastic-insulated underground DC
cables with a voltage level of 525 kV. As thesecan
transmit more electricity, only half as many cables are
required compared to a conventional 320 kV solution.
Lower transmission losses and less civil engineering
work mean the SuedLink cables willhave a lower impact
on the environment.
• A milestone was also reached in the SuedOstLink, a
580km connection from near Magdeburg to near Munich
in Germany. This isanother important connection in the
energy transition and a joint project together withanother
fellow German TSO, 50Hertz. Theprojectmanaged to
finish the spatial planning (Bundesfachplanung) as the
first DC onshore Project. The permitting phase
(Planfeststellung) has now begun and corridors are being
worked out for the routing. In addition, contracts for the
cable production and laying wereawarded in Q2 and
negotiations for the converter are progressing well.
SuedOstLink will thus establish another backbone for
grid stability and transition capacity along the north-
south axis of Germany.
• TenneT and Danish Energinetcompleted the expansion
of one of the two existing interconnectors to improve
market integration between Denmark and Germany.
Theproject increases the cross-zonal connection
between Western Denmark and Northern Germany to a
maximum net transfer capacity of minimum 2,500 MW.
• In October TenneT brought the Wilster-West substation,
in Schleswig-Holstein, northern Germany, into service.
This is a central hub for the transport of electricity from
the north to the south of Germany. In the future three
new extra high-voltage lines from TenneT will converge
here: West Coast Line, NordLink and SuedLink.
• Alsoin October, another important network expansion
project for the energy transition went into operation –
anew 380 kV line between Wilhelmshaven and
Conneforde. The short 30 km line connects wind power
from the coast into the onshore grid. This is also the first
AC line in the German grid with two underground cabling
cable sections in the 380 kV three-phase network.
• In the NorthernNetherlands, TenneT is constructing a
new 380 kV line between Eemshaven and Vierverlaten –
Noord-West 380 kV. Civil works started in 2020 and
thefirst pylons were erected at the end of the year.
Furthermore, civil works started for the Zuid-West 380 kV
West project, – a new 380 kV line to be constructed in
the South West of the Netherlands.
Maintain the grid to meet reliability targets
Adequate maintenance is essential to operate our grid to its
maximum capacity. We regularly assess if our assets are in
the appropriate condition and perform maintenance, repairs
and other activities until operational end of life is reached.
The advanced application of data analytics increases our
ability to predict failures and thereby the effectiveness of our
maintenance strategies. We are harmonising and integrating
our maintenance strategies across different geographies
and asset classes to make use of these developments.
Risk-based maintenance approaches, based on FMECA
studies, aim to optimise overall risk and maintenance
workload. Our maintenance strategy also focuses on
maximising the efficiency of replacing end-of-life equipment
at our ageing estate of substations. That is, our approach
aims to keep our assets in the best operational conditions
without needing significant down-time.
In the operations, two main trends are influencing
maintenance activities: our aging network and inflow of
renewables. Aging existing infrastructure leads to a large
volume of replacement projects and increased maintenance
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Integrated Annual Report 2020 - TenneT Holding B.V.
demands. At the same time, a substantial inflow of
renewables is followed by a large increase in grid
reinforcement and expansion projects, as well as new
customer connections. The projects and maintenance
activities that result from these demands require outage
windows and technical resources. To meet the growing
demand for resources, TenneT is not only actively working
on increasing capacity of both internal and contractor
staff,but also extracting efficiencies in the execution by
integrating activities in the stages of planning and scheduling,
as well as by introducing innovate methodologies and
technology. To be concrete, the following developments
canbe mentioned: clustering maintenance activities and
combining those with project activities, providing execution
personnel with a real-time overview of allocated work
packages, and introducing programs that not only allow
TenneT to hire skilled personnel, build additional
competences, but also to retain them in the long run.
Furthermore, a roll-out of a new corporate ERP system,
introduction of new mobile solutions in the field, use of
sensors and real-time data replacing physical inspections,
as well as optimisation of digitalization (such as by use
ofBuilding Information Modelling) are to boost efficiency
and yields from the existing data.
What could prevent us from realising our goals?
Society and governments expect a swift transition towards
renewable energy. To ensure secure supply today and
tomorrow the execution of a large investment portfolio is
essential. This portfolio consists of investments in new
assets as well as replacing, repairing and maintaining
existing assets.This presents a high workload for TenneT
and our entire supply chain. We face scarcities in markets
for materials, resources, services and other supplies.
Thissituation is exacerbated by demands from other TSOs,
DSOs and other infrastructural companies worldwide as well
as by the lack of skilled staff available to us and our suppliers
in the labour market. This may lead to increases in prices as
well as delays in the realisation of our investment portfolio.
Sustainable supply chain practices
Our contractors and suppliers are important partners
to realise our investment portfolio. We require
them to adhere to our supplier code of conduct,
particularly regarding sustainable practices. These
are not only related to environmental impact, but
also to moral, ethical and safe working standards.
These standards are based on the principles of the
UN Global Compact, which TenneT committed to
in 2015. The labour principles are championed by
the International Labour Organisation ILO. We are
committed to the OECD (Organisation for Economic
Cooperation and Development) guidelines, as are
the Dutch and the German governments. For more
information on this, please refer to the ‘Additional
CSR Data’ document on our website.
As we rely on our suppliers to provide essential
components and materials for our work, such as
pylons and power lines, we want to ensure that
none of them are involved, directly or indirectly, in
conduct that does not meet our policies and quality
standards. This can relate to product specication,
environmental performance or human rights.
Our policy is to visit suppliers, ask them detailed
questions on these issues and discuss with them
how to make improvements where necessary. In
2020, we performed24 supplier visits. It is our
policy to not accept suppliers who fail to meet our
standards. In 2020,23 suppliers met our standards,
or were given the opportunity to after taking
corrective actions and 1 supplier was not approved.
In 2020, we joined six other international TSOs in a
call for action to further integrate sustainability into
procurement practices. TenneT sent a statement to
over 2,000 companies we work withcalling on them
to work with usin making more sustainable choices.
We are enhancing the way we manage human rights
within our supply chain, by dening new metrics,
monitoring and steering mechanisms. A scan
performed in 2019 showed that our human rights
risks are predominantly related to our supply chain
as we buy our parts on the global market.The most
salient issues identied were fair business practices,
human rights, ethics and labour rights.
2020 at
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Integrated Annual Report 2020 - TenneT Holding B.V.
To cope with this, TenneT has updated its supply chain
management and focuses among other things on new
sourcing models. These include long-term partnerships
accompanied by improved demand planning and
standardisation, revising harmonised contract models
andtender procedures. We also actively support the
development of new technology, production facilities and
the sourcing of alternative suppliers and service providers.
Furthermore, we employ external project management
service providers to staff construction projects in the
onshore grid. To counterbalance a lack of internal
resources, we pro-actively perform analyses to ensure
adequate succession planning.
Ageing infrastructural assets are a challenge in realising
ourinvestment portfolio. We continuously work to optimise
our organisational processes, including lean decision-
making, an emphasis on employee training, and the use of
probabilistic schedule analyses. We have made additional
resources available for maintenance work and are increasing
the efficiency and flexibility of our maintenance programme
by monitoring and simplifying internal processes.
Weconsider bottlenecks in outage planning in addition
toan increasing duration of unplanned outages still to
bearisk.
In a highly dynamic market, there is a certain risk associated
with the emergence of new players who may overstretch
themselves, fail or go out of business. This may also
increase a risk of unreliable suppliersupport or unavailability
of (spare) parts. To mitigate these risks, TenneT assesses
the financial stability of suppliers and prescribes the
long-term availability of parts and services as one of its
contractual pre-conditions.
In addition, our engagement with stakeholders treads a fine
line between societal and local interests. What is good for
and desired by society is not always welcomed by the local
communities affected by our projects. We communicate
with a large number of stakeholders, assess different
technological options, routing options, interdependencies
ofwork packages between different projects and challenges
in the political environment. Delays in licensing (especially
mandatory permits issued by authorities) as well as
challenges arising from the use of innovative technology
(e.g. newly designed 525 kV DC cabling) can also cause
delays in project schedules.
TenneT mitigates these risks by identifying possible
constraints and the cost of viable solutions in the early
stages of the decision-making process, communicating
transparently with regional stakeholders, working closely
with authorities, enforcing high quality standards and closely
monitoring our suppliers and deliverables. We are aware
that we will not always meet the requirements from local
opposition. The approval process is influenced by the wish
to accelerate procedures but at the same time empower
local authorities.
Certain environmental developments in Europe pose
achallenge to us and may delay projects. These include
various European government policies on perfluoroalkylated
substances (PFAs) and nitrous oxide. This is embedded
inour daily operation.
On the other hand, opportunities in this area, such as
digitalisation, could reduce costs and help us achieve a
secure energy transition. This may come with some strict
requirements, not only regarding data security, but also
especially for information management and human
resources in terms of designing, developing, maintaining
and operating systems. Therefore, TenneT continuously
develops its IT capabilities, enhancing its organisation,
training employees and reviewing the performance of IT
service providers.
Looking ahead, we face possible delays to future projects
as the COVID-19 pandemic has made the usual planning
and permitting process difficult to sustain. This particularly
holds for onshore projects, for which the permitting process
relies on face-to-face stakeholder meetings in local
communities. For public health safety, we were unable to
have these face-to-face meetings due to the measures
taken to stop the spread of the COVID-19 virus. Some of
these can now continue online, but the knock-on effect
from the delay in this pre-construction phase will pose
challenges. We managed however to make good progress
with online consultations in 2020. We successfully held
virtual tender meetings with potential suppliers for our
SuedLink, SuedOstLink and BorWin5 projects. This was
thefirst time we have engaged online with suppliers during
a tender process and the success of the negotiations
showed the possibility for a more efficient way of working
inthe future, requiring less travel time and expense.
2020 at
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Yolande Verbeek
Managing Director Operations
Uniper Benelux
“ We need substantial
investments in all parts
of the hydrogen value
chain.”
Ensure critical infrastructure for society
Hydrogen: a critical link in the puzzle of the
energy transition
The energy transition is a puzzle with many pieces,
players, and dimensions. TenneT aims to play its part
to solve this, working closely with various parties.
One of these is Uniper, a leading international energy
company and front-runner in the development of
‘green hydrogen.’
“Green hydrogen is a crucial part of the puzzle in
moving towards a carbon neutral energy system,”
says Uniper’s Yolande Verbeek. “However, the
necessary hydrogen infrastructure, both up- and
downstream, requires thoughtful coordination and
an EU-wide level playing field of regulations and
support. We need substantial investments in all parts
of the hydrogen value chain. At this stage, hydrogen
is similar to the early days of wind energy: it needs
support to get off to a flying start – but it will be the
future and will be competitive sooner than many of
us may think,” says Verbeek, who adds that the pipe
infrastructure for natural gas, such as that owned
by Gasunie, the Dutch national gas company, could
be used. “We are already working closely together.
The challenges can only be solved if we face them
together and take initiative.”
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Technical data:
KMs of circuit
16
substations
468
completed offshore
connections
14
pylons
over
27,000
23,866
interconnectors
2020 at
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Integrated Annual Report 2020 - TenneT Holding B.V.
Create a sustainable workplace
To secure the supply of electricity and drive the energy transition, we rely
on the dedication, passion and talent of our most important asset, our people:
‘People are at the heart of TenneT’.
In recent years, we have prepared our people and
transformed our organisation so we are ready to meet the
challenges society expects from us. We have re-imagined
how we harness and nurture the talent of our people,
allowing them to perform at their best, with new ways
ofworking and in a safe, inclusive and stimulating
environment. Adaptiveness and innovation will be central
tofulfilling our role in the green energy future, and our
success will depend on our ability to attract and retain
thebest talent. We are changing our culture, streamlining
our processes, sharpening our talent and performance
management processes and building leadership that
empowers, inspires and creates opportunities for growth
and learning. This is why energising our people and
organisation is an integral part of our strategy.
Absentee rate is showing a
decrease compared to 2019.
However, given the COVID-19
circumstances it is difficult to
compare both years.
StatusPerformance
NL 2.7%
GE 2.5%
Trend
Healthy workforce
Absentee rate
Netherlands / Germany
2020 NL 2.7, GE 2.5
2019 NL 3.4, GE 2.8
2018 NL 3.0, GE 3.0
Regrettably, there were
twofatal incidents in 2020.
This also impacted our overall
performance and we did
notmeet our target this year.
in 2023
Target StatusPerformance
4.05 3.74
Trend
2020 2019 2018
4.834.05 3.74
Safe workforce
TRIR
(including contractors)
Upward trend in our ability to
attract female talent, with a
positive effect on the overall
population.
in 2023
Target StatusPerformance
33% 30%
Trend
Diverse workforce
Diversity (% female
inow of total inow)
Our performance in 2020
2020 at
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Organise for our people to perform at their best
andto work as one company
As of 1 July 2020, TenneT’s new organisational structure
came into being, together with a sharpened strategy and
the first steps towards a renewed culture, guided by a
newpurpose, promise and principles. At the core of this
transformation is a commitment to create a sustainable
andrewarding workplace for our 5,722 internal and
externalemployees, empowering our people to perform
attheir best.
Our new organisational structure aims to enable faster
action and decision-making with more personal
empowerment, clearer roles, and better cooperation across
borders and departments.Our strategy can only be executed
if we operate as an integrated European TSO. To achieve
this, we introduced a new model for TenneT based on
functional steering across borders, with greater empowerment
at lower organisational levels.It streamlines our structure
into ‘One TenneT’ with 22 new units led by senior leaders
who were appointed into their roles in May 2020. Our senior
leadership is a diverse team comprising 50% German and
50% Dutch leaders, of whom 32% are female. Six of these
senior leaders are new at TenneT.
Our decision-making processes have been streamlined,
with more emphasis on ownership and empowerment.
Fournew decision-making committees (Future Design,
Asset, Integrated Work Planning and Systems & Market)
replaced multiple existing committees and structures,
making our decision-making more effective and less
complex. The new organisation had been designed to
create a unified company-wide view, supported by
end-to-end processes across the entire value chain.
During 2020, the COVID-19 pandemic presented
challenges for the implementation of our TenneT
transformation. Not being able to meet in person posed
difficulties for teams to grow accustomed to thenew
structure and ways of working. However, the pandemic
alsoprovided an unexpected opportunity to accelerate
theprocess of change, allowing us to embed new routines
faster. For example, cross-border teams in the new
organisational structure quickly adapted into remote
working routines and virtual collaboration. Recognising that
this process can be challenging,leaders of the new units –
including those who had not previously led remote teams
– were trained in the skills of motivating and collaborating
with their teams in a virtual setting.
We adapted to help our people perform at their best, such
as facilitating working from home by providing everybody
with the opportunity to improve their home office. We were
also conscious that working from home involves specific
challenges for different people, physical and also mental.
Making sure our people stay connected with their colleagues
and paying attention to work life balance and exercise are
all important in the new working reality. To facilitate this, we
shifted our mental and physical health and vitality programme,
Always Energy, into an online programme and provided
webinars and real-time engagement to ensure the wellbeing
of our colleagues is fully supported.
To measure how we are succeeding in energising our
people and organisation and to create this sustainable
workplace, we measure the absentee rate in the Netherlands
and in Germany. This has resulted in an absentee rate of 2.7
in the Netherlands (2019: 3.4) and 2.5 in Germany (2.8 in
2019). Although the absentee rate has improved, we
consider that this image is a bit distorted due to the unusual
year we had in 2020 and the circumstances our employees
have been and are still working with. Furthermore, we
conducted our employee survey in Q4 of 2020. This resulted
in an employee engagement score of 82%. The methodology
for this survey was updated compared to the prior employee
engagement survey, as some questions were confusing.
Using the current methodology, the prior employee
engagement score was 85%, thus a 3 percent decrease.
Future-proof our organisation by recruiting
thebesttalent
One of the most important ways to help our organisation
achieve its strategic goals is to recruit the right people.
Wecurrently need to hire hundreds of people per year to
keep pace with the growth of our business and the demands
for our services. In 2020, our workforce grew from 4,913
to5,722,but we continue to need more talent to achieve
ourstrategic goals. That is why we continue to recruit and
also aim to bring out the best in our current workforce with
additional training for their current role or to help them
develop to new positions. This also helps to retain talent.
During 2020 with the Transforming TenneT programme,
many colleagues transferred internally into new roles
andopportunities which helped in their professional
development.
We are not alone in the need for talent, as other TSOs
andplayers in the renewable energy business compete for
the best people. The resulting skills shortage makes hiring
enough people of the right quality a constant challenge.
2020 at
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However, it is a challenge that makes us think more
creatively. The changing nature of our business – with more
emphasis on data, for example – means we can hire from
abroader pool. Today, mathematicians, economists, digital
engineers and data scientists can find a role in our business
in ways not previously possible.
The COVID-19 pandemic and resulting shift to virtual
working has also opened new possibilities for attracting
talent. Being located close to one of our offices is no longer
so essential, allowing us to draw on a broader geographic
and more diverse talent pool. For example, we are now
targeting labour markets in Spain, Romania, Poland and
other countries. To extend this work, we are undertaking a
new accelerator project in our People Unit to help us reach
new talent pools, with an emphasis on building a more
attractive employer brand and using new communications
techniques to connect with potential candidates.
Build leadership that empowers, inspires and creates
opportunities for growth and learning
The next phase of our transformation is about shifting
mind-set and behaviour. This will enable our employees
tobe responsive to and ready for all the opportunities and
risks facing us in the fast, changing energy landscape.
Central to this is embedding a new leadership model that
puts our leaders in the driving seat of our transformation,
building a new way of working that is open, curious,
courageous and focused on learning and growing.
Training for our leaders in our new organisation began in
May 2020, with the launch the Lead Your Team programme.
With a focus on people and change management, this is
based on the competencies our leaders and all employees
will need to meet the challenges ahead. A mandatory
requirement for all leaders of the new TenneT departments,
Lead Your Team is designed to be a shared journey, helping
to embed our principles of Ownership, Courage and
Connection and working together with leaders towards
anew culture with new behaviours and ways of working.
The training features a carefully selected programme of
online workshops, designed to build leadership skills, drive
change, and collaborate effectively across departments
andborders. The training not only meets the physical
challenges of the COVID-19 pandemic by teaching virtual
communication, but also the psychological aspects
ofpeople management during the pandemic, building
skillsforempathy, self-awareness, resilience and
psychologicalsafety.
As part of becoming a learning organisation, we have
alsodeveloped the Grow For It learning journey, for all
5,722TenneT employees. This immerses our people in
ourculture and strategy and builds a full understanding
ofour Purpose, Promise and Principles. To further embed
our company strategy within all layers of our organisation,
we also organised a Strategy Week within TenneT in
November 2020. Workshops were held for each strategic
pillar withemployees invited to learn and share their
thoughts with respect to our renewed strategy.
Bring out the best in our people in an inclusive and
safe environment where people are proud of coming
to work
Inclusion & Diversity
We believe that a diverse working environment – not only
interms of gender, religion, culture and socio-economic
background, but also personality, experience and
geographic backgrounds – helps us perform better and
deliver better value for stakeholders and society. And for
diversity to really show its power, it needs inclusion as a key
building block. Encouraging diversity while promoting a
culture of inclusion will help foster a culture of equal
opportunity.
Our aim is to strengthen our focus on inclusion in all phases
of the employee journey. This starts with our employer
branding, to be an attractive employer for potential
colleagues. Next to this we also aim to broaden our
recruitment approach and are developing new ways to
findthe right talent.
As we expand our recruitment to more countries, we aim
tomonitor closely the diversity of our employees in terms
ofnationalities. Another new way is to recruit using broader
job profiles based on competencies, instead of looking for
the perfect match based on education and experience.
Thisapproach requires more on-the-job training.
Regarding our ambitions in gender diversity, we have made
good progress as wemet our 2023 targets for the key
performance indicators in this area in 2020. We aimed for
30% female board members in our Executive / Supervisory
Board by 2023 and recorded 44% in 2020. Our ambition
isalso to have 22% of the people hired in management
positions and of our workforce in general to be female.
Wemet this target as we recorded 29% of our management
positions were female hires and an overall ratio of 24%
female employees, whichcompares favourably to peers
inthe oil and gas industries and other TSOs.
2020 at
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Even though we exceeded our 2023 targets this year, we
continue to work on this to ensure that we also reach our
ambitions in the years to come.
Furthermore, we feel it’s our responsibility to reach out to
those who need extra support in the labour market, helping
us grow towards a workforce which fairly reflects the
European society we serve. An example of this is our
partnership with Rising You, where we support employment
opportunities for refugee talent at our contractors. Attracting
more talent in this way also helps TenneT. For example, our
collaboration with Refugee Talent Hub in the Netherlands,
led to TenneT providing work opportunities to 7 former
refugee talents in 2019 / 2020, with 2 finding permanent
employment with TenneT in 2020.
Safety
For TenneT, safety is a core business value. Every day we
are aware of the risks associated with our activities and
believe that every safety incident is one too many. TenneT
wants every employee to return home safely at the end of
each working day. That is why we measure the Total
Recordable Incident Frequency Rate (TRIR), which indicates
how many incidents (needing medical treatment or even
more severe) have occurred per one million hours worked.
In 2020, the TRIR was slightly lower than the preceding
year, but it is still not at the level we want it to be. We
continue working with colleagues and contractors to
improve the TRIR and avoid potential accidents.
Four out of every five accidents occur with our contractors,
as they perform most of the work in high-risk environments,
such as on construction sites, and at sea.
We deeply regret two fatal accidents that occurred during
2020.In May 2020, an employee of one of our contractors
suffered fatal injuries after a fallwhen dismantling a
temporary pylon frame. The work was executed on an
overhead line between Wilhelmshaven and Conneforde,
Germany. In November 2020, an employee of one of
ourcontractors suffered fatal injuries, after he became
trapped under a heavy winch which was transported in
thevicinity of Ehringshausen.We are deeply hurt by these
incidents, and our thoughts go out to the families and
friends of these two workers.
To prevent accidents, we strive to constantly enhance our
employees’ safety awareness and devote ongoing attention
to optimising our processes. To this end, our Executive
Board signed a new Occupational Health and Safety (OHS)
policy in August 2020. The policy includes adopting
integrated risk-based approaches to safety, based on a
continuous improvement process. Apart from prominent
risks, softer OHS elements are included as well, like
psychological safety (everybody should feel free to speak
up), safety culture (having an open and pro-active safety
culture within TenneT and its supply chain), and becoming
alearning organisation (by sharing information on incidents
and best practices to prevent incidents). To embed this
comprehensive approach to safety and to make it part of
our TenneT culture, we need strong safety leaders, who
take ownership for safety, show courage and are connected.
To embed this mind-set and new approach across TenneT,
we intend to launch a new multi-year corporate Safety
Leadership programme at the start of 2021 for all leaders
atTenneT.
At the end of 2020 we determined new priorities with
respect to safety, striving for more resilience. Next year
wewill operationalise this concept into practical approaches
for our employees. Another initiative that further develops
astrong safety culture in TenneT, was successfully passing
the Safety Culture Ladder (SCL) follow-up audit. This means
TenneT maintained its SCL level 3 certification in 2020.
Safety also played an important part in the establishment
ofthe new TenneT organisation in July 2020. With new
structures, positions and people, we aimed to create a safe
start from day one. For all our new leaders, and those
leaders with a new position (approximately 70), TenneT’s
Safety and Security department conducted a safety training
to onboard the new leaders about safety processes,
4,321
Employees
1%
15%
31%
26%
21%
6%
Nationalities
51
External employees
1,401
Diversity at TenneT
24% 76%
2020 at
a glance
Performance
2020
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procedures and requirements at TenneT, as well as
explaining what is expected from a TenneT leader when
itcomes to safety.
What could prevent us from realising our goals?
The scarcity of qualified short-term and long-term staff
remains a key risk. To address this, we focus on tailored
sourcing approaches and aim to build an image of TenneT
as an attractive employer, as well as actively working on
internal succession planning. We are interacting more with
potential employees, actively participating in career events
and reaching out to students during their studies. We are
investing in our future talent pipeline, including initiatives to
attract potential employees such as our International Trainee
Programme and our High Voltage Trainee programme.
Our ever-challenging pipeline of investment projects and
maintenance tasks inherently results in an increased risk
ofinjuries and even fatalities. This also applies, perhaps
toagreater extent, to the work of our suppliers. They
mightconsider and apply safety values that are different
toTenneT’s. We continue to educate our contractors
andsubcontractors what safety means at TenneT, build
awareness of this and to implement safety as one
commongoal.
Progress made with TenneT’s organisational transformation
in 2020 boosted confidence in our ability to deliver our
strategy. The new organisation structure within TenneT has
now been in force since mid-2020, accompanied by the
Grow For It and Lead Your Team learning journeys. This
important work will help TenneT’s people execute our new
strategy. Further organisational improvements are ongoing
until 2021 and later, including a new end-to-end process
structure and implementation of one ERP-system. Although
some efficiency can be lost during organisational changes
inthe short term, this is currently compensated by the high
motivation of our employees and efficiency gains we expect
in the longer run due to Transforming TenneT. Nevertheless,
we remain alert to risks, for example if expected
organisational enhancements take longer to embed or the
ongoing COVID-19 pandemic affects the Transforming
TenneT process.
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“ Everyone looks out for
each other and is very
safety-conscious.”
Tim van Zuijlen
Trainee Technical Assistant
Create a Sustainable workplace
COVID-19 career-switch: from lighting
events to technical maintenance at TenneT
Tim van Zuijlen switched careers in the middle of
the COVID-19 pandemic, moving to TenneT from an
events agency. “That whole business was knocked
out by COVID-19 and will be for the foreseeable
future, so I really needed to look around,’’ says Tim.
At TenneT, Tim can draw on his experience of setting
up high lighting rigs for large events and festivals.
Now, he is applying these skills as a Trainee Technical
Assistant, helping to meet TenneT’s ongoing need
forskilled technicians. “I am a technical guy and
I love working at heights and with high voltages,
which makes TenneT perfect for me.”
In two years’ time, Tim and about ten others
– ranging from other career-switchers to recent
graduates – will be trained to work on maintenance
in the field for TenneT. Given the nature of his work,
Tim particularly likes TenneT’s focus on safety and
teamwork. “I really appreciate this. Everyone looks
out for each other and is very safety-conscious.
That’s very important in this business.”
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Create value to transition to a low carbon economy
In order to fulfil our ambition to drive the energy transition, we aim to lead as a green and
responsible grid operator. This does not only mean providing the renewable energy solutions
that enable the transition – it also means reducing our own climate footprint and promoting
sustainability throughout our supply chain.
To this end, we measure our progress of our sustainability
performance. This relates to our ambition to ‘lead as a
green grid operator’. This sustainability performance
consists of three main impact areas: Climate, Circularity and
Nature. Each area has specific indicators where we track
how we are performing and if we are realising our ambitions.
Climate
In 2020, TenneT formulated its new company purpose:
‘Toconnect everyone with a brighter energy future’.
Consequently, we strive to ensure that people living in the
areas we serve have access to sustainable electricity
through our grid.
That is the reason, we have defined our key impact metric
for climate as the equivalent number of households able to
switch to 100% renewable electricity, such as wind and
solar. Currently, we have started by including our offshore
operations and a selection of renewable energy sources
1
To be climate neutral for our substations, offices and mobility in 2020.
2
To be fully climate neutral (SF6 emissions, grid losses, energy use offices, stations and mobility of our employees) in 2025.
SF
6
leakage (%) < 0.28% in 2020, SF6 leakage (kg) < 1,106kg in 2020.
3
In 2025 25% less impact of virgin copper use.
4
In 2025 25% less impact of non-recyclable waste.
• (Net) impact on nature
• Environmental incidents
We regret the environmental
incidents and the oil leakages
from cables. On the other
hand we are proud of the
positive biodiversity measures
we have taken.
Target StatusPerformance Trend
Nature
Zero impact
on nature
in 2020
Progress has been made
togain more insights on our
virgin copper use and the
amount of non-recyclable
waste. More information will
be disclosed when this is
available.
• Reduction of virgin copper use
• Reduction of non-recyclable
waste
Target StatusPerformance Trend
Circularity
25%
reduction
in 2025
3,4
We have been able to make
progress in lowering our net
carbon footprint, mainly due
to greening more of our grid
losses. However, we were
unable to fully meet our 2020
climate ambition due to
mobility.
CO
2
footprint of our
substations, offices and mobility
(net emission in tonnes of CO
2
)
Target Status Trend
Climate
Performance
Climate
neutral
in2025
1,2
Our performance in 2020
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directly connected to our grid. With this, we have been able
to provide 9.7 millionequivalent households able to switch
to 100% renewable energy.
As we connect more and more renewable energy sources
(RES) to our grid, we measure our climate impact in terms
of avoided emissions. Naturally, these climate figures are not
only achieved through our own operations, but also through
our partners in the energy sector, such as electricity
generation companies and distribution system operators.
Working together in 2020, we thus avoided 12.3 million
tonnes of CO
2
equivalents. More information (such as the
methodology) on these impact metrics is included in our
Additional CSR data document.
TenneT also measures climate impact resulting from its own
operations. Our biggest climate impact results from our grid
losses, accounting for 95% of our carbon footprint. The next
largest impact is related to our operations (offices, substations
and mobility) and those resulting from the leakage of SF
6
gas.
Through a range of initiatives targeting these three areas,
TenneT strives to become climate-neutral by 2025.
Overall, we achieved a 10% increase in gross carbon
emissions in 2020 (compared to the carbon footprint of
2019 adjusted for the effect of the development in
conversion factors) and adecrease of our net carbon
emissions of 40%. This is related to the development in
ourgrid losses, which we describe in more detail below.
Grid losses
Approximately 95% of TenneT’s CO
2
footprint is due to
gridlosses. Grid losses inevitably occur during power
transmission and result from the difference between the
energy fed into the grid and the withdrawal. To reduce
ournet carbon footprint, we will 'green' our electricity
consumption with the use of guarantees of origin. Next to
the energy use of all our offices and stations, this applies to
100% of the grid losses in the Netherlands and, as of this
year, also approximately 47% of the grid losses in Germany.
To compensate for the CO
2
-footprint of our German grid
losses, we purchase certificates of origin in the relevant
amount cancelled in the Netherlands.
Grid losses depend, among other things, on the current,
thevoltage, but also on the distance electricity is transported.
The latter is increasing, as wind and solar electricity are
often generated in remote areas, far from where most
people consume it. Our grid losses increased to 5,530 GWh
in 2020, compared to 5,035 GWh in 2019. As such, there is
a tension between grid-losses and the measures we take to
drive the energy transition. They inevitably increase as we
expand our grid and introduce more RES into the system.
An alternative to expanding our grid is to make smarter use
of it, but this also presents a paradox. While building less
has clear environmental benefits, grid losses will grow if we
utilise our existing assets at higher levels .
Mobility
As for many other companies adapting to the COVID-19
pandemic, the way we work has changed significantly in the
past year, with government restrictions requiring employees
to work from home. This also resulted in a reduction of our
carbon footprint with respect to our mobility and energy use
at our offices.
We regard this as a consequence of the COVID-19 situation
and not an excuse to stop taking actions to reduce our
carbon impact. That is why we have adopted a new action
plan to reduce the environmental impact of our mobility,
encouraging our employees to travel less and if they do,
touse green transportation. We are also greening our
company car fleet with electric vehicles. In Germany, we are
developing a bike-leasing scheme and, if successful, we will
also introduce it in the Netherlands. Promoting sustainable
travel is part of a wider commitment via the “Anders Reizen”
initiative to halve the CO
2
emissions of all TenneT’s business
travel by 2030. We are currently exploring how to translate
these ambitions into policy.
2,448,640 930,627
tonnes CO
2
e (gross)
tonnes CO
2
e (net)
Indirect
Upstream
0.48%
Scope 3
1.05%
0.18%
0.06%
94.6%
3.62%
0.00%
0.48%
SF6 leakage
Lease vehicles
Gas consumption
Grid losses
Electricity use stations
Electricity use offices
Travel and transport
Direct
Own operations
1.29%
Scope 1
Indirect
Upstream
98.23%
Scope 2
Carbon footprint
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Substations
During 2020, we continued to reduce the carbon footprint
of our substations with a goal to be climate neutral by 2025.
We do this for instance by taking lower climate impact into
account in the design when replacing existing substations.
An example of how we are addressing this is the project
related toour 150 kV station in Etten, the Netherlands.
Thefacility is at the end of its life and needs to be replaced.
As we do so, we are taking lower climate impact into
account in the design, for example by using solar panels,
better isolation and LED lighting. Plans were finalised this
year and construction will start in 2021.
Supply chain
To reduce CO
2
emissions even further, we are taking steps
across our supply chain by motivating contractors to reduce
their footprint. For example, during the year we started testing
a new certification process, requiring suppliers to demonstrate
their carbon reduction measures. Furthermore, we integrated
an environmental cost indicator (ECI) which allows us to
calculate the CO
2
footprint directly into each project’s cost
evaluation. Having piloted this approach with some of our
offshore contractors, we are now extending it further in our
operations, for instance in our BorWin6 and 2GW projects.
SF
6
gas
Sulfur hexafluoride (SF
6
) is a gas used by TSOs to protect
electrical power stations and distribution systems by
interrupting electric currents. Although it is a highly effective
circuit-breaker, insulator and extinguisher, it is also a powerful
greenhouse gas, over 23,000 times more polluting than CO
2
.
Although SF
6
accounts for approximately 1% of our climate
footprint, any leakage is damaging to the environment,
which is why we continue to find ways to minimise and
avoid them across our network. We are also aware of the
growing environmental concern about the use of this gas
and have accelerated our efforts to explore alternative
solutions with pilot projects during 2020.
An example of this is our Westerlee station, where we
awarded the tender to a supplier that proposed an
alternative gas GIS solution.We motivate our suppliers
toaccelerate the exploration of alternative technologies.
Wetoughened our approach to SF
6
in our Future of
Offshore programme. This provides a roadmap for our
offshore projects, setting out clear policies and working
practices. Aspart of this, we are exploring the possibility
toexclude SF
6
from bidders’ proposals, requiring them
touse alternative solutions. We are already using a new
approach to work without SF
6
in our BorWin5 project
andwill use this as a test case for future projects.
This year, we achieved a 0.24% leakage rate, which was
comparable to 2019 (0.24%). As we look beyond 2020,
wehave committed to keep SF
6
leakage below atarget of
0.28% until 2025. Knowing that our asset base will increase
considerably due to large-scale network expansions, this
objective is challenging, but we remain committed to reduce
this element of our climate footprint. In the meantime, we
are compensating for the carbon emissions fromSF
6
leakages, which we have done in full for our 2020
performance in this area.
Linking finance to our climate performance
To make progress against our climate ambitions even more
visible, we have linked our financing costs to our climate
performance. Secure access to finance is essential to ensure
that we maintain the pace of our investment portfolio.
An example of this is ourEUR 3.3 billion sustainable
Revolving Credit Facility (RCF), which is linked to
sustainability performance indicators and targets. In practice
this means that, depending on the realisation of our
climate-related KPIs, a discount is applied to the interest
margin on the RCF. This is related to the green percentage
of energy use of our stations (100% in 2020 vs 100% in
2019) and our offices (81% in 2020 vs 84% in 2019). It is
also linked to SF
6
(refer to SF
6
section above) and to the net
carbon impact of mobility per employee against the total
number of employees (2.1 in 2020 vs 3.4 in 2019).
Circularity
Recycling materials and reducing waste is key to the growth
of the circular economy. We share this commitment, with
our circularity ambitions focused on minimising our use of
scarce materials, re-using materials where possible, and
reducing non-recyclable waste in our operations.
We need copper, steel, aluminium and many other raw
materials to expand our grid. Although we must work with
these materials, we aim to reduce our impact by increasing
our focus on circularity. We focus on copper, as it is expected
to become scarce in the near future and we have a high
dependency on it in our operations.
In 2020, we took our first steps to report ourcircularity
performance. This year will serve as a base year for
measuring our progress, with a target to reduce the use of
virgin copper and non-recyclable waste by 25% in 2025.
Our aim is to reduce, re-use and recycle our waste as much
as possible. For example, in our projects we separate sand,
soil and concrete from construction sites so they can be
recycled. From a circularity perspective, the materials left
over at the end of one process can be the input for another.
These materials also have a remaining value, so there is an
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additional incentive not to dispose of them. Unfortunately,
we have not found solutions for all the materials we use,
such as synthetic materials used to make temporary
roadways on construction sites. We are in contact with
oursuppliers and look for partnerships to help reduce our
non-recyclable waste.
To maximise circularity we need insight in our material
usage in projects. Therefore we request material passports
in our tenders. This records all raw materials used in a
specific product, stating which include recycled and
recyclable material. This way, the passport provides
transparency of resource mix, and provides a basis to
increase the circularity of product components. Working
with our contractors, we aim to include a raw material
passport system in all our new tenders, giving us a
comprehensive view of circularity in our supply chain.
For both our non-recyclable waste and our virgin copper
use, we have made progress by working together with our
suppliers to obtain preliminary insights on the percentage
ofwaste that is non-recyclable and the percentage of virgin
copper, which will be included in the projects that have
been tendered in 2020. Unfortunately, as not all data is
available yet when this report is published, we will disclose
this information in our Additional CSR data document,
which we will update when the data is available.
Basedonour current insights from our previous year's
waste reporting related to a significant part of our
Germanoperation, our estimate is that around
60-75%ofthe copper we use is virgin copper and
around10-25% ofour waste is non-recyclable.
We also pursue innovations in underground cabling,
allowing us to increase the sustainability and circularity
ofthe materials used. An example is the innovative plastic-
insulated 525 kV underground cables for our SuedLink and
SuedOstLink projects. This is the first time these cables
have been used worldwide, setting new standards in
technology, and reducing environmental pollution. As well
asbeing fully recyclable, the cables can transmit significantly
more power than conventional 320 kV cable systems.
Thismeans that less cables are needed, allowing the route
to be narrower, with less civil engineering work required.
This significantly reduces the impact on the environment.
We are also researching the use of these more resource-
friendly and higher capacity cabling systems in our offshore
projects. Thisshould lead to a standardised cable system
that TenneT can use in the BalWin, (German North Sea) and
IJmuiden Ver (Dutch North Sea) projects as well as in future
projects with the same power and voltage. We have
reached agreements with eight cable manufacturers to
develop a new standard for a DC submarine 525 kV cable
system instead of the existing technology of 320 kV
standard. This new cable system will be required for our
2GW offshore grid connections in Germany and the
Netherlands, which will set a new standard for connecting
offshore wind farms (see Critical Infrastructure chapter).
Nature
Unfortunately, we have an unavoidable impact on nature
aswe build, maintain and operate our assets in the natural
landscape. However, we also aim to create positive
impacts, such as promoting biodiversity at our substations
and considering our impact on nature early in the process
ofrealising a project.By doing so, we ultimately aimto have
a zero net impact on nature.
Regarding our negative impacts on nature, we were unable
to meet our goals in 2020 as we aimed for a 17% reduction
of our 2019 oil leakages from cables (maximum of 1,529
litres). We reported 57 environmental incidents, which is a
bit more than the 50 incidents reported in 2019 and 5,391
litres of oil leaked from cables (1,842 litres in 2019), mainly
in the Western Netherlands. These cables are relatively old
and are therefore more prone to leakage, with great
difficulties to locate and repair leaks in time. Nevertheless,
we regret the amount of oil leaked and the negative impact
this had on the environment near our assets. We are
working on resolving these leakages and finding ways to
further improve in this area going forward.On the other
hand, we are pleased with the progress we made to create
more positive impact on nature. TenneT is involved in a
coalition called ‘Groene Netten’ comprised ofcompanies
that operate critical infrastructure in the Netherlands.
Together, the coalition members manage over 922 square
kilometres of ground and water with an impact on nature.
This is related to more than 800.000 kilometres
infrastructure. In 2020, Groene Netten has presented the
‘ecologische hoofdinfrastructuur’, a digital map which can
be used to work together and increase biodiversity in our
projects.Amongst other things, this has the potential to
bring together data such as biodiversity hotspots, ground
water levels and relevant GIS data to help identify
opportunities for biodiversity protection.
To achieve our ambitions, we created a nature roadmap,
which sets the targets for the coming year and our definition
of zero impact on nature. As part of this, we announced in
May 2019 a plan to promote biodiversity at all of our 468
high-voltage substations in the Netherlands and Germany,
especially as regards to protecting and increasing bird and
insect populations.
The plan builds on positive results from a pilot project at three
substations in the Netherlands, revealing that nature-friendly
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maintenance of these sites, including non-linear “sinus’’ grass
mowing, conserved up to 72% of the insect populations.
Thisway of maintaining the grass around our assets has
been shown to have a positive effect on biodiversity. We also
extended our biodiversity substation pilots in Germany in
2020, related to the two projects at Irsching and Wurgau.
Thisincludes conducting a bio-diversity study at each location
and identifying what measures can be taken to protect and
promote different species, as well as sinus mowing and
planting European flower seeds to attract birds and bees.
We are taking the same bio-diversity approach underneath
our powerlines, with so-called ‘’flower lines’’ of insect and
bird-friendly planting. An example is our ‘Honey Highway’
undertaken in early 2020, this is a rich bio-diverse
landscape along the 110 kV cable connection between
Bolsward and Heerenveen, running for over 30 kilometres.
After soil restoration work, flowers were sown on several
strips. Many of these biodiversity projects are performed in
co-operation with our project partners, such the project
consortium (Siemens, Ganesa and Van Oord), Visser Smit
Hanab and others.
In our offshore projects, we have a similar approach.
Forexample, we are involved in a research project with
aconsortium of partners including Wageningen Marine
Research and the Naturalis Biodiversity Center Nederland,
in which we are studying the effects of electromagnetic
fields from subsea power cables on North Sea marine life.
For new offshore projects, we aim to have nature-inclusive
design built into tender proposals. In 2020 we concluded a
tender to build two new 700 MW offshore wind substations
in the Dutch North Sea, Hollandse Kust Noord and Hollandse
Kust Zuid. These are our first new offshore projects to
incorporate nature-inclusive design, which will make them
our most sustainable platforms when they become
operational. Examples of nature-inclusive design are: fish
hotels, artificial reefs, eco-friendly scour protection and
ecological cable crossings.
Together with NGOs, such as the North Sea Foundation, we
have come up with possible measures to improve biodiversity
for marine life near and at our assets. We are currently
including this element as part of our tender procedures
andthis concept will be used in the Hollandse Kust (Noord)
offshore project – due to come on stream in 2023.
What could prevent us from realising our goals?
The decarbonisation of society has an impact on business,
regulatory frameworks, financing, and the availability and
prices of products and services.
National and European actions to achieve climate goals are
becoming more concrete. Examples include the European
Green Deal, setting new goals for renewable energy
production, the use of (green) hydrogen and the stimulation
of green and ethical investments. These factors are
increasing the scale and pace of TenneT’s investment
portfolio and increasing the relevance of future projects,
such as system integration with gas infrastructure.
When considering risks to our ambition as a green and
responsible grid operator, we should consider the global
economic and political context. These include a potential
economic slowdown resulting from anti-pandemic measures,
regulatory changes, geopolitical conflicts, financial market
turmoil and rapid advances in technology. On a positive note,
the new US administration has decided to return to an
international consensus on climate targets, but ‘trade
“games”’ may continue. A severe economic crisis could
impact the current focus on climate change and energy
transition. However, it currently seems more likely, that
national and European-level investments in infrastructure
projects might be used to stabilise the economy.
Nevertheless, the affordability of projects could come under
increased scrutiny, as could the question to what extent
society is willing to accept the cost of the energy transition.
Due to the nature of TenneT’s business, we must consider
climate-related risks and opportunities in order to achieve
our strategic goals. To this end, we have adopted the
recommendations from the Taskforce for Climate-Related
Financial Disclosures. Wediscuss climate-related risks
andopportunities in workshops and dialogues with senior
leadership and embed theseelements into our strategy
andrisk procedures. An example of this is considering the
impact of climate adaptation, includingscenarios related to
drought, flooding and more extreme weather events, such
as in Noordwaard,where flooding submerged part of a
pylon (Mast 58) on the 380 kV line between Krimpen aan
den IJssel andGeertruidenberg. We designed a new steel
base for the mast, coated to withstand water, and raised
the pylon by 4 metres– all while maintaining the power
supply. This has never been done before in the Netherlands.
For more information on howwe have assessed our climate
related financial disclosures and opportunities, please refer
to the Governance and risk management chapter of
thisreport.
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“ Everyone works at their
own speed, but we are
all working towards the
same vision.”
Maria van der Heijden
Director of MVO Nederland, a foundation
setting out a network for entrepreneurs
in the new economy
Create value to transition to low
carbon economy
TenneT joins fellow infrastructure
operators to work towards a greener future
With its focus on establishing a new circular
economy through collaboration and sharing of best
practices, MVO was ideally positioned to set up the
so-called “Groene Netten” coalition. This comprises
other companies that, like TenneT, operate critical
infrastructure in the Netherlands, including railways,
cables, tunnels and pipes, stretching over 800
square kilometres of land throughout the Netherlands.
The participants, ProRail, Rijkswaterstaat, KPN,
Alliander, Enexis, TenneT, Gasunie and Stedin, aim
to ensure the management of their infrastructure is
climate neutral and circular.
“One of the big successes of Groene Netten can
be seen in our biodiversity work. For example,
ecologists advise to allow for longer grass around
infrastructure, so insects can thrive. We are now
applying that approach as much as possible,’’
says Maria van der Heijden, who also shares her
knowledge and best practice more broadly with
other interested parties, such as local municipalities.
“Everyone works at their own speed, but we are all
working towards the same vision. It is very inspiring.
TenneT has a good role to play as a public company
with ambitious goals for the energy transition.”
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Secure a solid financial performance and investor rating
Providing the infrastructure that we need for a secure and reliable supply of electricity
– today, and in the future – requires constant vigilance, efficient operations, and sustainable
investments. Broad and sustainable access to financing is a prerequisite to implement our
strategy and realize our investment portfolio.This requires a strong financial performance,
astrong investor rating and a robust and reliable regulatory framework. That is why it is
important to us to secure a sound financial future.
Within the next five years, we are committed to invest
EUR5 – 6 billion annually to play our part in the European
transition to sustainable energy. It is up to us to ensure that
this is financed with the right mix of equity and debt.
Indoing sowe must always balance affordability against
theneed for security of supply and sustainability.
ROIC was above budget,
mainly due to higher EBIT.
Target StatusPerformance
5.1% 4.0%
Trend
2020 2019 2018
5.15.1 6.2
FFO to Net Debt has
developed according to
expectation. The increase
of the FFO was offset by
abigger increase in the net
debt position.
Target StatusPerformance
11.3% 8.5%
Trend
12.911.3 14.1
Satisfied capital
providers
ROIC group (%)
Adjusted underlying EBIT
group was higher compared
to 2019, due to higher
regulatory reimbursement as
a result of new investments.
Target StatusPerformance
796 712
Trend
2020 2019 2018
753796 826
Healthy financial
operations
Adjusted underlying
EBIT group
1)
(EUR milion)
Safeguarded
capital structure
2)
Adjusted FFO/
Net debt group
Our performance in 2020
1. Reference is made to next page.
2. Reference is made to Note 17 of the financial statements.
2020 at
a glance
Performance
2020
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Deliver a return on capital in line with
theexpectations of our capital providers
* Refer to note 2 of the financial statements.
Special items Capex reimbursement are related to an
adjustment of the useful lives of tangible fixed assets.
Special items OPEX mainly relate to the higher OPEX
offshore reimbursement for previous years in the Netherlands
due to the Income Decision by ACM. Special items Energy
& Capacity and other items is mainly related tothe release
of the provision for offshore liabilities.
Raising the necessary external financing
As our investment portfolio grows, so does our need
foradditional financing. To attract funds from the capital
markets we use a range of instruments, including green
debt and equity financing. In mid-2020, we issued green
hybrid securities of EUR 1 billion, which were 2.5 times
oversubscribed, underlining strong market appetite.
Inaddition we secured a EUR 250 million loan from the
European Investment Bank to finance the new Zuid-West
380 kV high-voltage connection between Borssele and
Tilburg in the Netherlands. In November, we issued green
bonds of EUR 1.35 billion.
Together with the three other German TSOs, TenneT is
responsible for the financial management of the ‘Renewable
Energy Sources Act’ (Erneuerbare Energien-Gesetz (EEG)),
which has a significant impact on TenneT’s cash flow,
although it does not affect our financial performance.
Basedon this law, German end-users pay a levy to finance
the green energy transition in Germany. The EEG levy is
used tosubsidise the EEG feed-in tariffs which are paid to
producers of renewable energy who receive a guaranteed
price for their produced green electricity exceeding the
market price. The EEG levy is determined based on
forecasted renewable energy volumes and electricity prices
for the subsequent year.
To prevent negative EEG balances and the necessity
ofadditional short-term bridge financing, a liquidity buffer
isincluded in the EEG levy. TenneT raised an additional
12-month liquidity financing of EUR 1.5 billion and
uncommitted financing of EUR 0.5 billion in 2020 at
verylowinterest rates, to cover significant unforeseen
variations in renewable energy volumes and wholesale
electricity prices.
As a result of the Climate Programme 2030 (‘Klimaschutz-
programm 2030’) the four German TSOs will receive
EUR10.8 billion from the German government to finance
the EEG in 2021. TenneT will receive 32% of this amount
inthree instalments (January 2021: EUR 1,632 million,
May2021: EUR 960 million and October 2021: 864 million)
and will use the payments to finance payments made
torenewable energy producers.
During 2020, our A- credit rating from Standard & Poors
and our A3 rating from Moody’s were reaffirmed – which
underpins our ability to secure financing for the future.
Wealso saw an improvement in our Environmental, Social
and Governance (ESG) evaluations from external rating
agencies. For example, Sustainalytics ranked us in the
‘low risk’ category and among the frontrunners in our sector.
Meanwhile, our ISS / Oekom rating remained at level B.
In 2020 a declaration of intent between the Dutch and
German governments was signed and published to stress
the mutual energy policy interests. The declaration includes
arrangements to expand collaboration on energy between
the two countries and to explore a possible participation by
the German state in TenneT with additional equity capital.
EUR million
14 -31
-97
796
768
-58
4
39
753
2020 2019
Underlying EBIT group
Special items capex reimbursement
Special items opex performance
Special items energy & capacity and other items
Adjusted underlying EBIT group
Underlying EBIT group*
910
2020 at
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2020
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Maintain a regulatory framework to support our
financial strategy
A forthcoming financial challenge could be a possible policy
change in Germany concerning redispatch costs. These
cover the system operations measures we need to take
tomanage congestion on our grid. Traditionally, TSOs are
compensated for these grid stabilisation measures, but
aproposed policy change in Germany calls for this
compensation to be capped. We consider this proposed
policy change to be suboptimal, since redispatch costs
inevitably increase as renewable energy generation is
prioritised and more volatile renewable energy is fed into
thegrid. As a result, redispatch is a temporary and
inevitable cost of driving the energy transition. In 2020
gridstability measures, such as redispatch costs,
reachedEUR 257 million inGermany, compared to
EUR264 million in 2019.
A further financial challenge stems from mid-2019, when
TenneT’s efficiency scores were updated by CEER’s TCB18
European Efficiency Benchmarking. TenneT’s efficiency
score in the Netherlands dropped significantly. It is expected
this will have a significant short-term impact on our
revenues. Since the general and specific reports did not
provide sufficient insights, a shadow benchmark has been
performed, showing large differences between the two
benchmarks. How the results of the shadow benchmark
willbe reflected in the method decisions will become clear
in the next months.
The nature of our business and the scale of the energy
challenge requires us to think 30 or more years aheadto
assess how we need to invest today and tomorrow.
Ourinvestments in electricity infrastructure have a long-term
character. The technical and regulatory life time of investments
can range from 20-50 years. Therefore these investments
need to be supported by a regulatory framework with a
long-term focus. While regulatory periods are typically only
established for a period of 3-5 years the underlying
methodologies are providing a stable long-term regulatory
framework in both the Netherlands and Germany. This
relates to the recognition of investments in the Regulatory
Asset Base (RAB), methods used to determine the cost of
capital, and the fact that TSOs do not incur a volume risk.
This stability is needed and recognised by investors
andserves as a prerequisite for being able to finance
theincreased level of investments. The stability also
hasbenefitsfor our customers as it reduces risk and
consequently leads to lower tariffs as investments
canbefinanced very efficiently.
What could prevent us from realising our goals?
In order to fund our investment portfolio and raise the
required financing, TenneT needs to secure an appropriate
credit rating by attracting sufficient additional equity.
Assuch, we work closely together with the Dutch Ministry
of Finance on alternative solutions for equity financing.
Our revenues are predominantly dependent on the
regulatory frameworks in the Netherlands and Germany.
Thegrowing concern about the increasing cost of energy
isputting more pressure on the reimbursement systems.
Adverse changes in any of the regulatory systems might
impact our financial performance.
The regulatory reimbursement schedules (revenue cap)
inboth the Netherlands and Germany aim to allow
TenneTto recover the efficiently incurred costs including
amarket based return. The regulatory methods underlying
the revenue cap are typically established for a period of
3-5years. The main risks for TenneT are that market returns
arecontinuously decreasing as a result of the low interest
environment on the capital markets and that it is increasingly
difficult to accurately forecast efficiently incurred expenses
for future periods as the past no longer reflects the future
due to the significant developments in the electricity market.
Both developments could lead to significant deviations
between the allowed revenue in a given year of the
regulatory period and the actual costs needed to run the
business. Although this risk is partially mitigated by the fact
that TenneT receives additional income on top of the
revenue cap for specific investments it remains an area of
debate between TenneT, Regulators and Market Parties.
This risk and the resulting regulation is also a very
importantfactor in financing investments as credit rating
methodologies assign significant weight on their assessment
of the regulatory regime. As such TenneT strives for
reasonable regulatory solutions that treat TSOs and
customers fairly and thus provide a fair long term solution
for both parties. This also supports the credit rating and
leads to efficient costs of capital which is also in the interest
of our customers.
Investments in green businesses and economies are
increasingly favoured by large investors and banks. To date,
this has resulted in a relatively high attractiveness to provide
debt and equity to TenneT’s infrastructure projects. However,
this could be diminished by lower regulatory rates of return
on capital as determined by the national regulatory
authorities.
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Manon Leijten
Board member of the Dutch Authority for
Consumers & Markets (ACM)
“ We want to ensure that
there is room for sustainable
innovation and initiatives
within the legal possibilities.”
Secure a solid financial performance
and investor rating
Contributing to a successful energy
transition
As a society we are faced with the major and com-
plex task of drastically reducing the consumption
of fossil fuels to limit C0
2
emissions. TenneT has an
important role in this. The ACM wants to play its
part in promoting the energy transition and removing
obstacles wherever possible. We want to ensure that
there is room for sustainable innovation and initiatives
within the legal possibilities. Reducing congestion
is important in this. The ACM is contributing by, for
example, ensuring that network operators have a
well-supported investment plan and that they actively
implement congestion management. It is of great
importance to the ACM that the energy transition is
affordable and safe and that customers can count on
a reliable energy supply, now as well as in the long
term.
With TenneT and other players in the energy market,
we are working, each from our own position and
role, to promote the public interests of sustainability,
affordability, and security of supply. Together, we are
contributing to the success of the energy transition.
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Solve societal challenges with stakeholders
andthrough partnerships
At TenneT, we want to connect everyone with a brighter energy future. To do this, we aim
todrive the energy transition, enabling the shift to renewable, fossil-free power. Ambitious
climate targets require a social, political, economic and technical evolution, driven by
collaboration and collective thought leadership. The challenge is too big for any player
totackle alone.
That is why we use the power of strategic partnerships to
drive scalable solutions in fields like flexibility, integration of
renewables (offshore wind and solar) and digitalisation. And
because the energy transition requires a host of new skills
and technologies, we are broadening our partnerships in
new sectors, such as data, automotive and green hydrogen,
and scaling up from pilots to full projects. This way, we trust
to find the solutions we need for a green energy future.
Wedon’t only draw on the power of partnerships to meet
technological challenges – other forms of collaboration also
help us meet our strategic goals to safeguard our financial
health and energise our people and organisation.
A representative sample of our collaborative efforts
isprovided below.
Our performance in 2020
Partnerships to drive the energy transition
Our aspiration is to drive, not just facilitate the energy
transition. To do this, we aim to work with other ambitious
players to find ways to transition to a low-carbon economy.
To this effect, we are working on large-scale offshore wind
integration, ways to reduce our environmental footprint
anddesign the energy system of the future.
Scaling up offshore wind power: North Sea Wind
Power Hub
An accelerated deployment of large-scale offshore wind
hubs in the North Sea is expected to play an important role
in achieving the Paris climate targets and establishing the
North Sea as Europe’s renewable energy ‘power house’
ofthe future. Our collaboration on the North Sea Wind
Power Hub project exemplifies this vision. This partnership
consists of Gasunie, Energinet and TenneT (and the Port
ofRotterdam as a strategic partner). The project entails
theevaluation and development of concepts for an
internationally coordinated roll out of ‘hub-and-spoke’
power hubs in the North Sea. These will connect onshore
energy markets with offshore wind power and use smart
solutions to integrate wind-powered electricity into the
onshore energy grid, including power to gas technology.
Building model solutions for the future: SINTEG
TenneT is a partner in the Smart Energy Showcases – Digital
Agenda for the Energy Transition (SINTEG). This involves the
creation of large-scale showcase regions that can be used
to develop and demonstrate model solutions for a secure,
efficient, and environmentally compatible energy supply.
Theprogramme is focused on building smart networks,
linking energy supply and demand, and on innovative grid
technology and operating strategies. It addresses key
challenges of the energy transition, including the integration
of renewables into the system, flexibility, digitisation, system
security, energy efficiency and the establishment of smart
energy systems and market structures. The project makes
an important contribution to the digital transformation of
energy supply and the overall energy transition.
Solutions for integrating North Sea wind power:
NSON II
TenneT, together with project partners Fraunhofer IEE,
Leibniz University Hanover and University of Kassel, has
been invited by the German Federal Ministry of Economic
Affairs and Energy (BMWi) to participate in this research
project, which explores the cost efficient and international
integrated connection of offshore wind energy in the North
Sea. TenneT’s main input is in system and grid control and
optimised (grid-) planning and operation of offshore
systems.
Advancing HVDC Offshore Transmission Networks:
PROMOTioN Offshore
TenneT is a key player in this leading European research
programme that aimed for an offshore grid development
plan, which was concluded in the end of 2020.
Theprogramme aims to develop meshed HVDC offshore
grids, based on cost-effective and reliable technological
innovation in combination with a sound political, financial
and legal regulatory framework.
Finding cleaner alternatives for SF
6
gas
As we want to minimise the emission of greenhouse gases
from our operations, we are implementing pilot projects to
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investigate alternatives to this highly-pollutive SF
6
as an
isolating and switching gas in our technical installations.
This includes collaborations with Siemens and GE with
whom we are testing the use of different gas mixtures in the
field, such as Fluornitrile andFluorketone and natural gases.
Work in this area was further boosted this year with an
order placed for a 145 kV Gas Insulated Switchgear for
BorWin5, replacing SF
6
with an alternative gas.
Harnessing the power of hydrogen: Element Eins
TenneT is working with Gasunie and Thyssengas to develop
solutions using the gas network to distribute and store
electrolysed hydrogen as a flexible energy source. The
partners are working on a pilot project called Element Eins.
This involves the construction of a power-to-gas installation
with a capacity of 100 MW in Lower Saxony, Germany,
which is expected to come into operation gradually from
2022 onwards. By bringing electricity and gas together
inthis way, we can create an integrated energy system,
capable of serving our needs in a green energy future.
TheGerman federal government has selected the project
asone of 20 ‘living laboratories of the energy transition’ for
a government grant, reflecting its strategic importance.
MVO Nederland and Groene Netten
TenneT is a member of MVO Nederland, a Dutch network of
entrepreneurial businesses aiming to build a climate-neutral,
inclusive and circular economy with fair supply chains. We
are also part of a coalitioncalled the Groene Netten, which
is supported by MVO Nederland. Here we are working with
companies that manage other critical infrastructure in the
Netherlands, such as roads, rail, telecom, gas and electricity
infrastructure. We work together on themes such as
circularity and biodiversity. For more information on this,
please refer to the chapter ‘Create value to transition to
alow carbon economy.
Unlocking flexibility in the grid with crowd balancing:
Equigy
Feeding volatile wind and solar power into the electricity
system creates a complex challenge: keeping the grid
balanced, while ensuring security of supply. Traditionally,
TSOs have used fossil-fuelled power plants to provide the
flexible power needed to keep the grid balanced. Now, they
are looking for renewable sources of flexibility. One
innovative solution is to access energy stored in privately
owned decentralised energy sources, like electric vehicles,
home batteries and heat pumps. To harness the flexibility
offered by these storage devices, TenneT has teamed up
with other TSOs in Italy and Switzerland to create a
European crowd-balancing joint-venture, called Equigy.
Theplatform uses blockchain technology to register and
validate a multitude of transactions with owners of
distributed energy sources. It gives TSOs visibility of the
flexible capacity offered by home-storage devices and
allows them to manage the transactions securely. So far,
Equigy has been launched in the Netherlands, Germany,
Italy, and Switzerland, but it is a platform designed to
accommodate a bigger scale. The plan is for it to
progressively roll out in other European countries and
discussions with other TSOs and partners (manufacturers
ofelectric appliances and aggregators) are ongoing.
Formore information on Equigy: www.equigy.com.
Partnerships to secure supply, today
andtomorrow
In a fast-changing energy landscape, we understand that
the way we secure supply today might not be the same
tosecure supply tomorrow. Innovative solutions and
partnerships will be crucial to this, not just to build more
assets, but also to make smarter use of our grid. We are
involved in multiple collaborative initiatives to increase grid
utilisation through new technologies and data solutions.
Optimising system operations for the energy
transition: InnoSys 2030
In InnoSys 2030, TenneT is working with partners to find
new solutions to help shape the future energy landscape.
This programme was initiated by the German government
and the four German TSOs to find innovative solutions to
boost grid flexibility and automation, thereby allowing
existing grid networks to handle greater capacity while
ensuring security of supply and preventing system failure.
InnoSys aims to design future-proof electricity systems,
optimised for the complexities of renewable energy in the
years ahead.
Working together with other European TSOs
inENTSO-E
TenneT works together with other TSOs in the European
Network of Transmission System Operators for Electricity
(ENTSO-E). This is a collaboration of 42 TSOs from
35countries working together in key areas including
establishing technical and market-related network codes,
coordinating plans to develop European infrastructure and
promoting technical cooperation between TSOs. As a
member of ENTSO-E, TenneT is helping to build a more
integrated European electricity market, contributing to
asustainable energy landscape, and ensuring electricity
inEurope is affordable, sustainable and secure.
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Developing the energy grid of the future: Kopernikus
project ENSURE
TenneT is a key partner in the Kopernikus project ENSURE
in which scientists, industrial companies and civil society
organisations are developing the energy grid of the future.
The Kopernikus projects are among the largest research
initiatives in Germany in the field of the energy transition.
Their aim is to make it possible for Germany to be climate-
neutral by 2050. Power-to-X technologies play a key role in
this, as they can transform electricity into other forms of
energy, for example fuels (Power-to-Fuel), gases (Power-to-
Gas), and heat (Power-to-Heat). In this way, electricity will
become a raw material for gas, heating and transport.
Another challenge is to re-design the electricity grid so it
can cater for volatile in-feeds from renewable energy
sources. A re-designed power grid is an essential
requirement for a successful energy transition. The ENSURE
project develops potential concepts for such a grid and
theroute to its realisation.
Partnerships to energise our people and
organisation
Partnerships for Refugee Talent
We are hiring refugee talent in the Netherlands and
Germany providing apprenticeships and vocational training
to them. To find qualified refugee talents in the Netherlands,
we partnered up with the Refugee Talent Hub and TENT
Partnership – both initiatives linking refugee talent and
employers, with paid employment as the goal. The Refugee
Talent Hub and TENT Partnership provide a network,
bringing affiliated employers into contact with job-seeking
newcomers through small-scale, customised meet & greet
meetings. In 2019 / 20 TenneT Netherlands gave
7newcomers work opportunities, with 2 finding permanent
employment with TenneT in 2020. TenneT Netherlands
provided a learning path (‘opleidingstraject’) for these
7refugee talents to learn more about the company and
gaininsights into the working culture in the Netherlands.
Inaddition to this learning path for newcomers, their leaders
and teams have been coached to be more inclusive and
understand the cultural background of refugee talent.
Cooperation with educational institutes
Sharing expertise and insights with educational institutes
plays an important part in building knowledge for our sector
and also educating the new generation of technical talent.
Inthe Netherlands we collaborate with Netbeheer
Nederland in the MBO-Covenant Klimaattechniek. This is a
collaboration between the educational sector, government
and grid operators and includes agreements to create more
training positions and job guarantees for technical MBO
students.By creating more opportunities for technical
talent,we hope to alleviate the skills shortage in the energy
sector. TenneT is further tapping into talent of the future via
the Integrated High-Voltage Laboratory at TU Delft. Through
this, TenneT can gain insight into the latest knowledge and
research undertaken by Masters and PhD students.
Partnerships to safeguard our financial health
Our cooperation with co-investors
To finance the expansion of offshore grid connections,
TenneT cooperates with external co-investors such as
Copenhagen Infrastructure Partners (CIP) and Chubu
Electric Power. Via separate legal entities the co-investors
contribute equity and receive economic participation rights
in return. Their contribution helps to ensure adequate
financial ratios. Furthermore their participation strengthens
TenneT’s interest in a reliable and stable regulatory
framework as reasonable co-investors interests are
communicated towards policy makers and regulators.
Raise the necessary funding: TenneT’s house banks
Without a solid financial position, TenneT would be unable
to achieve its strategic goals and fulfil its role in the energy
transition. Our financial stability is built on our good
relationship with our shareholder, the Dutch state, and
through close contacts with the banks participating in
TenneT’s Revolving Credit Facility (RCF).
ABN AMRO, BNG, BNP Paribas, Commerzbank,
DeutscheBank, HSBC, ING, Lloyds, Rabobank, NatWest
and SMBC are participating in our current sustainable RCF
of EUR3.3billion. The majority of these house banks also
participated in TenneT’s 2009 RCF, showing our
commitment to long-term relationships.
With the support of our house banks we issue the
necessary debt to finance our projects and have become
one of the largest corporate issuers of sustainable, green
debt financing in Europe. In 2020, TenneT issued with the
support of its banking partners EUR 2.35 billionof Green
(Hybrid) Bonds. Through this partnership, we are able to
secure a solid financing and ensure that we can drive the
energy transition in a more affordable way.
What could prevent us from realising our goals?
To be able to drive the energy transition and lead as a green
grid operator, it is important to create societal acceptance
of the energy transition. Lack of acceptance could lead
tothe inability to fulfil our ambitions and delay the transition
to a low-carbon economy.
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Societal acceptance of our infrastructure remains important.
TenneT’s construction and operation of substations,
underground cables and transmission lines, and investments
in sustainable energy solutions may affect a large number of
people and interests. Because grid expansion projects take
years to develop and cost billions of euros, the impact of
project delays, difficulties or shutdowns may be significant.
The expansion of our high-voltage electricity grid may
significantly alter landscapes in a way that can affect the
livelihood of surrounding residents. The debate with respect
to potential health risks related to our overhead transmission
lines and magnetic fields is ongoing. As TenneT, our aim
isto comply with rules and regulations and take sufficient
caution in the construction and operation of our assets.
We are also currently working together with the respective
authorities and other involved stakeholders to include their
views as we are in the process of updating our policy with
respect to magnetic fields.
In our view, forming long-term partnerships within and
outside the TSO work field is an opportunity to drive the
energy transition. Initiatives like integration of energy
system, crowd balancing and big data need strong
partnerships between several industries and local and
national governments.
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2020
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“ We are moving from
analogue to digital
legislation.”
Solving societal challenges with
stakeholders and through partnerships
Equigy sees Europe move from analogue
to digital energy legislation
Launched by a consortium of leading national
TSOs – TenneT, Swissgrid and Terna – Equigy is one
of the most innovative initiatives to help drive the
energy transition in Europe. The blockchain-based
platform allows TSOs to access electricity stored in
small and distributed consumer-based units, such
as electric vehicles and domestic heat pumps. This
source offlexibility can be used to keep the grid in
balance, offsetting intermittent in-flows of power from
renewable energy sources.
Christopher Jones was involved from the start of the
Equigy project to help assess what legal adjustments
are needed at a European level to link batteries for
crowd balancing. “Although it is of course extremely
complex, technically, and legislatively, it is definitely
doable. It is a matter of selectively adjusting some of
our European energy regulations – which were after
all drafted 20 years ago – for an entirely different
system. We are moving from analogue to digital
legislation.”
Professor Jones says Equigy has a crucial role in
achieving Europe’s Green Deal Targets. “Equigy is
areal game-changer and really puts the EU ahead.
Itis cost-effective, offers standardisation and has
great potential for scale-up. It could play a crucial
role in achieving our Green Deal Targets.”
Christopher Jones
Part-time professor of Energy Law, EUI and
former Deputy Director-General for Energy
at the European Commission
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Statements of the Executive Board
The Executive Board is responsible for designing and operating TenneT’s risk management
and internal control system, and for reviewing its effectiveness.
In control statement
The Executive Board is responsible for designing and
operating TenneT’s risk management and internal control
system, and for reviewing its effectiveness.
The risk management and internal control system consists
of the following elements:
• The enterprise risk management system aimed to
identify, analyse, define mitigating measures and monitor
the development of risks relevant to TenneT;
• The internal control framework aimed to manage and
control critical processes, including control self-
assessments to document the effectiveness of control
processes;
• Business plans and quarterly reports with information
onfinancial and non-financial objectives and their
achievement;
• Internal audits of key processes andfollow-up to audit
findings with relevant management;
• Actions based on recommendations made in the external
auditor’s management letter;
• An upwardly cascading internal Letter of Representation
(LOR) process, resulting in a company-wide LOR signed
by the Executive Board;
• A compliance management system that enables TenneT
to demonstrate itscompliance with relevant laws-
andregulations, industry codes and standards, as well
as its commitment to good corporate governance,
bestpractices, ethics and stakeholder expectations.
The Executive Board periodically reviews and analyses the
strategic, operational, financial and compliance risks to
which TenneT is exposed. It also regularly assesses the
design and effectiveness of the risk management and
internal control system. The results of these assessments
are shared with the Audit, Risk & Compliance Committee,
acting as a committee of Supervisory Board, the
Supervisory Board itself and the external auditor.
The risk management and internal control system does
notprovide absolute assurance that all corporate objectives
will be fully achieved, nor does it give full assurance that
material errors, losses, fraud or violations of laws and
regulations will not occur in the operational processes and/
or the financial reporting.
Taking the above into account, the Executive Board is
oftheopinion that TenneT’s risk management and internal
control system provides reasonable assurance that
TenneT’s financial reporting does not contain any errors of
material significance and that the risk management and
internal control system has operated effectively in the year
under review.
Statement of responsibility
We confirm that, to the best of our knowledge, the financial
statements for the period 1 January to 31 December2020
have been prepared in accordance with IFRS, as adopted
by the EU, and with Part 9, Book 2 of the Dutch Civil Code;
that the disclosures in the financial statements are a true
and fair view of TenneT’s assets, liabilities, financial position
and results as a whole; and that the disclosures in the
annual report give a true and fair review of TenneT’s financial
performance, results and position, together with a
description of the most significant risks and uncertainties
the company faces. Furthermore,we confirm that to the
best of our knowled ge, the Group has adequate resources
to remain in operation during the next 12 months and
consequently the financial statements have been prepared
on a going concern basis.
Arnhem, 8 March 2021
M.J.J. van Beek
O. Jager
T.C. Meyerjürgens
M.C. Abbenhuis
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
57
Integrated Annual Report 2020 - TenneT Holding B.V.
Our Executive Board
M.J.J. (Manon)
van Beek
Chair Executive Board /
ChiefExecutive Officer
50, Dutch (f)
Initial appointment:
1 September 2018
End of first term:
31 August 2022
Other positions
qualitate qua:
• Chair Aufsichtsrat
TenneT TSO GmbH
• Member Board TenneT
Verwaltungs GmbH
Other positions:
• Chair Supervisory Board
Kanker.nl Foundation
• Chair Board Giving
BackFoundation
• Chair Board Refugee
Talent Hub Foundation
• Member of Advisory
Board Top Woman of
theYear Foundation
(until 1 November 2020)
• General Member Board of
German-Dutch Chamber
of Commerce DNHK
• Council of the Thinktank
Agora Energiewende
• Chair of the Roundtable
for Europe’s Energy
Future (REEF)
O. (Otto)
Jager
Member of the Executive
Board / ChiefFinancial
Officer
51, Dutch (m)
Initial appointment:
1 August 2013
Second appointment:
1 August 2017
End of second
appointment:
31 July 2021
Other positions
qualitate qua:
• Member Board
TenneT TSO B.V.
• Member Board
TenneT TSO GmbH
Other positions:
• Chair Advisory Council of
the New CFO Executive
Program, Erasmus
University Rotterdam
T.C. (Tim)
Meyerjürgens
Member of the Executive
Board / ChiefOperating
Officer
45, German (m)
Initial appointment:
1 March 2019
End of first appointment:
29 February 2024
Other positions
qualitate qua:
• Member Board
TenneT TSO B.V.
• Member Board
TenneT TSO GmbH
• Member Board TenneT
Verwaltungs GmbH
• Member Board TenneT
Offshore GmbH
Other positions:
• Member Executive Board
WAB (Wind Energy
Association Bremerhaven)
• Member Advisory Board
Offshore Wind Energy MBA
• Member Board of
Trustees German Offshore
Wind Energy Foundation
• Member Advisory Board
Federal Association of
Wind Farms Offshore
• Member Board
ofDirectors FGH
(Forschungsgemeinschaft
für Elektrische Anlagen
und Stromwirtschaft e. V.)
• Board of Trustees FGE
(Forschungsgesellschaft
Energie e. V.)
• Member of the German
National Committee
ofCIGRE
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
58
Integrated Annual Report 2020 - TenneT Holding B.V.
M.C. (Maarten)
Abbenhuis
Member Executive Board /
Chief Operating Office
47, Dutch (m)
Initial appointment:
1 January 2021
End of appointment:
31 December 2024
Other positions
qualitate qua:
• Member Board
TenneT TSO B.V.
• Member Board
TenneT TSO GmbH
Other positions:
• Formal representative
Vereniging Nederlandse
EnergieData Uitwisseling
(NEDU)
• Member Board
Netbeheer Nederland
(as of 14 January 2021)
• Member Cooperation
Board TSCNET
Services GmbH
(as of 1 January 2021)
B.G.M. (Ben)
Voorhorst
Member of the Executive
Board / ChiefOperating
Officer
61, Dutch (m)
Initial appointment:
1 December 2007
Reappointment:
1 December 2019
End of appointment:
31 December 2020
Other positions
qualitate qua:
• Member Board
TenneT TSO B.V.
• Member Board
TenneT TSO GmbH
Other positions:
• Member Board
Netbeheer Nederland
(Until 31 December 2020)
• Member Cooperation
Board TSCNET
Services GmbH
(Until 13 January 2021)
• Member Supervisory
Board ETPA
• Member Standing
Committee on European
Integration of the Advisory
Board on International
Issues
• Member Supervisory
Board Energiefonds
Overijssel B.V.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
59
Integrated Annual Report 2020 - TenneT Holding B.V.
Supervisory
Board Report
The Supervisory Board (SB) supervises the overall management of TenneT by the
ExecutiveBoard (EB) and advises the EB on its strategy and policies. In 2020, TenneT
re-organised itsorganisation for growth to provide a solid foundation to carry out its strategy.
The SB is delighted to see a new Senior Leadership Team (SLT) underneath the EB consisting
of onethird female leaders, as well as an equal split between German and Dutch leaders.
TenneT’s ambition to be a leader in the European Energy Transition is changing the dynamics
for TenneT and its stakeholders. At the same time, TenneT has managed to ensure an
extremely high level of electricity grid reliability. Furthermore, TenneT needed, and will need,
tosecure sufficient funding for its enormous investment portfolio. This report describes
thecontribution of the SB to achieve all this.
Safety and security of supply
Safety is one of the main points of attention for the SB and
is a topic that is close to the hearts of its members. Sadly,
two fatal incidents occurred in 2020, during the course of
construction work being performed for TenneT. The SB
callsupon and challenges the TenneT organisation to do
itsutmost to prevent such incidents from happening.
Safetytothe SB means being intrinsically motivated to
keepeach other (both colleagues and third parties) safe
andfree from harm and to speak up if that should be at risk.
The SB closely monitors TenneT’s performance in the
field of safety – as well as that of its contractors. This is
discussed in every SB meeting, where lessons learned are
shared extensively. Where TenneT is currently at level 3
ofthe Safety Culture Ladder, TenneT aims for level 4 in
thenear future. The SB advises and challenges the EB
andthe SLT to work towards continuous improvement,
through an interactive Permanent Education Session on
safety, amongst other things. The SB were very pleased
tosee that a safety leadership programme is being set up
within TenneT throughout the whole organisation. The SB
would like to see safety leadership throughout the whole
chain of producers, contractors, and service providers that
TenneT works with and helps the EB and SLT to try and
achieve this. TenneT is working on improving Safety by
Design, to which the SB has lent its support. The SB was
also pleased with the workshop that was organised within
the SLT on psychological safety.
Furthermore, the COVID-19 pandemic has been shedding
new light on safety and security of supply. This was also a
recurring topic for the SB during its meetings throughout the
year. Next to developments in COVID-19 employee cases,
risks pursuant thereto and associated mitigation measures,
the SB closely monitored business continuity. For TenneT
employees affected by the pandemic, telephone helplines
were set up. Where the longer-term effects of COVID-19
may only become manifest in 2021 or later, TenneT has
taken extensive measures in the fields of grid operation,
on- and offshore construction, maintenance and
preservation, and in the office to deal with immediate and
longer terms risks and opportunities. Fortunately, TenneT
has proved to be resilient: to date, COVID-19 has only had
a limited effect on the day-to-day business of TenneT.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
60
Integrated Annual Report 2020 - TenneT Holding B.V.
Security of Supply
TenneT’s grid performance, both onshore and offshore,
waswell on target. TenneT has started the ‘Delivery
Capability Expansion (DiCE)’ program to enable TenneT
todouble its output capacity for maintenance, replacement,
and grid expansion projects by 2023 in various ways.
Thisproject was discussed in-depth with the SB, leading
tovaluable insights and sharing of best practices.
Other main topics of attention
Sharpened strategy
TenneT’s sharpened strategy is based on four pillars: (i)
energise people and organisation, (ii) secure supply today
and tomorrow, (iii) drive the energy transition and (iv)
safeguard financial health.
In November 2020, the SB and the EB participated in the
annual strategy session. Progress in respect of the sharpened
strategy was discussed, and the following concrete
initiatives of the strategy in action were highlighted:
• Delivery Booster: a bottom-up method to unlock
substantial value from our resources. The SB was very
pleased with the new planning app, which helps reduce
maintenance work to free up resources and avoids
double training modules for critical functions. This allows
for a shorter training period and as such earlier availability
of these people.
• Grid booster: creating two separate energy storage
devices, one to be installed in the north and one in the
south of the main grid congestions in Germany. These
will act as a source and sink of a “virtual power line”
incase of emergency.
• Attention has also been paid to ‘being a green grid
operator’, amongst others where successful
sustainability results in offshore tenders for the windfarm
connections have been presented to the SB.
Financing
TenneT’s future equity financing, needed to drive the energy
transition, has been a very important topic for the SB. The
SB welcomed the successful issuance of EUR 1 billion of
green hybrid bonds in July 2020, as well as the successful
issuance of EUR 1.35 billion of green senior bonds in
November 2020.
The SB is closely monitoring and providing advice in respect
of further equity financing and the negotiations that TenneT
is engaged in with the German State regarding a possible
participation of the latter in TenneT. These negotiations are
conducted together with the Dutch Ministries of Finance
and of Economic Affairs and Climate.
Further topics that were discussed with the EB and
management were the financing plan, the financing
structure, credit rating, forecasts on cash flow and liquidity
and various debt financing instruments.
Investment portfolio
In 2020, the SB paid significant attention to TenneT’s
increasing investment portfolio. A multitude of project
budget applications and exception reports were approved
for projects that will be carried out on the basis of either
theInvestment Plan (for The Netherlands) or the Grid
Development Plan (the NEP) for Germany. These investments
are planned for a 10-year horizon and beyond.
The Energy Transition and international ambitions to realise
a sharply increasing amount of renewable energy means
that TenneT is requested to carry out a continuously
growing number of projects. This necessitates securing
further resources and integrated and innovative ways
ofcarrying out this portfolio. The SB particularly welcomes
theinitiatives of the EB to enter into cooperation with other
companies, such as Gasunie and Thyssengas, to explore
the role that hydrogen solutions may play in the energy
transition. The SB is engaged in ongoing dialogue on the
strategic, societal and technical issues at stake, taking
account of where potential legal and regulatory bottlenecks
may occur and how to address these.
Maintenance and renewal efforts
Besides carrying out all investments necessary for the
energy transition, TenneT also ensures a grid performance
of nearly 100%. Keeping an electricity grid in operation
secure to this high standard requires careful consideration
of the timing and location of maintenance and renewal
projects. The SB has taken careful note of the initiatives
embarked upon by the organisation to free up critical
resources for maintenance work earlier, for instance by
eliminating superfluous training modules for supervising
personnel. Maintenance and replacement projects may
alsobe combined in a smart way to minimise planned
gridoutages.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
61
Integrated Annual Report 2020 - TenneT Holding B.V.
HR Topics
On 1 July 2020, TenneT’s changed organisation structure
became a fact. The SB welcomed the streamlined design
and the diverse, second-layer senior leadership team.
Inearly 2020, the EB’s remuneration policy was revised and
may be revised again when a new equity financing solution
is found. The remuneration policy for the SB is still under
consideration by the Shareholder.
The SB also paid close attention to the topic of inclusion
and diversity. The SB challenged the EB on its ambitions in
this field, resulting in 2021 targets for female inflow of new
employees of at least 30% and culturally diverse inflow of
atleast 10%. Furthermore, the SB discussed the mobility
vision and action plan in line with TenneT’s ambition to
become a green grid operator.
2020 - 2021
All in all the SB have been able to strike a good balance
between its various roles as employer, supervisor and
sparring partner for the EB. This will be continued in 2021
with a focus on the equity financing solution, on the
investment portfolio and on TenneT’s renewed organisation.
With all topics at play within the Netherlands, Germany and
above all to drive the European Energy Transition, the SB
was pleased to see that TenneT’ unitary governance proved
successful in 2020, just like in the years before. This
facilitates a really (pro)active contribution to the system
integration of Europe, of offshore and onshore and
ofelectrons and molecules).
Composition of the Executive Board
The SB took a close look (with input from the EB) at the
ideal (future) composition of the EB, also in view of the
stepping down of COO Ben Voorhorst as statutory director
as of 1 January 2021. The job profile for a new COO was
determined in consultation with the relevant stakeholders,
and a careful recruitment and selection procedure ensued.
The SB is delighted that this has resulted in an internal
candidate, Maarten Abbenhuis, taking over the role.
Mr.Abbenhuis knows the organisation inside-out and is
fullycommitted to realising the European energy transition,
sustainably and safely. The SB is grateful for and would like
to thank Mr. Voorhorst for his long and visionary leadership,
helping TenneT become a leading TSO in Northwest Europe
and a driving force behind the energy transition during his
25-year tenure.
Composition of the Supervisory Board
The appointment term of Pieter Verboom expired in
September 2020, and that of Rien Zwitserloot in November
2020. They will not be replaced, as contemporaneously with
the recruitment in 2019 of three new SB members, the SB
had decided to carry on with five members. Of the five SB
members, three are female, which makes percentage of
female representatives on TenneT’s SB is currently well
above 30%. Furthermore, the whole SB represents various
European nationalities. All SB members have extensive
experience in the Netherlands, Germany and Europe and
assuch reflects the international character of the TenneT
asa TSO.
To safeguard a high level of engagement for TenneT and
avoid potential conflicts of interest, external positions of the
members of the SB and the EB are discussed annually.
The composition of the SB complies with the Electricity Act,
which stipulates that the majority of its members have no
direct or indirect links to legal entities (or shareholders
thereof) engaged in the production, purchase or supply
ofelectricity or gas. It was noted that Essimari Kairisto
isalso a member of the SB of, and chairs the Audit & Risk
Committee, of Fortum Oyj. It was concluded that this
rolecurrently does not result in a conflict of interest.
For more information on members of the SB as well as
onthe (re)appointment schedule, please visit our website.
SB meetings
Ten SB meetings took place in 2020, with [94%] of
SB-members present at the -mostly virtual- meetings.
Inaddition, nine SB meetings were organised apart from
theregular meeting schedule, mostly on the topic of the
possible participation of the German State in TenneT.
Permanent education
Keeping the knowledge of the SB members up to date
onvarious topics is essential. As part of the continuous
permanent education plan, TenneT organised interactive
workshops on black-outs, safety, cyber security and the
European Green Deal. Next to that, SB members joined
various TenneT webinars and events on topics like the
European Offshore and Hydrogen agenda as well as
onintegrated grid planning. One project site-visit of
theShareholder, the SB and the EB to a combined
transformer and switching station (handling 380 kV
and150kV) took place early 2020, just prior to the
COVID-19pandemic. Dueto the pandemic, subsequent
site-visits were cancelled.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
62
Integrated Annual Report 2020 - TenneT Holding B.V.
SB attendance 2020
Supervisory
Board
Audit, Risk
and
Compliance
Committee
Remuneration
and
Appointments
Committee
Strategic
Investments
Committee
A.F. van der Touw (chair) 19/19 4/4 4/4 -
P.M. Verboom
1)
15/16 3/3 - -
R.G.M. Zwitsersloot
2)
18/18 - - 4/4
L.J. Griffith
3)
18/19 - 4/4 -
E. Kairisto
4)
18/19 4/4 - 2/2
A.C.C. van Els
5)
19/19 - 4/4 3/3
E. Schöne
6)
17/19 2/2 - 4/4
Total attendance 96.0% 100.0% 100.0% 100.0%
1
January – September 2020. Mr Verboom’s term ended on September 17
th
, 2020
2
January – November 2020. Mr. Zwitserloot’s term ended on November 23
th
, 2020.
The Chair of the SIC was handed over on May 13
th
, 2020.
Mr Zwitserloot remains member of the Aufsichtsrat of TenneT TSO GmbH.
3
Vice-chair as of September 18
th
, 2020
Mrs Griffith is also member of the Aufsichtsrat of TenneT TSO GmbH.
4
Chair ARCC as of November 24
th
, 2020; Member SIC as of September 18
th
, 2020
5
Chair SIC as of May 13
th
, 2020
6
Member ARCC as of September 18
th
, 2020
Committees
Strategic Investment Committee
The SB’s Strategic Investment Committee (SIC) reviews
investment proposals exceeding EUR 50 million and advises
the SB on such proposals. Nineteen project budget
applications and exception reports were discussed within
the SIC to prepare for these decisions by the SB. Where
necessary, the SIC challenges proposed alternatives for
projects, also looking at the technical, financial and societal
aspects of these projects. The SIC also monitored
timeliness, quality, cost efficiency and risks associated with
large projects, on the basis of the quarterly investment
reports. These quarterly progress reports on large projects
were reviewed and discussed by the SIC and subsequently,
by the SB.
These reports focused on project management, with
specific attention paid to timely delivery, risk of delays and
interruptions, and external requirements that could leadto
delays and/or projects becoming more expensive. In2020,
areas of focus for the SIC continued to be the availability of
material- and human resources and the supplier market,
especially pro-active supplier management. In light thereof,
the SIC also had various dialogues on TenneT’s ‘Delivery
Capability Expansion (DiCE)’ programme.
During 2020, the SIC met five times with both COOs
present (with one exception, where only one COO
attended), one meeting coincided with an SB meeting.
During 2020, the SIC consisted of Rien Zwitserloot (chair
until May 2020 and member of the SIC until November
2020), Edna Schöne, Pieter Verboom (until September
2020), Ms Kairisto and Stijn van Els. Mr Van Els succeeded
Mr Zwitserloot as chair of the SIC formally as of May 2020.
Ms Kairisto joined the SIC ahead of Mr Verboom’s SB
membership term ending.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
63
Integrated Annual Report 2020 - TenneT Holding B.V.
Audit, Risk & Compliance Committee
The SB’s Audit, Risk & Compliance Committee (ARCC),
monitors the company’s financial reporting, including
quarterly and annual reports, financing, risk management
and internal control, internal audit, the independent external
audit of the financial statements and the evaluation of the
external auditor.
In 2020, the ARCC consisted of Pieter Verboom (chair until
September 2020), Essimari Kairisto (chair from September
2020 onwards) and Ab van der Touw. Edna Schöne joined
the ARCC after Mr Verboom’s term ended. The committee
held four meetings attended by the CEO (three meetings),
the CFO (four meetings), the Head of Internal Audit and the
company’s external auditor. For relevant agenda topics, the
(associate) directors for Financial Governance Services and
Business Guidance as well as the Head of Compliance &
Integrity also joined the meetings. The ARCC also spoke
with the external auditor without any EB members present,
as was also the case in previous years. No additional
material topics arose from this meeting. As in previous
years, the CFO had additional one-on-one meetings with
the chair of the ARCC. The Head of Internal Audit also met
with the members of the ARCC separately, among others
todiscuss the Audit Plan for 2021.
Management Letter
Deloitte, TenneT’s new external auditor started its
engagement as of 1 January 2020. The ARCC interacted
with the external auditor and the EB in each ARCC meeting.
Deloitte assessed the overall control environment of TenneT
and reported no significant deficiencies. Key findings
reported by Deloitte in its management letter related
todecommissioning provisions, IT access management
andthe useful life of assets.
Risk management
Individual interviews were conducted with members of the
ARCC as part of the 2020 annual strategic risk assessment.
Accommodating the rapid growth of the investment
portfolio and all resources necessary to achieve that, while
at the same time controlling risks, remains a challenge.
Anoverview of strategic risks is listed in the section
‘Riskmanagement and internal control’.
Compliance and integrity
Compliance and integrity require constant attention.
The SB discussed the quarterly compliance and integrity
reports with both the EB and the Head of Compliance &
Integrity, with a focus on lessons learned from the cases
investigated, as well as strengthening the compliance team
and the compliance management system. The SB
appreciated a workshop on compliance and integrity
organised with the EB and the SLT. The SB also welcomed
the introduction of a new code of conduct, designed around
the principles of ownership, connection and courage, as
well as the launch of a refreshed Speak Up policy (formerly:
Whistleblower policy), to encourage people to speak up
whenever they have compliance or integrity concerns.
Anopen and transparent culture is key to the continued
success of TenneT.
Regulation
In all its supervisory activities, the SB took the regulatory
framework in both the Netherlands and Germany into close
account. The balance between regulatory requirements and
value creation has proven to be delicate, especially as not
every situation is covered by rules or regulations.
Integrated reporting and audit
The SB discussed TenneT’s financial statements for
the2019 financial year, the 2020 internal quarterly reports
andthe 2020 interim results during the year, as well as the
independent auditor’s report, internal audit reports, results
from internal risk and control assessments, the 2021
budget and the Integrated Performance Plan 2021-2023.
Financial statements
The SB examined the Integrated Annual Report 2020,
thefinancial statements 2020 and the independent auditor’s
report, the assurance report of the independent auditor
related to non-financial information, the management letter
and the audit results report issued by TenneT’s external
auditor. This review was based on the ARCC’s preparatory
work and advice. As a result,the SB endorsed the
documents and recommends that the General Meeting
ofShareholders adopt the financial statements. The SB
recommends that the GeneralMeeting of Shareholders
discharges the EB members from liability for its
management of the company and releases the SB
fromliability for its supervision.
Remuneration & Appointments Committee
The SB’s Remuneration & Appointments Committee (RAC),
is tasked with the company’s remuneration policy and the
remuneration of individual board members. The RAC also
establishes criteria for (re)appointing new statutory EB and
SB members and supervises the recruitment process.
Furthermore, it is responsible for management review
andsuccession planning for the EB.
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
64
Integrated Annual Report 2020 - TenneT Holding B.V.
The RAC consists of Laetitia Griffith, Ab van der Touw and
Stijn van Els and met five times, in accordance with the
regular meeting schedule. The meetings were also attended
by the CEO, the CFO and the Director People.
Succession planning
The current and future composition of TenneT’s EB is
ofgreat importance to the SB, which makes succession
planning crucial. As set out under composition of the EB,
this topic was high on the SB’s agenda given the search
fora new COO. Inclusion and diversity remains a very
important topic, particularly in terms of how to achieve a
greater percentage of female leadership in the EB and the
SLT as well as a good balance in terms of nationality and
diversity of thinking. To that effect, the composition of, and
the succession of SLT members and members of the next
management layers was discussed.
Performance Dialogues
Furthermore, the RAC conducted performancedialogues
with the members of the EB that were prepared by the RAC
based on input gathered during a SB meeting not attended
by the EB. As in previous years, during 2020 pairs of SB
members had meetings with each individual EB member
togain more insight into the EB team dynamics as well as
individual performance.Besides assessing the performance
of the EB, the SB also discussed the performance of
TenneT’s wider SLT.
Inclusion and Diversity
Without inclusion (behaviours and social norms that ensure
people feel welcome), diversity (employing a diverse team
ofpeople that reflects the society it serves) cannot exist.
TenneT’s beliefs with regard to inclusion and diversity are
that connecting people of various types and backgrounds
reflect TenneT’s diverse stakeholders in society, that for
growth it is necessary to think more broadly and more
European, and that diversity helps generate better
innovative and financial achievements.
TenneT strives to work with people from diverse
backgrounds and ages, with a range of experience, skills,
and knowledge. In addition, TenneT believes that diversity
contributes to exploring new approaches and outside-the-
box thinking that may contribute to a more efficient way
ofworking. Bearing in mind the Dutch Civil Code and the
Dutch Corporate Governance Code, the SB has set a
gender diversity target of 30% female board members,
bothexecutive and non-executive. Even though the search
for a new COO has not led to increased gender diversity,
the SB strives for TenneT’s EB to become more diverse
inthe coming years. As three out of five SB members
arefemale, the percentage of female representatives on
TenneT’s SB is currently well above 30%. Next to the
executive levels, the SB is pleased with the diversity of
TenneT’s Senior Leadership Team as of 1 July 2020: more
than 30% females, a 50-50% balance between Dutch
andGerman based leaders and a good mix of internal
appointments (16 out of 22) and external hires (6 out of 22).
For the RAC inclusion and diversity will remain a top priority
in 2021 with a focus on gender as well as cultural diversity.
Remuneration
In 2020, the SB reached a temporary agreement with the
Shareholder on the remuneration policy for EB members.
This policy will be applicable for the time being, under the
current shareholder and equity financing structure. The SB
aims to set up a remuneration policy which enables the
company to attract suitable employees on all levels across
Europe. Although the SB’s responsibility does not extend
beyond EB-members, any remuneration policy set for the
EB impacts the entire company. The SB fully recognises
that TenneT is a state-owned company and therefore has
torespect certain limitations on remuneration packages.
Nevertheless, the SB strives for a remuneration policy which
adequately reflects the increasing complexity and size of
thecompany.
Self-evaluation of the SB
The SB evaluated its own performance at the end of 2020.
Several points to ensure better functioning of the SB and
interaction with the EB have been shared and will be taken
into account for 2021 and onwards.
Furthermore, the SB members filled out a capability
matrix,in which each SB member’s knowledge of various
competencies has been listed. To further strengthen the SB
capabilities and stay up-to-date, the SB will include topics
like Regulation, Capital markets and Digitization into the
2021 permanent education calendar.
In 2020, each SB meeting ended with an evaluation of the
meeting. The SB and EB openly shared their reflections on
the quality of – and the interaction in – the dialogues, as well
as the setting of the agenda and the quality of the documents.
They also shared their thoughts on the effectiveness of
online meetings.
2020 at
a glance
Performance
2020
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Capabilities Matrix Supervisory Board
Competencies
A.F. van
der Touw
(chair)
P.M.
Verboom
(vice-chair/
until
17-9-2020)
L.J. Griffith
(vice-chair
from
17-9-2020)
R.G.M.
Zwitserloot
(until
23-11-
2020)
E. Kairisto S. van Els E. Schöne
General management
● ● ● ● ● ● ●
Financial management
● ● ● ● ● ● ●
Capital market/ investor relations
● ● ● ● ● ● ●
Technology
● ● ● ● ● ● ●
IT
● ● ● ● ● ● ●
Risk management
● ● ● ● ● ● ●
Project management (large infrastructure projects)
● ● ● ● ● ● ●
Human resources
● ● ● ● ● ● ●
Marketing/Public Affairs/ Brand image
● ● ● ● ● ● ●
Regulation
● ● ● ● ● ● ●
Public sector/State owned companies
● ● ● ● ● ● ●
Political/managerial experience and network the Netherlands
● ● ● ● ● ● ●
Political/managerial experience and network Germany
● ● ● ● ● ● ●
International background/experience
● ● ● ● ● ● ●
Legal
● ● ● ● ● ● ●
Experience in energy-, industrial and/or financial sector
● ● ● ● ● ● ●
Knowledge of Dutch Corporate Governance Code
● ● ● ● ● ● ●
Corporate Social Responsibility
● ● ● ● ● ● ●
● = H● = M● = L
Contact with the works councils
Laetitia Griffith and Stijn van Els, both appointed SB
members on the nomination by the Dutch Works Council,
regularly met with members of the Dutch Works Council.
Asin previous years, other SB members also met with the
Dutch Works Council to exchange information on what is
atstake in both committees. Through their membership of
theAufsichtsrat of TenneT TSO GmbH, both Laetitia Griffith
andRien Zwitserloot were also in close contact with the
representatives of the German Works Council in the
Aufsichtsrat. The SB highly values frequent contact with
employee representatives to maintain a good understanding
of topics that are relevant to TenneT’s employees.
The SB welcomed the joint session held in November with
the Dutch Works Council and the EB on Corporate Social
Responsibility, as it proved to be a good opportunity to
share ideas about recruiting and mobility.
Company Secretary
The SB welcomed Ancella Anssems as new company
secretary as per 1 January 2020 and thanks her for her
unwavering support throughout the year.
Closing words
In 2020, TenneT once again performed very well, especially
taking the COVID-19 pandemic into consideration. This
success is due to the hard work, dedication, and loyalty
ofall TenneT employees, for which SB would like to thank
everyone warmly.
The SB advised and supervised the performance of the EB
during 2020, helping to ensure that TenneT continues to
connect everyone with a brighter energy future. We look
forward to continuing our work in 2021.
2020 at
a glance
Performance
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Remuneration policy
TenneT’s remuneration policy primarily aims to offer remuneration at a level that will
attractand retain qualified and capable statutory directors (including those from within the
organisation). The remuneration policy meets the best-practice provisions on remuneration
defined in the Dutch Corporate Governance Code. Since all of the shares in TenneT are held
by the State of the Netherlands, TenneT’s remuneration policy falls within the scope of
the2013 state participations policy (‘Nota Deelnemingenbeleid Rijksoverheid 2013’).
TenneT’s revised remuneration policy has been approved
bythe Shareholder and is effective asof January 2020.
Themost important elements of the current remuneration
policy are described below.
Employment market reference group
Remuneration for the statutory directors of TenneT has been
set using a benchmark, comparison withorganisations
competing in the same business andemployment markets
as TenneT. These organisations include:
• International transmission system operators (TSOs);
• Operators of infrastructure;
• Installation /engineering companies;
• Building companies;
• Financial institutions.
This reference group is divided in three sub reference
groups, (semi-)public, private and international TSOs. The
remuneration level of the statutory directors is determined
based on the level of the median of the sub-reference
groups, taking into account the relevant job grading.
The Supervisory Board intends to review the remuneration
policy for statutory directors once every four years. The
Supervisory Board may resolve to do this as well in case of
important policy changes, changes in shareholder structure
or ownership and changes in the labour market. Such
changes will be submitted to the shareholder for approval.
Remuneration norm
The benchmarking method as applied by TenneT results
ina‘norm’ level of remuneration for TenneT statutory
directors thatexceeds the maximum amount desired by
theShareholder ofEUR383,160 (level 2019). Upon the
appointment of a new statutory director, the Supervisory
Board shall, at the request of the Shareholder, limit the
amount of remuneration. For 2020, this limit was set at
EUR400,537 for TenneT’s Chief Executive Officer.
Theremuneration of the other statutory directors of TenneT
has been capped at 90% of the remuneration of the CEO.
If, in the opinion of the Supervisory Board, the
maximumremuneration as required by the shareholder
leads to unacceptable risks to the organisation because
nosuitable candidates can be found to fulfil the role
ofstatutory director, the Supervisory Board shall consult
theShareholder.
The Supervisory Board decides on the annual increase
insalary. If the remuneration of a statutory director has
reached its maximum, further increases will be limited to
thestructural increments as agreed upon in the collective
labour agreement which is applicable to all Dutch TenneT
employees.
Service agreement and compensation for early
termination
In principle, with effect from 2017, employment contracts
– with the exception of internal appointments – are
concluded for a fixed term of four years. In the event that
the employment contract is terminated prior to the expiry
date, TenneT pays a maximum of one year’s salary as a
severance payment, unless the statutory director resigns
voluntarily or the termination is the result of his or her
actions.
Other allowances and secondary benefits
The total remuneration package for statutory directors
includes an allowance for necessary out-of-pocket
expenses, the use of a lease car (of a type comparable
tothose provided to statutory directors of similar
organisations) including possible private use, accident
anddirectors’ andofficers’ liability insurance, and thirty
days’ paid leave per annum.
Secondary benefits also include a nominal contribution
towards health insurance premiums and the choice of other
flexible individualised benefits as well as a percentage of
thefixed salary equivalent an employer’s contribution to
alife-course savings scheme which used to be a
compensation component under a previous collective
labour agreement.
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These benefits are applicable to all TenneT, working under
the Dutch collective labour agreement. The company
doesnot extend any loans, loan guarantees or advances
against future earnings to any statutory director.
Pensions
The retirement age of statutory directors is based on the
statutory pension Dutch age for Dutch contracts and the
German age for German contractsas the case may be.
Statutory directors participate in the regular pension
scheme of the country in which they are covered for social
insurance.
The Dutch statutory directors participate in a pension
arrangement as defined in the collective labour agreement
and as applicable for all employees in the Netherlands.
Theemployer and employee contribution for the statutory
directors follow the same rules as applicable to all other
employees. Dutch pension regulations define the
pensionable salary up to thefiscal maximum of
EUR110,111 (gross pension, 2020).
Dutch statutory directors receive the same compensation
as TenneTemployees with an income above the fiscal
maximum pension salary. The compensation is based on
the fiscally allowed, age-dependent premium percentages
upto fiscal maximum pension salary.
German statutory directors participate in the regular pension
scheme (“Beitragsplan”) or any other pension scheme that
such statutory director may have already been entitled to.
Employment contracts of statutory directors
appointed before 2011
The current remuneration policy as described above does
not affect the agreed employment terms and conditions of
statutory directors appointed before 2011.
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Board remuneration
This section specifies the current remuneration for statutory directors as well as members
ofthe Supervisory Board. As of 2020, no variable remuneration is applicable anymore
forstatutory directors, following a change in remuneration policy agreed by the shareholder.
As a result, statutory directors’ variable remuneration component has been converted
intofixed salary as of 2020.
During 2020, the Executive Board of TenneT was
composed of the following statutory directors:
Position
Date of first appoint-
ment
End of 1
st
term End of 2
nd
term
M.J.J. van Beek CEO 1 September 2018 31 August 2022
B.G.M. Voorhorst COO 1 June 2006
End of current term
31 December 2020
O. Jager
1)
CFO 1 August 2013 31 July 2017 31 July 2021
T.C. Meyerjürgens
2)
COO 1 March 2019 29 February 2024
M.C. Abbenhuis COO 1 January 2021 31 December 2024
1
As of 1 March 2020 Mr. Meyerjürgens as statutory director.
Mr Jager announced that this second term will be his
lastterm. Ms. Van Beek has a fixed-term employment
contract with the company. Mr. Abbenhuis, Mr. Jager
andMr.Meyerjürgens all have open-ended employment
contracts.
Remuneration of the statutory directors
Total remuneration
2020 (in EUR thousand)
Fixed
remunera-
tion
Variable
remunera-
tion
(annual)
Total
remunera-
tion
Gross
Pension
Net
pension
Total
pension
Other
M.J.J. van Beek 399 - 399 30 34 64 14
B.G.M. Voorhorst 359 - 359 29 36 65 21
O. Jager 359 - 359 28 23 51 21
T.C. Meyerjürgens
1)
300 - 300 158 - 158 16
Total 1,417 - 1,417 245 93 338 72
1
From March 2020 Mr. Meyerjürgens is appointed as statutory director.
2019 (in EUR thousand)
Fixed
remunera-
tion
Variable
remunera-
tion
(annual)
Total
remunera-
tion
Gross
Pension
Net
pension
Total
pension
Other
M.J.J. van Beek 320 56 376 26 27 53 12
B.G.M. Voorhorst 286 50 336 25 35 60 16
O. Jager 283 50 333 24 23 47 20
Total 889 156 1,045 75 85 160 48
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Fixed remuneration
In accordance with the indexation foremployees as
determined by the collective labour agreement for TenneT,
the salaries of all statutory directors have been increased by
1% as of January 2020 and 3.5% as of February 2020.
Variable remuneration
In accordance with the revised remuneration policy
approved by the shareholder, no variable remuneration
willbe applicable from 2020 onwards. Nevertheless,
performance targets will continue to be set and evaluated
by the Supervisory Board for each statutory director
onanannual basis.
Pension cost
The pensions of all Dutch statutory directors are administered
by the ABP Pension Fund. The pension accrual is based on
an average pay system up to the fiscal maximum (gross
pension). With respect to the fixed remuneration exceeding
the fiscal maximum, the Dutch statutory directors may
participate in a net pension system.
The pension of the German statutory director is registered
inthe Defined Benefit Obligation.
Other allowances and secondary benefits
All statutory directors have a company car available to
them. The value of theprivate use of these cars as shown
inthe table is based onthe taxable value in the domestic
country. The company does not reimburse its statutory
directors for any personal income tax consequence
resulting from the privateuse of leased cars.
For Dutch statutory directors the secondary benefits
asshown in the remuneration table, include acontribution
tohealth insurance and a budget for flexibleterms of
employment. Each statutory director received an allowance
fornecessary out-of-pocket expenses, of EUR2,196 a year.
This allowance is not included in the remuneration table as
itis a compensation of expenses incurred and hence not
considered a remuneration component.
The total remuneration paid to the statutory directors is
reconciled to and further disclosed in the note 4 of the
consolidated financial statements.
Remuneration ratio
The remuneration ratio CEO to employees is measured
bycomparing the CEO’s annual total compensation with
themedian annual total compensation, including fixed
salary, variable remuneration and pension benefits of all
other employees. The remuneration ratio CEO to senior
management is measured by comparing the CEO’s
annualtotal compensation withthe median annual total
compensation, including fixed salary, variable remuneration
and pension benefits of senior management employees.
2020 2019 2018
Remuneration ratio to employees 5.6 5.4 5.6
Remuneration ratio to senior management 2.1 2.1 2.2
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Remuneration of the Supervisory Board
The remuneration policy for the Supervisory Board defines
the remuneration for the different roles and committees
ofthe Supervisory Board. During 2020 each Supervisory
Board member was serving on one or two committees.
The roles and responsibilities of members of the Supervisory
Board were as follows:
Supervisory
Board
Audit, Risk
and
Compliance
Committee
Remuneration
and
Appointments
Committee
Strategic
Investments
Committee
A.F. van der Touw Chair Member Member
P.M. Verboom
1)
Vice-chair Chair
R.G.M. Zwitsersloot
2)
Member Chair
L.J. Griffith
3)
Vice-chair Chair
E. Kairisto
4)
Member Chair Member
A.C.C. van Els
5)
Member Member Chair
E. Schöne
6)
Member Member Member
1
January – September 2020. Mr Verboom’s term ended on September 17
th
, 2020
2
January – November 2020. Mr. Zwitserloot’s term ended on November 23
th
, 2020.
The Chair of the SIC was handed over on May 13
th
, 2020.
Mr Zwitserloot remains member of the Aufsichtsrat of TenneT TSO GmbH.
3
Vice-chair as of September 18
th
, 2020
Mrs Griffith is also member of the Aufsichtsrat of TenneT TSO GmbH.
4
Chair ARCC as of November 24
th
, 2020; Member SIC as of September 18
th
, 2020
5
Chair SIC as of May 13
th
, 2020
6
Member ARCC as of September 18
th
, 2020
The Shareholder agreed to an annual indexation of the
Supervisory Board remuneration following TenneT’s
collective labour agreement, from 1 January 2015 onwards.
As a result, Supervisory Board member remuneration
increased by 1% as of January 2020 and 3.5%as of
February 2020.
Supervisory Board member remuneration was as follows
over January 2020 and from February 2020 onwards:
(EUR)
Chair 30,425 per annum
Vice-chair 24,475 per annum
Member 21,840 per annum
Audit, Risk and Compliance Committee 7,350 per annum
Remuneration and Appointment Committee 5,760 per annum
Strategic Investment Committee 5,760 per annum
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a glance
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The total remuneration received by the Supervisory Board
intheir capacity as TenneT Supervisory Board members
during 2020 was as follows, resulting in the following
remuneration amounts as of 1 February 2020:
2020 2019
(in EUR thousand)
Fixed
remuneration
Committee
fee
Total
Fixed
remuneration
Committee
fee
Total
A.F. van der Touw 30 13 43 29 12 41
P.M. Verboom 18 10 28 23 12 35
R.G.M. Zwitserloot 20 5 25 21 5 26
L.J. Griffith 22 6 28 21 5 26
E. Kairisto 22 7 29 14 5 19
A.C.C. van Els 22 11 33 14 7 21
E.M Schöne 22 7 29 14 4 18
Total 156 59 215 136 50 186
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a glance
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Mast 58 Noordwaard (flooding)
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Our Supervisory Board
A.F. (Ab)
van der Touw
Chair of the Supervisory
Board / Member of the
Audit, Risk & Compliance
Committee / Member
Remuneration &
Appointments Committee
65, Dutch (m)
Initial appointment:
1 June 2018
End of first term:
31 May 2022
Principal position:
• Former CEO
Siemens Nederland
(until 1 April 2018)
Other positions:
• Member Board Deutsch-
Niederländische Handels-
kammer (as of 1st June 2020
member instead of VP)
• Chair Supervisory Board
Universiteit Leiden
• Chair Board Dutch
BachAssociation
• Chair Board Fonds
Slachtofferhulp
• Chair Supervisory Board NIBA
• Member Board GAK
Foundation
• (External) member
Ondernemingskamer
Gerechtshof ’s-Gravenhage
• Chair Advisory Counsel
Dutch Ministry of Defence
• Chair Advisory Counsel
Dutch Ministry of Infrastructure
• Chair Platform voor
TechniekTalent
L.J. (Laetitia)
Griffith
Member of the
Supervisory Board /
Chair of the
Remuneration &
Appointment Committee
55, Dutch (f)
Initial appointment:
1 July 2015
Expiry second term:
30 June 2023
Principal position:
• Former State Councillor
inthe Advisory Division of
the Dutch Council ofState
Other positions:
• Member of the Aufsichtsrat
TenneT TSO GmbH
• Chair Supervisory
BoardHolding Nationale
Goede Doelen Loterijen
• Chair board Nederlands
Filmfonds
• Member of the
SupervisoryBoard
ofGassanDiamondsB.V.
• Member of the
SupervisoryBoard of
ABNAMRO BankN.V.
E.M. (Edna)
Schöne
Member of the
Supervisory Board /
Member Strategic
Investments Committee,
Member of the Audit /
Risk & Compliance
Committee
49, German (f)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
Principal position:
• Member Executive Board
Euler Hermes AG
Other positions:
• Member of the Board
‘Lateinamerikaverein’
• Member of the Executive
Committee ‘Ostausschuss
der deutschen Wirtschaft’
• Member of the Executive
Committee International
Chamber of Commerce
Germany
• Member of Unternehmens-
beirat KfW Ipe
E. (Essimari)
Kairisto
Member of the
Supervisory Board /
Chair of the Audit, Risk &
Compliance Committee /
Member of the Strategic
Investments Committee
54, German and Finnish (f)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
Principal position:
• Former CFO Hochtief
Solutions AG
Other positions:
• Member Supervisory Board
Fortum Oyj
• Member Supervisory Board
Applus+ SA
• Member Supervisory Board
Freudenberg SE
• Chair ‘Deutsch-Finnische-
Gesellschaft e.V.’
(from September 2020)
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a glance
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2020
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A.C.C. (Stijn)
van Els
Member of the
Supervisory Board /
Chair Strategic
Investments Committee /
Member Remuneration &
Appointments Committee
56, Dutch (m)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
Principal position:
• Former CEO Shell Germany
• Commercial Director at
Havenbedrijf Rotterdam N.V.
Other positions:
• Chair Supervisory Board
IDAFoundation
• Chair Supervisory Board
EVOS B.V.
• Member Advisory Council
Dutch Ministry of
Infrastructure
P.M. (Pieter)
Verboom
Vice Chair Supervisory
Board / Chair Audit,
Risk & Compliance
Committee
70, Dutch (m)
Initial appointment:
18 September 2012
End of second and
last term:
17 September 2020
Principal position:
• Former CFO of RFS Holland
Holding
• Former Executive Vice
President and CFO of
Schiphol Group
Other positions:
• Managing Director
DESAJO BV
• Expert lay member of the
Dutch Enterprise Court
(until 1 April 2020)
R.G.M. (Rien)
Zwitserloot
Member of the
Supervisory Board /
Chair of the Strategic
Investments Committee
71, Dutch (m)
Initial appointment:
24 November 2010
End of third and
last term:
23 November 2020
Principal position:
• Former CEO of
WintershallAG
Other positions:
• Member of the Aufsichtsrat
TenneT TSO GmbH
(until March 2023)
• Member of the Supervisory
Board of Royal VOPAK N.V.
• Member of the Supervisory
Board of Amsterdam
CapitalTrading Commodities
Group B.V.
• Member of the Supervisory
Board of Amsterdam Capital
Trading FS Holding B.V.
• Member of the Supervisory
Board of Vroon B.V.
2020 at
a glance
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2020
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Governance
and risk
management
Corporate governance
As a transmission system operator, TenneT plays an important role in society. We believe in
having a solid governance structure, effective oversight and a transparent accountability to all
stakeholders. To that end, we comply with the Dutch Corporate Governance Code (hereafter:
the Code), insofar as it is applicable.
Corporate governance structure
TenneT’s corporate governance structure comprises the
Executive Board, the Supervisory Board and the General
Meeting of Shareholders. Additionally our internal auditor
and external auditor play an important role in this structure.
Executive Board
The Executive Board of TenneT Holding B.V. has four
statutory directors. The Executive Board members have
joint authority to represent the company. Each board
member also holds limited individual power of attorney.
Three members of the Executive Board of TenneT Holding
B.V. are managing directors of TenneT TSO B.V., three
members of the Executive Board are managing directors of
TenneT TSO GmbH and one of these three members is
managing director of TenneT Offshore GmbH.
The Executive Board is responsible for the management of
the company, which includes regulated and non-regulated
activities.
Supervisory Board
The Supervisory Board of TenneT Holding B.V. supervises
the policies, management and the general affairs.It carries
out its duties in the interests of the company and its
stakeholders, and also takes into account relevant aspects
of corporate social responsibility. TenneT has a two-tier
board structure, as specified in the Electricity Act.
All information about the Supervisory Board (such as its
rules and resignation schedule) is available on our corporate
website.
General Meeting of Shareholders
All shares in TenneT’s capital are held by the Dutch state,
which is represented by the Ministry of Finance. Under the
Electricity Act, only the Dutch state may hold voting
interests in the company. A General Meeting of
Shareholders is held within six months after the end of each
financial year.The General Meeting of Shareholders in 2020
was held on the 150/380 kV high voltage station Vijfhuizen.
TenneT was pleased to welcome the Treasurer-General of
Governance and risk
management
Corporate governance structure
2020 at
a glance
Performance
2020
Letter from
the Board
Supervisory
Board Report
Financial
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the Dutch State, Mr Rebergen to the General Meeting.
TheGeneral Meeting included an open dialogue on the
importance of the European Green Deal and the impact on
TenneT and was concluded with a site visit. The meeting
also discharged the Executive Board and Supervisory Board
members from liability from their respective activities in the
previous year. Other shareholder meetings are held as and
when deemed necessary by the Executive Board,
Supervisory Board or Shareholder.
External auditor
The General Meeting of Shareholders has the power to
appoint external auditors to audit the financial statements
prepared by the Executive Board. These auditors report to
the Supervisory Board and the Executive Board, and their
findings are presented in an independent auditor’s report,
an assurance report, a management letter and an audit
results report.The General Meeting of Shareholders
appointed Deloitte Accountants B.V. as TenneT’s external
auditor as per 1 January 2020.
The performance of the external auditor is evaluated by
theExecutive Board and the Audit, Risk & Compliance
Committee and, if necessary, also by the entire Supervisory
Board.
The external auditor attends all meetings of the Audit, Risk
& Compliance Committee. It also attends Supervisory Board
meetings when the independent auditor’s report on the
financial statements is discussed and the financial
statements approved.
Internal auditor
The Head Internal Audit attends all meetings of the Audit,
Risk & Compliance Committee.Internal Audit aligns its audit
scope and reports directly to the Executive board and the
Audit, Risk & Compliance Committee on minimum quarterly
basis.
Compliance & integrity officers
TenneT has a Head Compliancy & Integrity Officer, who is
also a member of the Senior Leadership Team, and Local
Compliance & Integrity Officers in both the Netherlands and
Germany. All material compliance and integrity issues are
shared and discussed with the Audit, Risk & Compliance
Committee.Additionally, Compliance & Integrity officers
report directly to the Executive board and the Audit, Risk &
Compliance Committee on at least a quarterly basis.
Related parties
Related party transactions are disclosed in note 30to the
consolidated financial statements.
Diversity
Diversity is disclosed in the Supervisory Board report.
Deviations from the Dutch Corporate
Governance Code
Certain principles and best-practice provisions in the Code
do not apply to TenneT. The reasons why and to what
extent TenneT decided not to or could not adopt these
particular principles and best-practice provisions are
explained below:
2.1.3, 3.1.3: Not applicable: no Executive Committee has
been established at TenneT.
2.3.8: Not applicable: no delegated Supervisory Board
member is employed by TenneT.
2.3.2: If the Supervisory Board has more than four
members, the Code stipulates that the board shall appoint
from among its members an Audit Committee,
aRemuneration Committee, and a Selection and
Appointments Committee. The TenneT Supervisory Board
has combined the tasks of the latter two committees into
aRemuneration and Appointments Committee.
2.7.5 - 2.8.3, 3.3.2, 3.3.3: Not applicable: these provisions
do not apply to TenneT because it only has one shareholder,
being the Dutch state.
Chapter 4: Regarding paragraph 4.1 TenneT complies
withthe Code. Paragraphs 4.2 – 4.4 are not applicable
toTenneT because it only has one shareholder, namely
theDutch state.
Chapter 5: Given TenneT’s two-tier board structure, this
chapter is not applicable.
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Risk and opportunity management and internal control
State-of-the-art risk management and our internal control framework are key to efficient
andeffective risk-based decision making throughout the TenneT organisation.
Risk and opportunitymanagement and internal
control objectives
To actively apply and advance our risk management
system, we periodically identify and continuouslymanage
uncertainties (comprising risks and opportunities) affecting
therealisation of TenneT’s strategic and operational
objectives. By applying top notch standards within TenneT’s
internal control system, we also enhance the efficiency and
effectiveness of our day-to-day processes.
The key objectives of TenneT’s riskand opportunity
management and internal control system are:
• To identify and assess uncertainties with apotentially
negative or positive impact on strategic andoperational
(department, process and project) objectives
• To create risk awareness and open culture of addressing
risks and opportunities
• To provide a uniform risk management framework and
tools, whichenables the organisation to take risk based
decisions founded on relevant, reliable and
timelyinformation and to ensure efficient priority based
resource allocation
• To provide transparency to the boards, internal
andexternal auditors and shareholders so they stay
nformedabout the most significant risks potentially
impacting strategic objectives
TenneT’s enterprise risk management and internal control
frameworks are based on ISO 31000 and COSO standards
and are compliant with the requirements of applicable laws
and regulations like the Dutch Corporate Governance Code,
the German Control and Transparency in Business Act and
the German Accounting Law Reform Act.
Risk management at TenneT is clustered in:
• Strategic risk management
• Operational risk management, including project risk
management
• Process risk management (such as internal control)
• Other risk domains, such as asset risk and portfolio
management
Risk management and internal control
Purpose,
Promise &
Principles
Objectives
Risk
Management
Process
Achieve
Objectives
Achieve objectives supported
by risk management and internal
control framework
Derive and implement
strategic objectives
Derive business objectives
• Department level
• Project level
• Process level (end-to-end)
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TenneT regards the following factors as crucial to realise
thefull value of risk management and internal control for
theorganisation. They are designed in line with stakeholder
requirements and described in the corporate risk
management policy:
• Structure: policies,IT-systems, reports, processes etc.
• People: roles and accountabilities, profile, education and
skills etc.
• Competencies: risk culture and competencies at
management level etc.
The principles of risk management should be taken
intoaccount in all activities performed at and for TenneT.
Furthermore, at the heart of the governance system,
riskmanagement and internal control are interlinked
withother secondline functions and departments like
risktransfer (insurances),business guidance, strategy &
partnerships, safety & security, digital & process excellence,
compliance & integrity and decentral specific risk
management experts as well as third line functions, such
asinternal audit. Corporate risk management facilitates top
down and bottom up dialogues and workshops as well as
analysis on specific topics. The resulting outcomes provide
management with insights to help take risk-based decisions
that support the achievement of objectives set at all
organisational levels.
Executive Board Oversight
Supervisory Board (ARCC) Oversight
Three lines
External
Assurance
Providers
First line roles
Own and manage risk
and control (front line
operating management)
Second line roles
Expertise, support,
monitoring and
challenge on
risk-related matters
Third line roles
Independent and objective
assurance and advice on
all matters related to the
achievement of objectives
Key
Accountability,
reporting
Delegation, direction,
resources, oversight
Alignment, communication,
coordination, collaboration
Management
Actions (including managing risk) to
achieve organzational objectives
Internal audit
Independent assurance
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Risk management and internal control framework
TenneT reacted on the COVID-19 pandemic, which was not
part of the top risks before, immediately by adopting its risk
management approach, e.g. introducing a temporary team
the “COVID-19 planning ahead team”. Its purpose was to
assess changes in the risk landscape and required actions
in all areas.
In 2020 the implementation of the in 2019 updated risk
management and internal cycle continued. The aims are
tofurther strengthen:
1. integration of risk management in the day-to-day
business as well as decision-making committees
2. fostering the development of personnel on risk
management and internal control and
3. managing the total costs of risks.
As a result, state-of-the-art assessment and prioritisation
tools and tailor made approaches like adjusted bow-ties
were introduced in strategic and operational risk management
processes.Although decentralised working from home as
one of the pandemic measures, this approach could be
fostered by using modern IT-software to support workshops
and dialogues.We also continued with the documentation
of application controls and extension the scope of the
internal control framework to further operational processes
and IT general controls.
Strategic risk management (SRM)
SRM focusses on future events and trends which may affect
strategic objectives in positive or negative ways (risks vs.
opportunities). Corporate risk management helps the
Executive Board to derive and assess uncertainties and
design risk response strategies. Furthermore, TenneT’s
strategic risk position is shared and discussed with the
Supervisory Board and the Audit, Risk & Compliance
Committee.Regularly, the project risk position is presented
to project steering committees, the executive board and
thesupervisory board investment committee.
In 2020 the COVID-19 planning ahead team directly
reported and interacted with the Executive board in short
intervals. Thereby, workshops were organised between
respective business departments and the executive board.
Taking a forward looking approach, potential risk scenarios
were analysed. Per July 2020 the new strategy team was
implemented. So the strategic risk assessment at the end
of2020 was performed in collaboration.
Operational risk management (ORM)
Operational risks affecting the various business units and
corporate departments are regularly updated and evaluated
with the help of interviews and workshops with Senior
Leaders to assess the adequacy of the responses, progress
on mitigation actions, specific developments and the
performance on management letter findings and control
deviations.TenneT’s corporate risk management &internal
control team facilitates the organisation to reviewits risks,
opportunities, related responses, progress on mitigation
actions, developments of influencing factors and the
business’ performance on management letter findings
andcontrol deviations.
Project risk management (PRM)
To meet challenges arising from our investment portfolio
and related objectives, TenneT started in 2008 to implement
project risk management, first with a focus on large
projects. PRM aims to boost the likelihood of realising
project goals on time, on budget and with a high level
ofquality. For all large projects, dedicated project risk
managers systematically review and manage risks together
with project leads within the quality and uniformity
standards safeguarded by corporate risk management.
Project risk management has reached a high maturity level
within TenneT and works closely together with project
claims and contract management.In the last 5 years project
risk management was extended to plan and perform
maintenance works in the grid.
Risk & portfolio management
To strengthen security of supply, TenneT’s asset
management uses condition monitoring and risk based
assessments to plan maintenance and investments. Grid
constraints are identified by analysing grid components and
failures and by monitoring the necessary transport capacity.
These constraints are assessed according to the risk they
pose to TenneT’s objectives. Should the risk exceed a
predefined level, responses are proposed and included.
Internal control (IC)
Our internal control framework is designed to support
andsafeguard the realisation of our process objectives, as
well as fulfil our legal obligations and establish the reliability
of our internal and external reporting. To assess the
effectiveness of this framework and identify opportunities
forimprovement, a control self-assessment is performed
bycontrol owners and validated by management twice a
year. The risk management & internal control team performs
quality assessments on the outcomes.
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Internal audit randomly checks selected control self-
assessmentsduring the year to form an independent
opinion. The outcomes ofthese control self-assessments
provide direct input for the Letter of Representation
procedure. Identified issues arereported to the risk
management & internal control team, which monitor and
follow up on mitigating steps with the relevant business
owners. Overall control effectiveness andthe scope of
TenneT’s internal control framework arepart of our bi-annual
report to the Executive and Supervisory Board.
In 2020 we continued to roll-out further the internal control
framework to non-financial reporting processes and
information technical general controls (ITGC). Additionally,
astrong focus was on the review and update of the whole
framework according to the new structural organisation
perJuly 2020. This will continue in 2021 in supporting
theimplementation of the one TenneT process model.
Furthermore, the implementation of the one ERP system is
supported by internal control to strive for more automated
and harmonised controls.
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Compliance and integrity
A culture of compliance and integrity, or simply said “responsible behaviour”, is essential
tobesuccessful in a sustainable manner. We therefore aim to predict, prevent, detect and
respond to compliance & integrity risks that threaten the realisation of TenneT’s strategy
andobjectives, and may lead to economic or reputational harm. The applicable laws and
regulations as well as internal policies and procedures determine the framework and the
boundaries within which we operate, but it is the way we behave and act within that
framework that demonstrate our compliance and integrity culture. To achieve this, we need
leadership, the right tone from the top and to act consistently with our principles Ownership,
Courage and Connection.
Under the new organisational structure applicable as
of1July 2020, the Compliance & Integrity department,
including the privacy officers directly fall within the remit of
the CEO. During the course of the year, the team has been
further extended with additional resources, both in the
Netherlands and in Germany.
With a view on the new organisation structure, the scope
ofthe compliance & integrity function has been aligned
internally and other risk related areas have been clearly
allocated to other units within the organisation. Furthermore,
the corporate compliance organisation, roles and
responsibilities, interfaces, processes and tools have been
set out in a charter and framework, which has been
endorsed by the Executive Board in December. All these
activities are aimed to have and maintain a compliance
management system that is generally in line with the ISO
19600 standard. To enhance knowledge and awareness,
together with the People unit, a training plan for company-
wide compliance & integrity learning was developed, which
will be rolled out as of 2021, and a communication plan
wasformulated.
TenneT has launched a new Code of Conduct; ‘The way
weact’, which is shaped around the new Purpose, Promise
and Principles. Closely related, the Speak Up business
directive (formerly called Whistleblower policy) is entirely
renewed and communicated. We stimulate our colleagues
and stakeholders to speak up, address concerns with the
leaders, trusted advisors or compliance & integrity and we
also offer them a safe, secure and confidential portal where
compliance and integrity concerns can be reported. In close
cooperation with our Safety and Security unit, we have
found the right balance in safeguarding data privacy, whilst
being able to adequately manage and report on safety risks
and incidents and the effects of the COVID-19 situation in
our organisation.
All employees received invitations to e-learnings about
REMIT, the European Regulation on Wholesale Energy
Market Integrity and Transparency, and information security.
All new employees received e-learnings about compliance
&integrity, privacy and other general compliance &
integritytopics, including safety & security as part of their
online onboarding program, Empower online. As regards
financial regulation, all so-called insiders have received
information about their duties under the Inside Information
business directive.
In 2020, 56 alleged compliance-related breaches were
reported (2019: 23). We believe the increase in comparison
to 2019 is the result of special attention made to compliance
& integrity and demonstrates that people know where to
find the Compliance & Integrity officers or where to report
(anonymously) via the Speak Up portal. 7 of these alleged
violations were reported via the Speak Up portal. Only 2
cases resulted in compliance investigations, of which 1 is
closed and 1 pending. After an initial assessment, the other
alleged breaches did not result in compliance investigations.
Only in two individual cases, the breaches were of a
material nature that led to disciplinary action or
terminationof employment. The outcome of the alleged
breaches and investigations had no material negative
impact on the company.
There have been 27 data leaks and/or irregularities in 2020
(2019: 35). If and when required, in total in 6 instances, they
have been reported to the relevant authorities.
TenneT did not identify any fraud, bribery or corruption
breaches which had a material impact in 2020. Material
impact is defined in our risk matrix as a breach that has
asignificant adverse effect on TenneT’s reputation and/
orfinancial position.
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Risk appetite
Risk appetite is the amount and type of risk TenneT is willing to take or not to take,
in pursuit of value, relative to its major business objectives.
TenneT’s risk appetite was set by the Executive Board
foreach of our strategic pillars. Executive Board and
Management show commitment to those levels in daily
practice.In terms of the amount of risk that we are willing
toaccept in relation to our strategic goals, we differentiate
between the following categories:
• Risk averse (low risk appetite),
• Risk neutral (medium risk appetite)
• Risk-taking (high risk appetite).
The following graph summarises risk appetite and trends
onrisks and opportunities assessed by the Executive
Board. To learn more about specific strategic risks please
refer to the section ‘Our performance in 2020’.
Strategic pillar Description Risk Appetite
Low - Low - Low -+ High + High + High
Risk Trend Opportunities Trend
Drive the energy
transition
as a green grid operator
and a thought leader.
Safeguard our
financial health
by implementing a regulatory frame-
work to support our strategy, and
delivering a return in line with what our
capital providers expect, and raising
the necessary external financing.
Energise our
people and
organisation
with an inclusive and safe
environment where people
enjoy coming to work.
Risk appetite and trend score
Secure supply
today and
tomorrow
by maintaining the grid to meet
reliability targets and operating
it to its maximum capability.
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Strategic pillar Risks and opportunities Mitigating measures
Energise our
people and
organisation
Risks
• Improving TenneT’s attractiveness as employer, the
succesion planning and our interaction with potential
candidates and students.
• Educating our contractors and subcontractors and
building awareness on TenneT’s safety measures to
implement it as common goal.
• Providing support to our people to ensure mental
andphysical health for instance via our Always
Energy programme.
• Scarcity of qualified short and long-term staff.
• Embedding organisational changes might take longer.
• Challenging pipeline of investment projects and
maintenance tasks could inherently increase the risk
of injuries and fatalities particularly on the suppliers’ side.
• Increase of sickness rate (physically and mentally)
within companies in the supply chain due to
COVID-19 related governance measures.
Opportunitiy
• New ways of working in several areas of our business,
such as in our tender procedures, community
engagement and recruitment process for new
employees.
Secure supply
today and
tomorrow
Risks
• Stimulating the development of alternative flexibility
sources and pursue technological innovations
• Supporting the development of new technology
andproduction facilities.
• Updating our supply chain management including
among others new sourcing models, long-term
partnerships, improving demand planning or revising
contract models and tendering procedures.
• Communicating transparently with regional
stakeholders and working closely with authorities.
• Performing virtual consultations as well as tender
meetings with potential suppliers.
• Employing external project management service
providers and adequate succesion planning.
• Demanding high quality standards by supplier
andservice providers.
• Including test and guarantee periods in project
planning and supplier contracts to define standards
and develop partnerships.
• Identifying possible constraints and costs of viable
solutions at an early stage.
• Monitoring of M&A activities in markets (e.g. cable
producers) and development of back-up plans.
• Implementation of ISO 27001 (i.e. information
security) and performance of penetration and crisis
management testing.
• Developing IT capabilities, organisation and trainings
as well as reviewing IT service provider performance.
• Optimising and simplifying organisational and decision
making processes to increase efficiency and flexibility
in our maintenance programme.
• Assessing suppliers’ financial stability and contractual
prescribing long-term availability of parts and services.
• Enforcing high quality standards and closely
monitoring our suppliers and deliverables.
• Improving our weather forecasting tools
to make our RES predictions moreaccurate.
• Uncertainty about the future strategy on the phase
outof conventional energy production and the future
expansion of renewables could lead to adaptions
andshortages in electricity production and reduced
leeway for TSOs.
• Scarcities in markets for (raw) materials, resources
and services as well as the unavailability of skilled
staff (internal and external) could lead to delays and
cost increases in our investment portfolio.
• Stakeholder engagement and permitting processes
by authorities could cause project delays especially
for innovative technologies.
• Environmental developments and European policies
could cause project delays. For example, in proceeding
on project level due to uncertainty regarding environ-
mental regulations such as PFAs and nitrous oxide.
• Challenging permitting processes due to public health
measures against the COVID-19 pandemic could lead
to project delays and knock-on effects.
• The introduction of new technologies could increase
the risk of outages caused by malfunctions.
• Long term projects going into operation at the same
time could lead to knock-on effects.
• Cyber and terror risk.
• Failure of suppliers in a dynamic market environment
with new players could lead to non-availability of
support or (spare) parts.
• Ageing infrastructure and bottlenecks in outage planning
for maintenace could lead to unplanned outages.
Opportunities
• Digitalisation and digitisation could reduce costs
andhelp achieve a secure energy transition.
• New technologies (e.g. big data and data analytics)
can support us in improving the utilisation of the grid,
to forecast weather and to determine the condition
ofour assets.
• Virtual consultations, tendering processes and
negotiations could reduce costs and enable a more
efficient way of supplier engagement.
Key risks
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Strategic pillar Risks and opportunities Mitigating measures
Drive the
energy
transition
Risks
• Early involvement of stakeholders, proactive
consultation about identified issues and transparent
communication.
• Use of digitalization for more efficient processes.
• Complying with rules and regulation and take caution
in construction and operation.
• Cooperating with authorities and other stakeholder
toupdate our policy regarding magnetic fields.
• Uncertain developments on national and European
level to further integrate the European energy system.
• Economic and political developments could influence
the acceptance of costs associated with energy
transition.
• Lack of societal acceptance of the energy transition
could lead to delays or inability to realize our
ambitions.
• Expansion of our grid could alter landscapes and
affect surrounding residents.
• Drought, flooding and other extreme weather events
could directly or indirectly impacting our grid.
Opportunity
• Long-term partnerships with TSOs as well as
between industries and local and national
governements could further drive the energy
transition.
Safeguard
our financial
health
Risks
• Securing an appropriate credit rating by
attracting sufficient additional equity.
• Placing hybrid bond of EUR 1bn in July 2020.
• Dependence on regulatory framework and political
commitments and growing concern about the cost of
energy are increasing the pressure on the
reimbursement systems.
• Lower regulatory rates of return on capital could
diminish TenneT’s attractiveness for investors.
• Less favourable insurance market and limited options
in risk transfer.
Opportunity
• Investments in green business and economies are
more and more becoming part of strategies for large
investors and banks.
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Regulatory risks
Regulatory risk Risk-mitigating actions
General
• Inability to meet increasing efficiency targets imposed by
incentive regulation, especially taking into account a
strongly growing company and the need of investments
in grid expansion and innovation.
• TenneT performs regular reviews of its processes and
organisational structure and introduced lean
management. Thereby, TenneT also initiated strategic
dialogues with ACM, BNetzA and industry partners/
suppliers.
• TenneT is unable to achieve a reasonable return on its
invested capital as well as the full remuneration of
operational costs as the regulated return continues to
decline due to the low interest environment and stricter
regulatory incentives.
• TenneT’s strategy is to seek mutually acceptable results,
however if needed legal action may be taken.
Europe
• The 'Clean Energy Package' (CEP) entered into force.
Itrequires amongst others that TSOs provide to the
market 70% of the total cross-border transmission
capacity, an amount difficult to achieve without extensive
and costly redispatch activities. The German
government introduced an action plan to gradually
achieve this target by 2024. Delays in fulfilment of this
plan by TenneT could lead to material financial penalties.
The ACM approved a derogation of TenneT from the
CEP and approved an action plan which gradually aims
to fulfil the targets in the Netherlands by2026.
• In Germany, TenneT directly negotiates with Baltic
Cable, BNetzA and Swedish agencies to achieve
countertrading contracts and thus to avoid penalties.
Inthe Netherlands TenneT monitors compliance against
the conditions of the derogation.
The Netherlands
• Regulatory returns in the Netherlands are under
pressure due to low interest rate environment. This
implies a weakening of operational cash flows in times
when TenneT is investing heavily. This impact is
aggravated in the Netherlands as a real WACC system
is applied which effectively pushes profitability into the
future, while being Net Present Value (NPV) neutral.
Furthermore, the ACM plans to replace the estimated
risk-free rate for the actual risk-free rate, which exposes
TenneT to more variability in cash flows and in the short
term is likely to have a further negative impact on returns
due to the policy of quantitative easing of the European
Central Bank.
• TenneT demonstrates that actual returns have not fallen
as much as is expected in the methodology of ACM,
therewith supporting its claim that the current method
results in an understatement of the Return on Equity.
Furthermore TenneT argues that ACM should also
address the financeability of a TSO in its decision
making, consequently TenneT argues in favour of a
nominal WACC system, which is Net Present Value
neutral for consumers.
• The ACM has shared the preliminary decision on the
application of the benchmark during a stakeholder
group meeting in February 2021. ACM intends to
gradually reduce TenneT’s efficient cost level to 77.5% in
2025 and 2026, therewith respecting the grace period
until 2025 which was granted in earlier method
decisions.
• TenneT has prepared reports (shadow benchmark –
based on the very same sample as ACM) to show that
the 'low' efficiency score result from omissions in the
model. Whilst ACM for now does not accept TenneT's
argumentation, TenneT assesses, that it has a very
strong legal position with evidence clearly showing that
this score is understated.
Germany
• The Federal Ministry of Economic Affairs and Energy
(BMWi) plans to introduce an incentive scheme to limit
the maximum costs of redispatch and feed-in
management that have to be reimbursed by the grid
user. TenneT may be unable to limit redispatch and
feed-in management costs in the target zone of the
coming incentive regulation. Up to now redispatch and
feed-in management costs are categorised as
permanently non-influenceable. In the future (most
probably from 2024 onwards) the costs will likely be
incentivised by a bonus/malus mechanism.
• While an incentive scheme is very likely to be introduced
from 2024 on, the four German TSOs argued for a
transitional scheme ending with the current regulatory
period (12/2023). The Federal Ministry of Economic
Affairs and Energy (BMWi) was open for the proposal to
introduce an intermediate bonus scheme. Discussions
regarding the final scheme that will be used from 2024
onwards are still ongoing.
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Climate related risks and opportunities
The Taskforce for Climate related Financial Disclosures
provide recommendations for companies to improve
andincrease the reporting of climate related financial
information. We have followed up on their recommendations,
also in our risk assessment process and have identified
thefollowing climate related risks and opportunities for
TenneT, which we clustered below. Please note that there
might be some overlap with risks also being mentioned
earlier in the report, but this is to provide one structured
overview in this section.
Climate related risks
Risks How might this affect TenneT? Risk mitigating actions
• Transition
risks
• Policy and
legal risks
• Policy and legal risks are related to our regulatory
framework. Choices we make that can help society
and us as a company to transition to a low carbon
economy are subject to discussion with our
regulator. Our regulatory framework is updated
once every 5 years and this might pose a risk that if
ambitions from governments in the areas we serve
move faster than the spirit of the regulatory
framework, this might be a constraining factor to
drive the energy transition.
• We mitigate this by lobbying on national and
European level, run pilot projects and present
business cases and focussing on those topics,
which promise the highest benefit for the society,
which are integration of power and hydrogen as
well as flexibility and grid utilisation together with
partners.
• Technology
risk
• A risk of stranded assets might occur in case a
new technology is developed which makes them
obsolete.
• Mitigating actions include challenging the
necessity of each investment and embrace other
solutions, if those promise more societal value and
actively work and invest in new technology as part
of our strategy.
• Market risk • Our market risks relate to dealing with the higher
infeed of renewable energy sources and impacting
the way we balance our grid and market prices.
Renewable energy sources are less predictable and
cannot easily be increased in case of a higher
demand. Differences in market prices can lead to
too high requests for energy at one location, e.g.
Southern-Germany, where not all energy can be
transmitted to the users. In such situations
additional measures are required to balance the
grid, e.g. re-dispatch.
• TenneT plans and builds DC-grid connections in
Germany and interconnectors within Europe and
we investigate the grid integration of green
hydrogen and power grids as well as improving
the quality of data to predict power production
and consumption.
• Reputation
risk
• A reputation risk could occur when we are unable
to deliver on our strategic goal to drive the energy
transition. Also, when realising our assets, we also
have a reputational risk if there is a growing
resistance from local communities and
governments, if we do not engage with our
stakeholders properly (“not in my backyard”).
Furthermore the overall cost of the energy transition
is also a risk from a reputational perspective
(affordability).
• To mitigate this risk we aim to communicate in an
open and transparent fashion. Next to this, we
invite stakeholders in the planning and approval
process of projects to voice their opinion which we
consider in, for instance, the final route of a certain
project. We also aim to balance affordability,
sustainability and security of supply in all our
investment decisions. Further mitigation takes
place through the usage of professional planning,
project management and costs forecasting.
• Physical
risks
• Acute • Acute risks are related to for instance (extreme)
weather conditions that impact our assets.
• Acute weather conditions are mitigated during the
design, construction and maintenance of our
assets, e.g. choice of location and the choice of
materials.
• Chronic • Chronic physical risks can relate to rising sea and
ground water levels for instance, where our assets
might bear a risk due to this.
• We monitor developments to gain more experience
and insights related to the scenarios and effects.
Examples include projects related to assets such as
our Krimpen aan de IJssel substation and one of our
pylons, which we both have elevated.
• TenneT insures all substations and buildings during
construction and operation against risks from
natural catastrophes. Pylons and overhead-lines
are not insured.
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Climate related opportunities
Opportunities How might this affect TenneT?
• Resource efficiency • Innovation and further developments in renewable energy production facilities result in decreasing
production costs and decreasing of levies. Additionally, stronger decentralized power production and
storage including self-balancing micro grids can relieve high-voltage grids. Furthermore, DC-interconnectors
enhance the transmission of power of very long distances and connect renewable power production and
demands in different countries.
• Solutions related to flexibility help us to make smarter use of our grid. This might have a positive effect as
this could lead to less grid expansion and therefore help us reduce the amounts of resources required to
secure supply today and tomorrow.
• Energy source • TenneT is a leading investor in the energy transition and so we have been able to gain a vast amount of
experience connecting renewable energy sources, such as offshore wind, to our grid. This experience helps
us to further drive the energy transition together with partners and fulfil the future investment portfolio.
• Products and Services • Our project portfolio has significantly changed in order to meet national and European climate goals. Key
projects are connecting offshore wind energy to our grid or to ensure that our onshore grid is prepared for
a new energy future. The gathering and analysis of energy data may lead to new products and services
provided by TSOs, such as TenneT.
• Markets • Strategies and objectives of financial institutes, banks and especially the European central bank provide
opportunities for TenneT to attract sustainable financing at favourable terms and conditions by issuing
green finance products to fund and refund our investments in green infrastructure projects.
• Resilience • Trends in the society, like the electrification of mobility result in higher demand on a stable grid and power
supply. To ensure resilience integration of power and gas grids is a vital alternative. Digitalisation using
technologies like automatization, robotics and block-chain will help to optimize grid utilisation while
safeguarding a reliable supply of electricity.
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Financial
statements
Financial statements 89
Profit appropriation 89
Consolidated financial statements 90
Notes to the consolidated financial statements 97
Company financial statements 149
Company statement of income 150
Notes to the company financial statements 151
Other information 155
Profit appropriation 155
Independent auditor’s report 156
Assurance report of the independent auditor 165
About this report 168
SWOT Analysis 173
Company addresses 174
Key figures: five-year summary 175
Glossary 176
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Financial statements Profit appropriation
Consolidated financial statements
Consolidated statement of financial position
For the year ended 31 December (EUR million)
Assets
Notes
2020 2019
Non-current assets
Tangible fixed assets 8 20,859 18,541
Right-of-use assets 9 505 392
Intangible assets 10 212 160
Investments in joint ventures 12 673 605
Investments in associates 12 34 33
Deferred tax assets 6 37 83
Other financial assets 13 28 61
Total non-current assets 22,348 19,875
Current assets
Inventories 14 65 66
Account- and other receivables 15 3,795 2,085
Income tax receivable 6 31 46
Cash and cash equivalents 16 567 901
Total current assets 4,458 3,098
Total assets 26,806 22,973
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Consolidated financial statements
Consolidated statement of financial position
For the year ended 31 December (EUR million)
Equity and liabilities
Notes
2020 2019
Equity
Equity attributable to ordinary shares 18 5,324 4,696
Hybrid securities 18 2,125 1,120
Equity attributable to owners of the company 7,449 5,816
Non-controlling interests 19 689 744
Total equity 8,138 6,560
Non-current liabilities
Borrowings 20 10,217 9,137
Contract liabilities 21 376 340
Deferred tax liability 6 146 63
Provisions 22 1,282 1,163
Lease liabilities 9 327 286
Net employee defined benefit liabilities 23 405 361
Other liabilities 5 3
Total non-current liabilities 12,758 11,353
Current liabilities
Borrowings 20 2,243 565
Contract liabilities 21 2 3
Income tax payable 6 2 242
Provisions 22 66 248
Other financial liabilities 85 79
Bank overdrafts 16 90 -
Lease liabilities 9 135 108
Account- and other payables 24 3,287 3,815
Total current liabilities 5,910 5,060
Total equity and liabilities 26,806 22,973
References relate to the notes starting with note 1‘Basis for reporting’. These form an integrated part of the consolidated financial statements.
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Consolidated statement of income
For the year ended 31 December (EUR million)
Notes
2020 2019
Revenue 3 5,025 4,422
Grid expenses 4 -2,252 -1,955
Personnel expenses 4 -239 -229
Depreciation and amortisation of assets 8,9,10 -1,074 -973
Other operating expenses 4 -171 -217
Other (gains)/losses 7 -6
Total operating expenses -3,729 -3,380
Share in profit of joint ventures and associates 12 60 35
Operating profit 1,356 1,077
Finance income 2 3
Finance expenses 5 -197 -207
Finance result -195 -204
Profit before income tax 1,161 873
Income tax expense
* 6 -324 -250
Profit for the year 837 623
Profit attributable to:
Equity holders of ordinary shares
* 18 748 534
Hybrid securities 18 44 33
Owners of the company 792 567
Non-controlling interests 19 45 56
Profit for the year 837 623
Income tax 2019 changed from EUR 243 million to 250 million compared to last year’s report. Further reference can be found in note 1 Basis for reporting.
Earnings per share attributable to the equity holders of ordinary shares
For the year ended 31 December (EUR per share)
Notes
2020 2019
Basic and diluted earnings per share 7 3,740 2,670
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Consolidated statement of comprehensive income
For the year ended 31 December (EUR million)
Attributable to equity holders of the company
Hedging
reserve
Retained
earnings
Unappro-
priated
result
*
Equity
attributable
to ordinary
shares
Hybrid
securities
Equity
attributable
to owners
of the
company
Non-
control-
ling
interest
Total
equity
Notes
18 18 18 18 19
2019
Other comprehensive income to be
reclassified to profit or loss in subsequent
years:
Amortisation of hedges 18 -2 - - -2 - -2 - -2
Taxation 6 - - - - - - - -
-2 - - -2 - -2 - -2
Items not to be reclassified to profit or loss in
subsequent years:
Re-measurement of defined benefit pensions 23 - -137 - -137 - -137 - -137
Taxation 6 - 40 - 40 - 40 - 40
- -97 - -97 - -97 - -97
Total other comprehensive income 2019 -2 -97 - -99 - -99 - -99
Profit for the year
*
- - 534 534 33 567 56 623
Total comprehensive income 2019 -2 -97 534 435 33 468 56 524
2020
Other comprehensive income to be
reclassified to profit or loss in subsequent
years:
Amortisation of hedges 18 -1 - - -1 - -1 - -1
Taxation 6 - - - - - - - -
-1 - - -1 - -1 - -1
Items not to be reclassified to profit or loss in
subsequent years:
Re-measurement of defined benefit pensions 23 - -24 - -24 - -24 - -24
Taxation 6 - 8 - 8 - 8 - 8
- -16 - -16 - -16 - -16
Total other comprehensive income 2020 -1 -16 - -17 - -17 - -17
Profit for the year - - 748 748 44 792 45 837
Total comprehensive income 2020 -1 -16 748 731 44 775 45 820
Unappropriated result 2019 changed from EUR 630 million to 623 million compared to last year’s report.
Further reference can be found in note 1 Basis for reporting.
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Consolidated statement of changes in equity
For the year ended 31 December (EUR million)
Attributable to equity holders of the company
Paid-up
and
called-up
capital
Share
premium
reserve
Hedging
reserve
Retained
earnings
Unappro-
priated
result
Equity
attribut-
able to
ordinary
shares
Hybrid
securities
Equity
attribut-
able to
owners of
the
company
Non-
control-
ling
interest
Total
equity
(EUR million)
Notes
18 18 18 18 18 18 19
At 1 January 2019 100 1,380 3 2,084 397 3,964 1,120 5,084 796 5,880
Profit for the year - - - - 534 534 33 567 56 623
Total other comprehen-
sive income - - -2 -97 - -99 - -99 - -99
Total comprehensive
income - - -2 -97 534 435 33 468 56 524
Dividends paid 18 - - - - -120 -120 - -120 -36 -156
Capital contribution 18 - 410 - - - 410 - 410 - 410
Capital repayment 18 - - - - - - - - -72 -72
Distribution on hybrid
securities 18 - - - - - - -33 -33 - -33
Tax on distribution on
hybrid securities 18 - - - 7 - 7 - 7 - 7
Appropriation remaining
prior year result - - - 277 -277 - - - - -
At 31 December 2019 100 1,790 1 2,271 534 4,696 1,120 5,816 744 6,560
Profit for the year - - - - 748 748 44 792 45 837
Total other comprehen-
sive income - - -1 -16 - -17 - -17 - -17
Total comprehensive
income - - -1 -16 748 731 44 775 45 820
Dividends paid 18 - - - - -112 -112 - -112 -50 -162
Capital contribution 18 - - - - - - - - 5 5
Capital repayment 18 - - - - - - - - -55 -55
Issue of hybrid securities 18 - - - - - - 1,000 1,000 - 1,000
Distribution on hybrid
securities 18 - - - - - - -39 -39 - -39
Tax on distribution on
hybrid securities 18 - - - 9 - 9 - 9 - 9
Appropriation remaining
prior year result - - - 422 -422 - - - - -
At 31 December 2020 100 1,790 - 2,686 748 5,324 2,125 7,449 689 8,138
Unappropriated result 2019 changed from EUR 630 million to 623 million compared to last year’s report.
Further reference can be found in note 1 Basis for reporting.
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Consolidated statement of cash flows
For the year ended 31 December (EUR million)
Notes
2020 2019
Operational activities
Operating profit 1,356 1,077
Non-cash adjustments to reconcile profit to net cash flows:
Depreciation, amortisation and impairment of assets 8,9,10 1,074 973
Result on disposal of assets 8 - 6
Share in profit of joint ventures and associates 12 -60 -35
Dividends received from joint ventures and associates 12 31 38
Movements in provisions and other (financial) liabilities and assets 101 70
1,146 1,052
Working capital adjustments excluding EEG working capital:
(Increase)/decrease in account- and other receivables 15 -85 -18
(Increase)/decrease in inventories 1 2
Increase/(decrease) in account- and other payables 24 -13 -71
Increase/(decrease) in contract liabilities 21 36 32
Increase/(decrease) in current financial liabilities 6 8
Cash generated from operation -55 -47
Income tax paid (net) -402 -200
Net cash flows from operating activities excluding EEG
working capital 2,045 1,882
EEG working capital adjustments:
(Increase)/decrease in EEG receivables 15 -1,625 -88
(Increase)/decrease EEG deposits > 3 months 15 - 250
Increase/(decrease) in EEG payables 24 -516 -718
-2,141 -556
Net cash flows from operating activities -96 1,326
Investing activities
Purchase of tangible and intangible fixed assets 8,10 -3,413 -2,720
Proceeds from sale of tangible and intangible fixed assets 8,10 - 4
Capital contribution to joint ventures and associates 12 -44 -73
Acquisition of subsidiary -12 -
Interest received - 3
Net cash flows used in investing activities -3,469 -2,786
Financing activities
Net financing
Proceeds from borrowings 20 3,316 1,731
Repayment of borrowings 20 -566 -756
2,750 975
Continuation >
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Notes
2020 2019
Other financing activities
Payment of lease liabilities 9 -169 -129
Interest paid -189 -167
Dividends paid to ordinary shareholders of the company 18 -112 -120
Proceeds from capital contributions 18 - 690
Proceeds from issue of hybrid securities 18 1,000 -
Distribution on hybrid securities 18 -39 -33
Dividends paid and capital repayments to non-controlling interests 19 -100 -108
391 133
Net cash flows from financing activities 3,141 1,108
Net change in cash and cash equivalents -424 -352
Cash and cash equivalents at 31 December 16 477 901
Cash and cash equivalents at 1 January 16 901 1,253
-424 -352
Consolidated statement of cash flows
For the year ended 31 December (EUR million)
< Continuation
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Notes to the consolidated financial statements
We are continuously improving our financial reporting to make it more relevant and
understandable to our stakeholders. These financial statements focus on the key (financial)
topics for 2020. Unlike last year, the notes to the consolidated financial statements are
disclosed following more or less the sequence of the balance sheet and profit & loss.
Accounting policies are indicated with i, while key assumptions and estimates are identified
by using + in front of the header.
1 Basis for reporting 98
2 Segment information 100
3 Revenue 106
4 Operating expenses 106
5 Finance expenses 109
6 Income tax 109
7 Earnings per share 112
8 Tangible fixed assets 113
9Right-of-useassets and lease liabilities 115
10 Intangible assets 118
11 Business combinations 120
12 Investments in joint ventures,
joint operations and associates 120
13 Other financial assets 124
14 Inventory 124
15 Account- and other receivables 124
16Cash, cash equivalents and bank overdrafts 125
17 Capital management 126
18 Equity 128
19 Non-controlling interests 129
20 Borrowings 131
21 Contract liabilities 133
22 Provisions 133
23 Net employee defined benefit liabilities 135
24 Account- and other payables 139
25 Financial risk management 140
26 Fair values 143
27i Accounting policies for financial instruments 144
28 Contingencies and commitments 145
29 Related parties 146
30 Consolidated subsidiaries 147
31 Events after the reporting period 148
Notes to the company financial statements 151
32 Company accounting policies 151
33 Finance income 151
34Finance expenses 151
35 Personnel expenses 151
36 Investments in subsidiaries 151
37 Investments in joint ventures and associates 152
38 Other financial assets 152
39 Account- and other receivables 152
40 Equity 153
41 Borrowings 153
42 Account- and other payables 153
43 Events after the reporting period 154
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Notes to the consolidated financial statements
1 Basis for reporting
The accounting policies describe our approach to recognising and measuring transactions and balance sheet items in our
financial statements. Accounting policies, including new European Union (EU) endorsed accounting standards, amendments
and interpretations, relating to the consolidated financial statements as a whole are described below. This section also
provides general guidance regarding assumptions, estimates and judgements used in the preparation of the financial
statements. A more detailed description of accounting policies and significant estimates related to specific reported amounts
is presented in the respective notes. Accounting policies which are deemed non-material are not presented in these financial
statements. We consider an item material if, in our view, it is likely to have an impact on the economic decisions of primary
users of these financial statements.
General
TenneT Holding B.V. and its subsidiaries are a leading electricity transmission system operator with activities in the
Netherlands and a large part of Germany. In the Netherlands, our activities are conducted by TenneT TSO B.V. and
itssubsidiaries. In Germany, the activities are performed by TenneT GmbH & Co. KG and its subsidiaries.
The Dutch State owns the entire issued share capital of TenneT Holding B.V. Furthermore, TenneT Holding B.V. has
issuedhybrid securities which are deeply subordinated and are accounted for as part of equity attributable to equity holders
of theCompany. The registered office of TenneT Holding B.V. is located at Utrechtseweg 310, Arnhem, the Netherlands,
withits statutory seat in Arnhem and a registration with the Dutch Commercial Register under number 09083317.
These consolidated financial statementsof TenneT Holding B.V. and its subsidiaries (hereafter referred to as‘TenneT’,
‘theCompany’ or ‘the Group’) for the year ended 31 December 2020 were prepared by our Executive Board and
authorisedfor issuance in accordance with a resolution of the Supervisory Board on 8 March 2021. The financial statements
will be submitted for adoption at the General Meeting of Shareholders. These consolidated financial statements have been
audited by Deloitte Accountants B.V.
Basis for preparation
These consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and Part 9,
Book 2 of the Dutch Civil Code. The company financial statements for TenneT Holding B.V. have been prepared in
accordance with the provisions of Part 9, Book 2, of the Dutch Civil Code.
These consolidated financial statements have been prepared on a going concern basis. The going concern basis presumes
that the Group has adequate resources to remain in operation and that the Executive Board intends it to do so, for at least
one year from the date of the end of the reporting period.
These consolidated financial statements are prepared on a historical cost basis, unless described otherwise in the
accounting policy of a balance sheet position. They are presented in euros and all values are rounded to the nearest million
(EUR 000,000), except when otherwise indicated.
Changes in prior year interpretations
Annual improvements cycle – 2015-2017
Since 1 January 2019 TenneT has applied the amendment on ‘IAS 12 Income Taxes – Income tax consequences
ofpayments on financial instruments classified as equity’ that is part of the Annual Improvements Cycle 2015-2017.
Theamendments clarify that the income tax consequences of dividends are linked more directly to past transactions
orevents that generated distributable profits than to distributions to owners. Therefore, an entity recognises the income
taxconsequences of dividends in profit or loss, other comprehensive income or equity according to where the entity
recognised the originating transaction or event that generated the distributable profits giving rise to the dividend.
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When applying this amendment on 1 January 2019 TenneT concluded that the past transaction that generated the dividend
payment came solely from the income statement. Accordingly, the tax consequences were recognised in the income
statement 2019. In 2020 TenneT reconsidered this conclusion, noting that a dividend payment to hybrid security holders
does not necessarily directly link to the (result from the) income statement because even if the result is negative, the coupon
repayment on our hybrid securities continues to accrue and should be paid in full before the Company can issue ordinary
dividend to its shareholders. Additionally, our standing dividend policy corrects for hybrid security coupons in determining
thedividend payment proposal. An adjustment of EUR 7 million is made from the consolidated statement of income 2019
tothe consolidated statement of equity 2019. Comparative figures are changed accordingly.
Changes in EU-endorsed published IFRS standards and interpretations effective in 2020
Significant new and amended standards adopted by the Group
TenneT has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
The IASB made amendments to the definition of materiality in IAS 1 and IAS 8. The new definition reads: Information is
material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary
usersof general purpose financial statements make on the basis of those financial statements. In line with the amendments
we consider an item material if, in our view, it could reasonably be expected that the item has impact on the economic
decisions of primary users of our general financial statements. The amendments to IAS 1 and IAS 8 are effective for annual
periods beginning on or after 1 January 2020 and must be applied prospectively. The amendment did not have a significant
impact on the financial statements of 31 December 2020.
IFRS standards issued but not yet effective and adopted by the Group
The IASB made an amendment to IFRS 16Leases, to make it easier for lessees to account for COVID-19-related rent
concessions such as rent holidays and temporary rent reductions.
The amendment exempts lessees from having to consider individual lease contracts to determine whether rent concessions
occurring as a direct consequence of the COVID-19 pandemic are lease modifications and allows lessees to account for
such rent concessions as if they were not lease modifications. It applies to COVID-19-related rent concessions that reduce
lease payments due on or before 30 June 2021.
IFRS 16 specifies how lessees should account for changes in lease payments, including concessions. However, applying
those requirements to a potentially large volume of COVID-19-related rent concessions could be practically difficult,
especially in the light of the many challenges stakeholders face during the pandemic. This optional exemption gives timely
relief to lessees and enables them to continue providing information about their leases that is useful to investors.
Theamendment does not affect lessors.
The Amendment is effective for annual periods beginning on or after 1 June 2020.
TenneT made no amendment to its current lease contracts due to COVID-19 and is also not planning to do that.
Thereforethis amendment has no impact on TenneT.
Basis for consolidation
The consolidated financial statements incorporate the financial statements of TenneT Holding B.V. and its subsidiaries as
at31 December 2020. A list of the legal entities included in the consolidation is included in note 30. Subsidiaries are
consolidated from the date of acquisition, constituting the date on which control is obtained and continue to be consolidated
until the date when such control ceases. The financial statements of subsidiaries are prepared for the same reporting period
as the parent company, using consistent accounting policies. All intercompany balances, transactions, unrealised gains and
losses resulting from intercompany transactions and dividends are eliminated in full in consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
Ifwecease to have control over a subsidiary, we derecognise the subsidiary's assets (including goodwill), liabilities and any
non-controlling interest in the former subsidiary at the date control is lost (including the cumulative translation differences).
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Furthermore, the fair value of the consideration received, the fair value of any investment retained and any surplus or deficit
instatement of income are recognised. Acquisitions are accounted for using the acquisition method, where the purchase
price is allocated to the identifiable assets acquired and liabilities assumed on a fair value basis and the remainder is
recognised as goodwill.
Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts
ofassets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses
during the reporting period.Such estimates are assessed continuously on the basis of previous results and experience,
consultations with experts, trends, prognoses and other methods which we deem appropriate in each individual
case.Actual results could differ from these estimates. Significant items containing estimates and assumptions are as follows:
Item
Note
Estimate/assumptions
Tangible fixed assets 8 Estimate of remaining useful life
Right-of-use assets and liabilities 9
Estimates of discount rate and expected extension or
accelerated termination date
Intangible fixed assets 10 Estimate of recoverable amount and remaining useful life
Impairment review of goodwill 10 Estimate of cash flow projections and pre-tax discount rate
Grid expense payable 24 Amongst others estimate of electricity usage and energy prices
Provision for environmental management and decommissioning 22
Estimate of removal costs, removal dates, discount rate and
price increases in the period leading up to removal
Tariffs related provision 22 Estimate of electricity usage and number of parties
Other provisions 22
Mainly relate to estimate of probability, realisation date and
curtailed feed-in volumes and prices
Net employee benefit obligation 23 Financial, actuarial and demographic assumptions
Foreign currency
These consolidated financial statements are presented in euros, which is also the parent company’s and all subsidiaries`
functional currency.
Covid-19 impact
In March 2020 Europe was confronted with the outbreak of COVID-19. Several teams within TenneT are handling the
situation: a crisis team, a business continuity team and a plan ahead team. We managed to keep our system operations,
field operations and projects running in good order, despite challenging conditions. During 2020, COVID-19 had no material
impact on the financial figures of TenneT. We refer to 'Our performance in 2020' for further elaboration on the impact of
COVID-19 on TenneT.
Changes in presentation
As of 2020, the Dutch offshore revenue are no longer presented as part of the connection and transmission services but
aspart of the offshore (balancing) revenue. This change affected the classification in theconsolidated statement of financial
position, impacting the line items revenue for the year 2020 for EUR 149 million (2019: EUR 60 million). There was neither
animpact on the consolidated statement of income nor on total equity.
2 Segment information
This section sets out the financial performance for the year in accordance with the way we manage our business
(operatingsegments). We measure and assess our performance based on underlying financial information, which
isexplained further below.
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We generate the majority of our revenue from our regulated operating segments in the Netherlands and Germany. Therefore
close collaboration with our respective regulators to obtain agreements that provide reasonable compensation for the risks
we faceis key to us. Our involvement in certain limited non-regulated activities is closely related and ancillary to our core
tasks.
Segment analysis
Our operating segments consist of:
• TSO Netherlands
• TSO Germany
• Non-regulated activities
For management information purposes, the performance of our regulated activities in the Netherlands and in Germany is
considered separately into two segments (corresponding to the geographical distribution). This segmentation, based on
separately applicable regulatory frameworks, is the key determinant for financial management of the business and for
decision-making on budgets, allocation of resources and financing.
Financing activities (including finance income and expenses) are managed on a Group basis and amounts related thereto are
not allocated to the segments. Transfer prices between the Netherlands and Germany are set at arm’s length in a manner
similar to transactions with third parties. These intercompany transactions are eliminated in theconsolidation.
Our Executive Board is the chief operating decision-making body of the company (as defined by IFRS 8 ‘Operating
segments’). Periodically, it monitors the performance of the respective operating segments for the purpose of performance
management and decision making about resource allocation. The segment performance is based on underlying financial
information, where EBIT and investments are the key metrics. The definition of EBIT equals operating profit.
Performanceofnon-regulated activities is evaluated based on EBIT of these activities.
Underlying financial information is based on the principle of recognising regulatory assets and liabilities for all of our regulated
activities. This implies that amounts resulting from past events and which are allowed to be received or required to be
returned through future tariffs are recorded as an asset or liability, respectively. TenneT’s Executive Board believes that the
presentation of underlying financial information provides additional relevant insight in the actual business, financial
performance, and as such economic reality. Furthermore this reflects the regulatory regime.
i Accounting policies applied for underlying financial information
Underlying financial information matches regulatory revenues and expenses in a corresponding reporting period and defers
certain income items until used for investments or tariff reductions.
IFRS
Regulatory
Deferral Accounts
Underlying
Matching is achieved by recognising regulatory deferral accounts. The key requirement for the recognition of regulatory
deferral accounts is that an existing regulatory framework must be in place that permits the future reimbursement or requires
the future settlement of regulated assets or liabilities, respectively. Consequently, a regulated asset is recognised in
underlying financial information in respect of permitted reimbursements of current year expenses in future year's tariffs.
Viceversa, a regulated liability is recognised in underlying financial information in respect of required settlements
(i.e.repayments) of current year revenues through future tariffs.Furthermore, until 2015 certain investments in the
Netherlands were financed via auction receipts resulting from auctioning available capacity on cross-border interconnections.
There are three customers in the German segment that generate revenues that are more than 10% of our total revenue.
Therevenue from these customers amount respectively EUR 816million (2019: EUR 921 million), EUR 770million
(2019:EUR 724 million) and EUR 572million (2019: EUR 662 million).
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2020 2019
(EUR million) Investments Assets Liabilities Investments Assets Liabilities
TSO Netherlands 1,281 7,790 4,564 1,131 7,075 4,014
TSO Germany 2,121 19,637 14,271 1,925 16,977 11,836
Non-regulated activities 10 841 204 8 561 257
Total segments 3,412 28,268 19,039 3,064 24,613 16,107
Eliminations and adjustments - -968 730 - -937 1,307
Consolidated underlying information 3,412 27,300 19,769 3,064 23,676 17,414
2020 2019
(EUR million) Assets Liabilities Assets Liabilities
TSO Netherlands 7,405 3,976 6,604 3,310
TSO Germany 19,517 13,747 16,736 11,526
Non-regulated activities 857 215 630 270
Total segments 27,779 17,938 23,970 15,106
Eliminations and adjustments -973 730 -997 1,307
Consolidated IFRS information 26,806 18,668 22,973 16,413
IFRS investments are equal as underlying investments.
For an analysis of the underlying results see the ‘Secure a solid financial performance and investor rating’ section of the
integrated annual report.
Regulatory deferral accounts: reconciliation to IFRS figures
The difference between underlying financial information - as presented in the segment information and board report - and
IFRS reported figures is related to the recognition of regulated assets and liabilities, auction receipts and the measurement of
tangible fixed assets. In the IFRS financial statements, revenue from contracts with customers is recognised when control of
the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services.In the underlying financial information revenues are recognised
according the permissible tariff decision adopted by the regulator.By doing so, volume and post calculation differences are
directly matched to the related costs and therefore provide additional relevant insight to management for steering TenneT.
These differences also result in different deferred tax balances in underlying financial information compared to IFRS reported
figures. No other differences between underlying financial information and IFRS exist.
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Underlying financial information can be reconciled to reported IFRS figures as follows:
2020
(EUR million) TSO NL TSO Germany
Non-
regulated
Total
Connection and transmission services 907 2,011 - 2,918
Maintenance of the energy balance 52 92 - 144
Operation of energy exchanges 4 - - 4
Offshore (balancing) 153 1,082 - 1,235
Other 52 99 -2 149
Inter-segment 22 23 - 45
Total underlying revenue 1,190 3,307 -2 4,495
Inter-segment adjustments and eliminations -22 -23 - -45
Total underlying revenue from contracts with customers 1,168 3,284 -2 4,450
Grid expenses -446 -1,666 9 -2,103
Other operating expenses -483 -1,000 -14 -1,497
Share in profit of joint ventures and associates 1 30 29 60
Underlying operating profit 240 648 22 910
Revenue adjustment to IFRS -44 619 - 575
Cost adjustment to IFRS 7 -136 - -129
IFRS operating profit 203 1,131 22 1,356
Finance result -195
Profit before income tax 1,161
Income tax expense -324
Profit for the year 837
2019
(EUR million) TSO NL TSO Germany
Non-
regulated
Total
Connection and transmission services 872 1,868 - 2,740
Maintenance of the energy balance 43 59 - 102
Operation of energy exchanges 2 2 - 4
Offshore (balancing) 66 1,012 - 1,078
Other 55 109 36 200
Inter-segment 25 15 - 40
Total underlying revenue 1,063 3,065 36 4,164
Inter-segment adjustments and eliminations -25 -15 - -40
Total underlying revenue from contracts with customers 1,038 3,050 36 4,124
Grid expenses -393 -1,525 - -1,918
Other operating expenses -434 -1,005 -34 -1,473
Share in profit of joint ventures and associates - 6 29 35
Underlying operating profit 211 526 31 768
Revenue adjustment to IFRS -226 564 - 338
Cost adjustment to IFRS 7 -36 - -29
IFRS operating profit -8 1,054 31 1,077
Finance result -204
Profit before income tax 873
Income tax expense -250
Profit for the year 623
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Reconciliation IFRS to underlying figures
2020 2019
(EUR million) IFRS figures
Underlying
items
Underlying
figures
IFRS figures
Underlying
items
Underlying
figures
Revenue 5,025 -575 4,450 4,422 -338 4,084
Grid expenses -2,252 149 -2,103 -1,955 50 -1,905
Personnel expenses -239 - -239 -229 - -229
Depreciation and amortisation of assets -1,074 -20 -1,094 -973 -21 -994
Other operating expenses -171 - -171 -217 - -217
Other (gains)/losses 7 - 7 -6 - -6
Total operating expenses -3,729 129 -3,600 -3,380 29 -3,351
Share in profit of joint ventures and associates 60 - 60 35 - 35
Operating profit 1,356 -446 910 1,077 -309 768
Finance income 2 4 6 3 12 15
Finance expenses -197 -14 -211 -207 -39 -246
Finance result -195 -10 -205 -204 -27 -231
Profit before income tax 1,161 -456 705 873 -336 537
Income tax expense * -324 135 -189 -250 114 -136
Profit for the year 837 -321 516 623 -222 401
Profit attributable to:
Equity holders of ordinary shares * 748 -321 427 534 -222 312
Hybrid securities 43 - 43 33 - 33
Owners of the company 791 -321 470 567 -222 345
Non-controlling interests 46 - 46 56 - 56
Profit for the year 837 -321 516 623 -222 401
Basic and diluted earnings per share 3,740 2,135 2,670 1,560
Underlying items
To be settled in tariffs -353 -181
Auction receipts -179 -136
Investment contributions 5 5
Maintenance of the energy balance -48 -26
Revenue -575 -338
To be settled in tariffs 149 50
Grid expenses 149 50
Depreciation and amortisation of assets -20 -21
Total operating expenses -20 -21
Share in profit of joint ventures and associates - -
Operating profit -446 -309
To be settled in tariffs
Revenue surpluses and deficits resulting from differences between expected (ex ante) and realised (ex post) electricity
transmission volumes are incorporated in the tariffs of subsequent years in both, Germany and the Netherlands. In the
underlying financial information, these surpluses and deficits are recorded as assets and liabilities, respectively, under
‘tobesettled in tariffs’. The expenses have to be settled in future tariffs in the coming years.
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The underlying itemto be settled in tariffs is part of revenue streamconnection and transmission services EUR 353 million
(2019: EUR 181 million).
Auction receipts & investment contributions
Auction receipts result from auctioning the available transmission capacity on cross-border interconnections. These receipts
are not at our free disposal. In accordance with European law, auction receipts are to be used to invest in additional cross-
border interconnections or to be refunded through tariff reductions. In the Netherlands, we have agreed with our regulator
(Autoriteit Consument en Markt) to fully utilise auction receipts to reduce future tariffs. The current outstanding balance of
auction receipts will be refunded via tariffs over the coming years.On 19 November 2019, an addendum to the original
power agreement was signed. The agreements relate to the restitution of existing auction fees in order to limit the increase
innet tariffs in 2020. In Germany, the use of auction receipts for investments is effectively achieved by reducing tariffs over a
rolling 20-year period as of 2019.
Investments financed by using auction receipts are classified as investment contributions and are reported under ‘liabilities’.
A periodic amount equal to the depreciation charges, plus a portion of the operating expenses, is released to the statement
of income, following the release scheme as described above.
The underlying item auction receipts is part ofrevenue stream operations of energy exchanges EUR 179 million
(2019: EUR136 million). The underlying item investment contribution is part of revenue stream other -/- EUR 5 million
(2019: -/- EUR 5 million).
Maintenance of the energy balance
As system manager of the high-voltage grid in the Netherlands, we receive funds for performing certain statutory duties,
such as the maintenance of the energy balance. The proceeds from these activities (i.e., imbalance settlements) may only
beused after approval by the ACM. Imbalance settlements collected during the year are to be offset in transmission tariffs in
the subsequent year. Consequently, these amounts are recorded as a liability and released in the subsequent year in the
underlying financial information.
As the balancing group coordinator, the TSO in Germany is responsible for balancing the balancing groups in terms of
energy. We balance surplus or shortfall balancing groups by means of control energy and bill the balancing group managers
for the resulting costs. For this billing of balance imbalances, the so-called “Uniform balancing energy price across control
zones” (reBAP) is used. As a result, TenneT TSO GmbH (TTG) receives higher payments from the balancing group managers
than TTG pays to the power plant operators. The resulting additional revenues from the balancing energy billing system are
to be deducted from the grid charges. Analogously, reduced revenues will increase future grid fees.
The underlying itemmaintenance of the energy balance is part of revenue stream maintenance of the energy balance
EUR48 million (2019: EUR 26 million).
Depreciation and amortisation of assets
Differences in depreciation and amortisation of assets occur due to the difference in accounting treatment of the regulatory
deferral accounts and the related cash flows in order to determine the economic useful life and recoverable amount of the
assets resulting from acquisitions and used for impairment analysis.
Between Underlying and IFRS there is no difference in depreciation method, but the amount of depreciation differs mainly
due toan impairment under IFRS of the NorNed cable in 2015 of EUR 232 million which is not recognised under Underlying.
With regard to Germany, depreciation as well as assets in Underlying are higher due to higher acquisition costs resulting
froman adjustment in connection with the Purchase Price Allocation in 2010.
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3 Revenue
Connection and transmission services
Revenue from connection and transmission is regulated by the ACMin the Netherlands and by the BNetzA in Germany.
Revenue from connection and transmission services includes revenue from services provided to DSOs and industrial clients
(such as resolution of transmission restrictions, congestion management and reactive power management).
Revenue increased partly due to ongoing investments and a growing asset base.
Maintenance of the energy balance
We are responsible to ensure that electricity supply and demand is in balance at all times (i.e. the alternating current frequency
in the power grid must be at 50 Hz continuously). If this balance is significantly disrupted, it may result in a power outage or
even a black-out, depending on the length and severity of the imbalance.To ensure this balance, we contract anddeploy
(among others) reserve and emergency capacity to compensate unexpected fluctuations in supply and demand. Theproceeds
from maintaining this energy balance (e.g. imbalance settlements) fluctuate considerably and are refunded through regulated
tariffs in both the Netherlands and Germany in subsequent years.The tariffs are set by both the German and Dutch regulator.
Operation of energy exchanges
This amount includes revenues resulting from the auctioning of cross-border (electricity transmission ‘interconnection’) capacity.
Offshore (balancing)
Total offshore (balancing) increased mainlydue to thehigher imputed return on equity and increasing offshore asset base.
Revenue from offshore (balancing) is regulated.Due to a regulatory decision in 2020, affecting the periods 2017-2020,
anadditional income pertaining to the years 2017-2019 ad EUR 29 million and additional income related to 2020 amounting
to EUR 15 million has been recorded.
i Accounting policy
Revenue primarily represents the sales value derived from the connection and transmission of electricity together with
thesales value derived from the provision of other services to customers during the year. Revenue from contracts with
customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects
theconsideration to which the Group expects to be entitled in exchange for those goods or services.
Revenues are from contracts with a single performance obligation. The assessment of unbilled connection and transmission
services supplied to customers between the date of the last meter reading and year-end is subject to significant judgement.
This assessment is primarily based on expected consumption and weather patterns.
If revenue received or receivable exceeds the maximum annual amount as determined by the regulator, ACM or BNetzA,
anadjustment will be made to future tariffs to reflect this over-recovery. Under IFRS, no liability is recognised since this
adjustment relates to the provision of future services. Similarly, no asset is recognised when a regulator permits increases
tobe made to future tariffs in respect of under-recovery.
Offshore (balancing) revenues in The Netherlands are accounted in accordance with the recognition and measurement
principles of IAS 20. These revenues are not recognized until there is reasonable assurance that the Group will comply with
the conditions attached to prerequisites for receiving this income.
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4 Operating expenses
Grid expenses
(EUR million) 2020 2019
System services 1,238 1,179
Connection and transmission services 360 317
Maintenance of the energy balance 145 98
Maintaining and operating transmission grids 516 370
Other -7 -9
Total 2,252 1,955
System services increased additionally due to higher costs related to feed-in management, transmission restrictions and
gridlosses. Increase of cost of maintaining and operating transmissions grids mainly related to higher insurance costs,
Personnel expenses
(EUR million) 2020 2019
Salaries 318 288
Social security contributions 47 40
Pension charges defined benefit plans 20 14
Pension charges other plans 23 19
Other personnel expenses 35 28
Capitalised costs for (in)tangible fixed assets -204 -160
Total 239 229
Average workforce in FTEs (internal employees only) 3,927 3,526
Average workforce in FTEs employed in the Netherlands 1,712 1,538
Average workforce in FTEs employed in the Germany 2,215 1,988
Key management remuneration
Members of the Executive Board and Supervisory Board are regarded as key management. Aggregate remuneration of
members of the Supervisory Board and Executive Board is as follows:
Supervisory Board (EUR thousand) Fixed
Committee
fee
Total
2020 156 59 215
2019 136 50 186
Executive Board (EUR thousand) Fixed Variable Pension cost Total
2020 1,543 - 370 1,913
2019 1,230 194 257 1,681
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The aggregate Executive Board remuneration comprises remuneration of statutory directors of EUR 1,827thousand (2019:
EUR 1,253 thousand) and remuneration of non-statutory directors of EUR 86 thousand(2019: EUR 427 thousand). Since
2020 all members of the Executive Board are statutory directors. Pension remuneration equals (i) the contributions payable
to the defined contribution plan for service rendered in the period or (ii), for defined benefit plans, the current service cost
and, when applicable, past service cost.
Other operating expenses
(EUR million) 2020 2019
Accommodation and office expenses 71 66
Consultancy expenses 39 27
Hiring of temporary personnel 38 31
Travel and living expenses 10 16
Other expenses 13 77
Total 171 217
The decrease of the other operating expenses is mainly related to the release of the offshore liability.
The fees listed in the table below relate to the procedures applied to the Company and its consolidated Group entity by
Deloitte Accountants B.V. The Netherlands (2019: EY network firms (including Ernst & Young Accountants LLP), the external
auditor as referred to in section 1(1) of the Dutch Accounting Firm Oversight Act (Dutch acronym: Wta), as well as by other
Dutch and foreign-based Deloitte individual partnerships and legal entities, including their tax services and advisory groups.
(EUR thousand) 2020 2019
Audit of the financial statements
Deloitte Accountants B.V. 813 -
Deloitte GmbH Wirtschaftsprüfungsgesellschaft 833 -
Ernst & Young Accountants LLP - 770
Ernst & Young Germany - 592
Total audit of the financial statements 1,646 1,362
Other assurance services
Deloitte Accountants B.V. 451 -
Deloitte GmbH Wirtschaftsprüfungsgesellschaft 52 -
Ernst & Young Accountants LLP - 309
Ernst & Young Germany - 172
Total other assurance services 503 481
Total assurance services 2,149 1,843
Other services (other Ernst & Young firms) - 33
Total other services - 33
Total audit fees 2,149 1,876
The financial audit fees include the aggregate fees in 2020 and 2019 for professional services rendered for the audit of
TenneT’s Integrated Annual Report and annual statutory financial statements of subsidiaries or services that are normally
provide by the auditor in connection with the audits.
The other assurance fees include the aggregate fees invoiced for assurance and services for other audit services, which
generally only the company’s independent auditor can reasonably provide, such as comfort letter, regulatory statements
andaudit of grant statements.
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i Accounting policy
We purchase electricity to supply our customers in The Netherlands and Germany and to meet our own energy needs.
Substantially all our costs of purchasing electricity for supply to customers are recoverable at an amount equal to
cost. The timing of recovery of these costs can vary between financial periods leading to an under- or over-recovery
within any particular year that can lead to large fluctuations in the income statement. We follow approved policies to
manage price and supply risks for our commodity activities.
Our energy procurement risk management policy and delegations of authority govern our commodity trading
activities for energy transactions. The purpose of this policy is to ensure we transact within pre-defined risk
parameters and only in the physical and financial markets where we or our customers have a physical market
requirement. In addition, state regulators require TenneT Grid to manage commodity risk and cost volatility prudently
through diversified pricing strategies. In both The Netherlands and Germany, we are required to file a plan outlining
our strategy to be approved by regulators. In certain cases, we might receive guidance with regard to specific hedging limits.
Energy purchase contracts for the forward purchase of electricity that are used to satisfy physical delivery
requirements to customers, or for energy that TenneT uses itself, meet the expected purchase or usage requirements
of IFRS 9. They are, therefore, not recognised in the financial statements until they are realised. Disclosure of
commitments under such contracts is made in note 28 as “Grid-related commitments”.
Operating expenses are expenses incurred during regular day-to-day business, such as system services, connection and
transmission services, personnel expenses, depreciation and accommodation and travel costs. Operating expenses are
recorded in the statement of income in the period they incurred.
5 Finance expenses
(EUR million) 2020 2019
Interest on borrowings and credit facilities 188 178
Capitalised interest on assets under construction -11 -9
Interest on provisions 2 19
Interest on defined benefit pension plans 4 4
Interest on lease liability 2 2
Other finance expenses 12 13
Total 197 207
i Accounting policy
Finance expenses comprise mainly interest expenses, such as interest on borrowings and credit facilities, interest on
provisions, interest on defined benefit plans and interest on lease liabilities. Finance expenses are recorded in the statement
of income using the effective interest rate method.
6 Income tax
We strive to comply with all applicable tax legislation in a socially responsible manner, maintaining among the highest levels
of transparency, quality and integrity. Management responsibility and oversight of our tax strategy lies with our‘Chief
Financial Officer' (CFO), our Associate Director Financial Governance & Services and our Head of Tax who monitor our tax
activities and report to the Executive Board and the Audit, Risk and Compliance Committee.
Our tax strategy is fully consistent with our corporate strategy. Building a transparent relationship with tax authorities based
on mutual trust is an integral part of this strategy. We have built and are continuously improving our tax control framework to
be‘in control’ of tax risks and to allow the company to demonstrate to all its stakeholders, including the tax authorities, that
the company fully complies with all applicable laws and regulations.
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Income tax is payable in the Netherlands and Germany. In the Netherlands, we entered into a so called ‘horizontal monitoring
agreement’ with the Dutch tax authorities. Based on transparency and mutual trust, this agreement is meant to ensure that
tax positions are fully disclosed and agreed on in advance, as a result of which generally no tax audits are performed by the
Dutch tax authorities. All corporate income tax returns in the Netherlands have been filed up to and including 2018.
Corporate income tax paid in the Netherlands in 2020 amounted to EUR36million.
In Germany, corporate income and trade tax returns for all German entities have been filed up to and including fiscal
year2019. The German tax authorities have started the tax audit for the fiscal years 2017 to 2019.In 2020, we paid
EUR366million of corporate income tax in Germany.
The key components of income tax expense are:
Consolidated income statement (EUR million) 2020 2019
Current income tax charge 190 339
Deferred tax: 134 -89
Income tax expense reported in the statement of income 324 250
* Current income tax charge 2019 changed from 243 into 250 due to reconsideration of the amendment on IAS 12 explained in note 1.
Consolidated statement of comprehensive income (EUR million) 2020 2019
Effect of re-measurement of defined benefit pensions 8 40
Income tax charged directly to other comprehensive income 8 40
Income tax on profits has been provided at the rates prevailing in the respective countries. In the Netherlands, a statutory
corporate income tax rate of 25% is applied, while in Germany, on average, a marginal statutory corporate income tax rate
of29,53% is applied (including trade tax levied by municipalities or‘Gewerbesteuer'). Reconciliation between tax expense
and the accounting profit multiplied by a statutory income tax rate of 25% is as follows.
(EUR million) 2020 2019
Profit before income tax 1,162 873
Statutory income tax rate of 25% (The Netherlands, 2019: 25%) 290 218
Effect of higher tax rate in Germany 46 39
Effect of future tax rate change in the Netherlands 1 9
Adjustments in respect to current and deferred tax of previous years -3 -11
Non-deductible costs 1 1
Non-taxable income -6 -3
Tax paid by third parties -5 -3
At the effective income tax rate of 28% (2019: 29%) 324 250
The main reason for the higher effective tax rate of 28% compared to the statutory tax rate of 25% is the effect of the higher
tax rate in Germany. The remeasurement of the deferred tax position due to the enacted rate change in the Netherlands has
also increased the effective rate. The increase of the tax paid by third parties relates to the increase of third party income
compared to 2019.
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Deferred tax relates to the following:
Statement of financial
position Statement of income
(EUR million) 2020 2019 2020 2019
Auction receipts -139 -185 -46 3
Investment contributions -69 -62 6 1
Tariffs to be settled -115 50 165 -33
Depreciation for tax purposes -156 -101 56 -55
Provisions 378 323 -46 -42
Profit allocation to hybrid securities -6 -5 - -
Other -2 - -1 37
Net deferred tax assets/(liabilities) -109 20
Deferred tax expense/(income) 134 -89
The effect on leases is part of ‘Other' and due to low interest not material.
Deferred taxes are presented in the statement of financial position as follows:
(EUR million) 2020 2019
Deferred tax assets 37 83
Deferred tax liabilities -146 -63
Deferred tax, net -109 20
The deferred tax assets mainly relate to TSO Germany. The current German tax law contains no time limits for deferred tax
assets.
Movements in deferred tax positions are set out below.
(EUR million) 2020 2019
At 1 January 20 -109
Tax expense during the period recognised in statement of income -134 89
Initial recognition of acquired companies (note 11) -3 -
Tax income during the period recognised in other comprehensive income 8 40
At 31 December -109 20
iAccounting policy
The tax charge for the period is recognised in the statement of income, equity orthe statement of comprehensive income,
inaccordance with the relevant accounting treatment of the related transaction.Only for equity instruments tax is recognised
in the statement of income instead of equity.The tax charge comprises both current and deferred tax.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and tax laws used to calculate these amounts are those enacted or substantively enacted at the
reporting date in those countries where we operate and generate taxable income.
Deferred tax is recognised using the liability method with respect to temporary differences between the tax bases of assets
and liabilities and their respective carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets
and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date in the
relevant jurisdictions.
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Deferred tax is generally recognised in respect of all temporary differences, the carry-forward of unused tax credits and any
unused tax losses. Deferred tax assets (also in association withinvestments in subsidiaries, associates and interests in joint
arrangements)are recognised to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised. This is assessed
annually. Deferred tax is not recognised for the temporary differencesarising from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered. There are no unrecognised carry forward
losses per 31 December 2020 (2019: nil). Deferred tax assets and liabilities are recognised gross in the statement of financial
position unless:
• the entity has a legally enforceable right to set off current tax assets against current tax liabilities and
• the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority
oneither:
• the same taxable entity or
• different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise
theassets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered. There are no unrecognised carry forward losses per
31December 2020 (2019: nil).
7 Earnings per share
Earnings per share have been calculated by dividing profit for the year attributable to ordinary shareholder of the Group,
afteradjustment for the distribution on hybrid securities, by the weighted average number of ordinary shares outstanding
during the year. The following table reflects the income and share data used for the basic and diluted earnings per
sharecalculations:
(EUR million) 2020 2019
Profit for the year attributable to the ordinary shareholder of the company 792 567
Allocation to hybrid securities -44 -33
Profit for the year attributable to equity holders of the company adjusted for the allocation
to hybrid securities 748 534
Weighted average number of ordinary shares in issue (in thousands) 200 200
i Accounting policy
Calculation of earnings per share is based on the profit for the year attributable to TenneT's shareholder and the weighted
average number of shares outstanding during the year.
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8 Tangible fixed assets
(EUR million)
High-voltage
substations
High-voltage
connections
Other assets
Assets under
construction
Total
Cost
At 1 January 2019 8,331 6,699 882 4,272 20,184
Additions 372 247 39 2,354 3,012
Transfers 1,524 1,401 44 -2,969 -
Transfer to intangible assets - - - -26 -26
Changes in estimations (note 22) 143 189 - - 332
Disposals -11 -6 -4 -4 -25
At 31 December 2019 10,359 8,530 961 3,627 23,477
Additions 260 324 60 2,698 3,342
Transfers 536 824 32 -1,392 -
Initial recognition of acquired companies (note 11) - - 11 - 11
Changes in estimations -17 -90 - - -107
Disposals -6 - -2 - -8
At 31 December 2020 11,132 9,588 1,062 4,933 26,715
Depreciation and impairment
At 1 January 2019 2,020 1,843 272 - 4,135
Depreciation for the year 446 305 59 - 810
Impairment 2 - - - 2
Disposals -6 -4 -1 - -11
At 31 December 2019 2,462 2,144 330 - 4,936
Depreciation for the year 503 358 60 - 921
Disposals -1 - - - -1
At 31 December 2020 2,964 2,502 390 - 5,856
Net book value:
At 1 January 2019 6,311 4,856 610 4,272 16,049
At 31 December 2019 7,897 6,386 631 3,627 18,541
At 31 December 2020 8,168 7,086 672 4,933 20,859
High-voltage substations include onshore and offshore transformer and converter stations. High-voltage connections consist
of overhead and underground connections. Unlike lands for substations, lands surrounding high-voltage pylons and cables
are generally not owned by the Group. Other tangible fixed assets consist of office buildings, office ICT equipment and other
company assets.
In 2020 the discount rate for the decommissioning provision was set between 0.0% and 0.1% (2019: 0.4% and 0.7%) for
OWF connections (see note 22).The discount rate has been adjusted in 2020 to better reflect current market assessments
of the time value of money and the risks specific to the liability.Since the main part of the decommissioning provision was
recognised as part of the carrying value of the related asset, changes in discount and inflation rate, if any, directly impact this
carrying value.
The amount of borrowing costs capitalised during 2020 is disclosed in note 5. The effective interest rate used to determine
the amount of borrowing costs capitalised was 2.1% (2019: 2.1%).
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i Accounting policy
Tangible fixed assets are valued at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Suchcosts include the cost of replacing part of the asset and borrowing costs for long-term construction projects if the
recognition criteria are met. When significant parts of the asset are required to be replaced at intervals, such parts are
recognised as individual assets with specific useful lives and depreciated accordingly. Likewise, when major maintenance is
performed, its cost is recognised in the carrying amount of the asset as a replacement, if the recognition criteria are met.
Allother repair and maintenance costs are recognised in the statement of income as incurred. The present value of the
expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset, if the
recognition criteria for a provision are met. Depreciation is calculated on a straight line basis.
An asset is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of income when the asset is derecognised.
General and specific borrowing costs directly attributable to the acquisition, construction or production of the tangible
fixedassets, are added to the cost, until such time that the assets are substantially ready for their intended use or sale.
Noborrowing costs are capitalised where the borrowing costs are directly compensated in the year of construction.
+ Key estimates and assumptions
To calculate depreciation amounts, the following useful lives of various asset categories are assumed:
Estimated useful lives tangible fixed assets Years
Substations
Switches and offshore converter stations 20-35
Offshore platforms 20
Security and control equipment 10-20
Power transformers 20-35
Capacitor banks 20-35
Telecommunications equipment 10-20
Connections
Pylons/lines 35-40
Cables (subsea and underground) 20-40
Other
Office buildings 40-50
Office IT equipment 3-5
Process automation facilities 5
Other company assets 5-10
Residual values, useful lives and methods of depreciation of assets are reviewed at each financial year-end and adjusted
prospectively, if appropriate. Per our annual review, the estimated useful lives of certain regulatory assets have been
extended per 1 July 2020, resulting in a decrease of EUR 15.3 million in the current financial year. The annual effect
for2021and beyond is expected to be approx. EUR 30 million in lower depreciation charges. The change in estimates is
related to the changed assumptions of the asset retirement obligation (note 22).
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9Right-of-useassets and lease liabilities
Right-of-use assets
(EUR million)
Land &
buildings
Power plants
NordLink
cable
Other
right-of-use
assets
Total
Cost
Initial recognition IFRS 16 95 218 - 71 384
Additions 17 95 - 30 142
Depreciation -11 -108 - -15 -134
At 31 December 2019 101 205 - 86 392
Additions 7 14 249 3 273
Remeasurement 5 -39 - 2 -32
Depreciation -11 -90 -7 -14 -122
Other movement -9 - - 3 -6
At 31 December 2020 93 90 242 80 505
Leased Land & Buildings
Land is mainly leased to set up pylons for transmission cables. These contracts run for a period of 2 - 170 years.
Buildingsare leased mainly as office space and storage space. These contracts run for a period of 1 - 36 years.
Lease contracts for buildings are negotiated individually and include a variety of different terms and conditions,
includingextension options.
Lease payments are in substance fixed, only a minority of the lease contracts contain clauses with reference to
theCPIindex.
Leased power plants
TenneT is committed to the use of grid reserve power plants representing lease commitments according to IFRS 16.
Thecommitments have a maturity of 2-7 years and can be prolonged depending on the decision of regulatory authorities.
Lease payments are in substance fixed and TenneT had no power plant leases which contained variable lease payments.
Lease contracts do not include any clauses with reference to an index or contractual rate.
Leased NordLink cable
With the commissioning of the NordLink interconnector cable in December 2020, the lease agreement between TenneT
andNOKA was recognised, for which a right of use and a corresponding lease liability of EUR 249 million was recognised.
The right-of-use asset will be amortised over the remaining lease term (until end of 2023), resulting in an amortisation of
EUR7 million in 2020. No extension option according to IFRS 16 is included in the lease contract. The lease liability was
reduced by a high lease payment of EUR 51 million in December 2020 to EUR 199 million at year-end. The high lease
payment results mainly from regulatory peculiarities in connection with the capitalisation of the interconnector cable in NOKA
(lessor), e.g. an imputed depreciation for the entire year and not only pro rata is included in the calculation basis of the lease
payment. The lease payments are in substance fixed.
Leased others
Telecom lease contracts (includingfibreglass cables) run for a period between 3 and 36 years.For qualifying employees
TenneT leases cars with a lease term between 1 and 10 years.TenneT does not purchase or guarantee the value of leased
telecom assetsorcars.
TenneT has several contracts with termination / extension options. In determining the lease term all relevant facts and
circumstances that create a significant economic incentive to exercise those options are taken into consideration.
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TenneT had no material 'sub lease' contracts in 2020 and 2019 and therefore no material income from subleasing right-of-
use assets. TenneT has not entered into any sale and leaseback contracts. No lease contracts with residual value guarantees
are entered into.No lease contracts have been concluded that contain restrictions or covenants.
Lease payments are in substance fixed, only some of the lease contracts have pre-determined lease payment changes.
Short-term leases and leases of low value
In some cases TenneT leases other assets with terms of 1 year. TenneT considers these assets to be of low-value or short
term in nature and therefore no right of use assets and lease liabilities are recognised for these leases. The aggregate total
ofshort-term lease expenses for more than one month and low value assets lease expenses amounted to EUR 2million
(2019: EUR 2 million).
Lease liability
2020 2019
(EUR million) Current Non-current Total Current Non-current Total
Lease liability Land & buildings 12 80 92 6 94 100
Lease liability power plants 42 48 90 93 114 207
Lease liability NordLink 68 131 199 - - -
Lease liability other leases 13 68 81 9 78 87
Total 135 327 462 108 286 394
(EUR million)
Lease liability
Land &
buildings
Lease liability
power plants
Lease liability
NordLink
Lease liability
other leases
Total
Initial recognition IFRS 16 95 218 - 71 384
Addition 17 95 - 30 142
Interest 1 - - 1 2
Repayments -11 -102 - -16 -129
Other movements -2 -4 - 1 -5
At 31 December 2019 100 207 - 87 394
Addition 8 13 250 4 275
Interest 1 - - 1 2
Remeasurement 5 -39 - 2 -32
Repayments -12 -91 -51 -15 -169
Other movements -10 - - 2 -8
At 31 December 2020 92 90 199 81 462
The total cash outflow (including low value items and short term leases) in 2020 was EUR 171million (2019: EUR 130 million).
Future cash outflows of leases not yet commenced but to which TenneT is committed mainly relate to power plants leases
and amount to EUR 46 million yearly from 2022 till 2032.
The maturity analysis of lease liabilities is disclosed in note 25.
(EUR million) 2020 2019
Depreciation expense of right-of-use assets -122 -134
Short-term lease expenses -2 -2
Interest expense on lease liabilities -2 -2
Total amount recognised in profit and loss -126 -138
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i Accounting policy
At inception of a contract, TenneT assesses whether a contract conveys the right to control the use of an identified asset for
a period in exchange for consideration, in which case it is classified as a lease.
TenneT recognises a right-of-use asset and a lease liability at the lease commencement date. The asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any
lease incentives received.
The lease asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term, considered to be indicated by the lease term.
The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any).
The lease liability is initially measured at the present value of outstanding lease payments, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, TenneT's incremental borrowing rate.If available, the interest
rate implicit in the lease is used for discounting (e.g. car leases). Otherwise the incremental borrowing rate is used and
shown in the table below.
2020 2019
Under 5 year 0.00% 0.00%
5-10 years 0.50% 0.50%
10-15 years 1.10% 1.10%
15-25 years 1.60% 1.60%
Above 25 years 2.00% 2.00%
After initial recognition the lease liability is measured at the present value of the remaining lease payments using the effective
interest method and is remeasured when there is a change in future lease payments arising from a change in an index or rate
or if TenneT changes its assessment of whether it will exercise a purchase, extension or termination option. A corresponding
adjustment is made to the carrying amount of the right-of-use asset with any excess over the carrying amount of the asset
being recognised in the profit or loss.
Short-Term Leases and Leases of Low Value
TenneT has elected not to recognise right-of-use assets and lease liabilities for short-term leases (leases with a term of
12months or less) and leases of low-value assets. TenneT recognises the lease payments associated with these leases as
an expense on a straight-line basis over the lease term or another systematic basis if that basis is more representative of
thepattern of the lessee’s benefit. Furthermore we have elected not to recognise the lease of intangible assets.
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10 Intangible assets
(EUR million) Goodwill Software
Customer
contracts
Other
intangible
assets
Intangible
assets under
construction
Total
Cost
At 1 January 2019 31 244 64 30 3 372
Additions - 3 - 1 48 52
Transfer from tangible assets - 2 - - 24 26
Transfers - 20 - 10 -30 -
At 31 December 2019 31 269 64 41 45 450
Additions - 1 - -1 66 66
Transfer from intangible assets under construction - 3 - - -3 -
Initial recognition of acquired companies (note 11) 4 - - 9 - 13
Transfers - 35 - - -35 -
At 31 December 2020 35 308 64 49 73 529
Amortisation and impairment
At 1 January 2019 - 200 48 13 - 261
Amortisation for the year - 23 5 1 - 29
At 31 December 2019 - 223 53 14 - 290
Amortisation for the year - 21 5 1 - 27
At 31 December 2020 - 244 58 15 - 317
Net book value:
At 1 January 2019 31 44 16 17 3 111
At 31 December 2019 31 46 11 27 45 160
At 31 December 2020 35 64 6 34 73 212
As at 31 December 2020 and 2019, goodwill was allocated to the following cash generating units (CGUs): TSO Netherlands
(EUR 3 million), TSO Germany(EUR24 million) and non-regulated activities (EUR8 million). The increase of EUR 4 million is
related to the acquisition of Globalways GmbH. Refer to note 11 for more information.
During 2020 EUR 26million (2019: EUR 16 million) of software was internally developed.
i Accounting policy
Intangible assets are measured at acquisition cost on initial recognition. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less
any accumulated amortisation and accumulated impairment losses. Except for capitalised development costs, internally
generated intangible assets are not capitalised and expenses are reflected in the statement of income in the period in which
they incur.
Goodwill is initially measured at cost and represents the excess of the consideration transferred over TenneT’s interest in the
value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of the non-controlling
interest in the acquiree. After initial recognition, goodwill is measured at cost less accumulated impairment losses.
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At each reporting date, we assess whether there is an indication that an asset may be impaired. If any indication exists,
orwhen annual impairment testing for an asset is required, the asset’s recoverable amount is estimated. The recoverable
amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. When the carrying
amountof an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to
itsrecoverable amount.
+Key estimates and assumptions
Estimated useful lives intangible assets Years
Goodwill Indefinite
Software 3-5
Customer contracts 10-14
Purchased rights to use land 25-45
Other 5-15
Intangible assets, with the exception of goodwill, are assumed to have a fixed useful life as shown above and are amortised
over this useful life. The useful life is re-assessed each reporting period. Intangible assets are amortised on a straight line
basis, as this best reflects the use of the asset.
Goodwill is assumed to have an indefinite useful life and is therefore not amortised, but is tested for impairment annually or
more frequently, if events or changes in circumstances indicate a triggering event, either individually or at the CGU level.
Impairment testing of goodwill
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs
(ouroperating segments, see note 2) or groups of CGUs expected to benefit from the synergies of the combination.
EachCGU or group of CGUs to which the goodwill is allocated represents the lowest level within the entity at which
thegoodwill is monitored for internal management purposes.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair
value less costs of disposal, an appropriate valuation model is used, if no recent market transactions can be identified.
The impairment calculation is based on detailed projections, which are prepared separately for each of the CGUs to which
the individual assets are allocated. The projections reflect current regulatory parameters, taking into account expected future
regulatory developments. Management believes that the resulting cash flows can be determined reliably and that they give
an appropriate reflection of the CGUs cash flow generating potential.
The recoverable amount of the Germany CGU was determined based on a value in use calculation using cash flow
projections from our three year business plan. The pre-tax discount rate applied to cash flow projections was 3.8%
(2019:3.8%). The cash flows beyond the three-year period until 2080 were estimated on the basis of regulatory allowed
returns and invested capital. The terminal value is determined estimating the regulatory asset base as of December 2080.
We concluded that the recoverable amount wassignificantly inexcess of the carrying value and as such no impairment
lossneeded to be recognised and as such no impairment is required.
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11 Business combinations
At 30 October 2020 TenneT acquired, through its subsidiaryRelined GmbH, 100% of the shares of Globalways GmbH
effective 1 January 2020 for a cash consideration of EUR 16 million. This company operates a network of internet
connections via fibre glass cables. The acquisition consideration contains an additional earn-out option in 2021 and 2022
ofboth EUR1.5million. The purchase price allocation as presented below is preliminary.
(EUR million)
Book value
of assets
acquired
Fair value
entries
Fair value
of assets
acquired
Tangbible fixed assets 10 1 11
Intangible assets - 9 9
Account- and other receivables 1 - 1
Liabilities
Deferred tax liabilitie - -3 -3
Loan to Relined GmbH -4 -4
Account- and other payables -2 -2
Net assets 5 7 12
Cash consideration 13
Deferred consideration 3
Total consideration 16
Goodwill arising from acquisition 4
i Accounting policy
Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured as the
aggregate of the assets and liabilities measured at their acquisition-date fair value (with a limited number of specified
exceptions) including the amount of any non-controlling interest in the acquiree. For each business combination, we elect
whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
Non-current assets held for sale are defined as non-current assets (other than financial instruments or property investments)
immediately available for sale and highly likely to be sold within a year. Non-current assets held for sale have been stated at
the lower end of the asset’s carrying value and fair value less costs of disposal.
12 Investments in joint ventures, joint operations and associates
Joint ventures
We have, directly or indirectly, 50% equity stakes in BritNed Development Ltd. ('BritNed'), DC Nordseekabel GmbH & Co.
KG (‘NOKA’), DC Nordseekabel Beteiligungs GmbH, Reddyn B.V., Tensz B.V. and TeslaN B.V. These investments are
classified as joint ventures, for which only the investments in BritNed (legal seat: Arnhem, the Netherlands) and NOKA
(legalseat: Bayreuth, Germany) are each considered as an investment of material value. Other joint ventures are
consideredimmaterial and are therefore not furtherdisclosed. The Group's share in profit (which is equal to other and
totalcomprehensive income) of these immaterial joint ventures amounted to EUR 3million in 2020 (2019: EUR 2million).
BritNed
BritNed is a joint venturewith National Grid International Ltd (National Grid), the British TSO. It owns and operates a
1,000MW 'Direct Current'(DC) interconnector between the United Kingdom and the Netherlands. Operating costs and
trading revenue are shared equally between TenneT and National Grid.
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NOKA
In February 2015, partner companies Statnett SF, TenneT and KfW IPEX-Bank GmbH (KfW) made a final investment decision
to establish an interconnector between Norway and Germany under the project name ‘NordLink’. Ownership of the
interconnector is equally split, with TenneT and KfW owning the Southern part through NOKA, a jointly owned company and
Statnett owning the Northern part. At the moment the main activities of NOKA are the construction of the Southern part of
the interconnector. Operating costs and trading revenue are shared equally between NOKA and Statnett.
The table below contains summarised financial information of material joint ventures and the reconciliation with their carrying
amounts.
2020 2019
Statement of financial position (EUR million) BritNed NOKA BritNed NOKA
Non-current assets 483 888 454 780
Cash and cash equivalents 46 48 46 13
All other current assets 29 59 22 95
Non-current liabilities -47 -80 -9 -72
Current liabilities -72 -15 -65 -56
Equity 439 900 448 760
Ownership TenneT 50% 50% 50% 50%
Carrying amount of the investment 220 450 224 380
2020 2019
Statement of income (EUR million) BritNed NOKA BritNed NOKA
Revenue 88 78 91 32
Depreciation and amortisation -16 -5 -16 -
Other costs -12 -3 -12 -2
Operating profit 60 70 63 30
Finance income and expenses -2 -2 -1 -3
Income tax expense -14 -8 -11 -15
Profit for the year* 44 60 51 12
Ownership TenneT 50% 50% 50% 50%
Group’s share in profit 22 30 26 6
* Profit for the year is equal to other and total comprehensive income.
BritNed had contingent liabilities of EUR 2 million (2019: EUR 2 million) mainly related to comfort letters issued.
NOKAhadcontingent liabilities of EUR 13million (2019: EUR 190 million) mainly related to investments in tangible fixed
assets.The construction phase of NOKA's NordLink project is expected to be finalised in the next months which is the
reason for the constant decline of the open amount for contingent liabilities.
None of our joint ventures are permitted to distribute profits without the consent from all shareholders or partners.
In2020EUR 25million dividend was received from BritNed (2019: EUR 28 million) and nilfrom other interests in joint
ventures (2019:EUR 1 million). During 2020 we contributed EUR 42million to NOKA's capital (2019: EUR 73 million).
Other interests in joint ventures amounted EUR 1 million at 31 December 2020 (2019: EUR 1 million).
Joint operations
In December 2020, TenneT established Equigy B.V. as a joint operation together with the Swiss and Italian TSOs.
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Associates
At 31 December 2020 our substantial investments in associates consisted of a 34% interest in HGRT and a 25% interest
inOpen Tower Company B.V. (hereafter referred to as ‘OTC’). In addition, the Group holds four immaterial investments in
Energie Data Services Nederland B.V. (EDSN), European Market Coupling Company GmbH (EMCC), WL Winet B.V. and
TSCNET Services GmbH (TSC). The Group's share in profit (which is equal to other and total comprehensive income) of
these immaterial associates amounted toEUR 4 million in 2020 (2019: EUR 2 million).
The summarised financial information of the material associatesand reconciliation with their respective carrying amounts,
ofthe investment in the consolidated financial statements is as follows:
2020 2019
Statement of financial position (EUR million) HGRT OTC HGRT OTC
Non-current assets 91 86 91 92
Current assets 1 29 1 33
Other non-current liabilities - -161 - -168
Current liabilities - -2 - -3
Equity 92 -48 92 -46
Ownership TenneT 34% 25% 34% 25%
Carrying amount of the investment 31 - 31 -
2020 2019
Statement of income (EUR million) HGRT OTC HGRT OTC
Revenue - 27 - 28
Depreciation and amortisation - -6 - -6
Other costs, gains and losses - -7 - -8
Operating profit - 14 - 14
Finance income and expenses 10 -5 10 -5
Income tax expense - -2 - -2
Profit for the year* 10 7 10 7
Ownership TenneT 34% 25% 34% 25%
Group's share in profit 3 2 3 2
* Profit for the year is equal to total and other comprehensive income.
HGRT
The legal seat of HGRT is in Paris, France. HGRT holds a 49% stake in EPEX. EPEX is the exchange for the power spot
markets for the 'North West Europe' (NWE) region and the United Kingdom.At 31 December 2020, HGRT had no
contingent liabilities outstanding (2019: nil). In 2020, EUR 3 million in dividends was received (2019: EUR 5 million).
OTC
OTC (legal seat: Vianen, the Netherlands) is a holding company and holds majority interests in four asset companies:
Colonne B.V., Mobile Radio Networks Vehicle B.V. (MRNV),OTC Networks B.V. and OTC II B.V. These companies mainly
own infrastructure assets specifically designed for terrestrial communications. OTC had no contingent liabilities as at
31December 2020 (2019: nil). EUR 2million dividend from OTC was received in 2020 (2019: EUR 4 million).
Effective 28 April 2020 Open Tower Company B.V. (OTC) established OTC Networks B.V., OTC holds 100% of the shares
ofOTC Networks.
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Other
Our interest in other associates amounted EUR 3 million at 31 December 2020 (2019: EUR 2 million). From other
associateswe received EUR 1 million dividend.
i Accounting policy
A joint venture is an arrangement whereby the parties in the arrangement have joint control over the net assets of the joint
arrangement.A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets and obligations for the liabilities of the arrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.An associate is an entity in which we have
significant influence, but no control. Significant influence is the power to participate in the financial and operating policy
decisions of the investor.
Investments in joint ventures and associates are accounted for using the equity method. Under the equity method, the
investment in the joint venture or associate is initially recognised at cost. The carrying amount of the investment is adjusted
to recognise changes in the Group’s share of net assets of the investment since the acquisition date. Goodwill relating to the
associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.
For investments in joint operations the following is recognised in relation to TenneT's interest in it:
• Assets, including its share of any assets held jointly;
• Liabilities, including its share of any liabilities incurred jointly;
• Revenue from the sale of its share of the output arising from the joint operation;
• Share of the revenue from the sale of the output by the joint operation;
• Expenses, including its share of any expenses incurred jointly.
The statement of income reflects our share in the results of operations of the investment. Any change in other
comprehensive income of those investors is presented as part of the other comprehensive income. In addition, when there is
a change recognised directly in the equity of the investment, our share of any change is recognised in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between us and the investment are eliminated to
the extent of the interest in the investment.When an associate or joint venture distributes dividend to us in excess of our
carrying amount, a liability is recognised ifTenneT:
• is obliged to refund the dividend;
• has incurred a legal or constructive obligation; or
• made payments on behalf of the associate.
In the absence of such obligations, the excess in net profit for the period is recognised. When the associate or joint venture
subsequently makes profits, this is only recognised when they exceed the excess cash distributions recognised in net profit
plus any previously unrecognised losses.
After application of the equity method, we determine whether it is necessary to recognise an impairment loss on our
investment in the joint venture or associate. At each reporting date, we determine whether there is objective evidence that
the investment is impaired. If such evidence exists, the amount of impairment is calculated as the excess of the carrying
value of the investment over its recoverable amount and recognised in the statement of income.
On loss of significant influence over the joint venture/associate, any retained investment is valued at fair value. Any difference
between the carrying amount of the investment on loss of significant influence and the fair value of the retained investment
and proceeds from disposal is recognised in the statement of income.
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13 Other financial assets
(EUR million) 2020 2019
Receivables from related parties 5 41
Fees for credit facilities available 5 6
Other 18 14
Total 28 61
The receivables from related parties mainly consisted of loans granted to NOKA and Mobile Radio Networks Vehicle B.V.
(a100% subsidiary of OTC) in anamount of nil (2019: EUR 36 million) respectively EUR 5 million(2019: EUR 5 million).
Theother position includes investments in several minorities. We contributed EUR 1 million in capital for these minorities.
i Accounting policy
Refer to note 27, accounting policies for financial instruments.
14 Inventory
Inventory primarily composed of oil which is used for measures taken at power plants that are standing by for TenneT.
Theprovision for inventory is EUR 11 million (2019: EUR 6 million).
The fair value of inventory was not materially different from the carrying value.
i Accounting policies
Inventory is stated at the lower of cost and net realisable value. Cost comprises direct purchase costs and associated costs
incurred in bringing inventories to their present condition and location. The net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
15 Account- and other receivables
(EUR million) 2020 2019
Amounts to be invoiced to EEG trade debtors 2,752 1,133
EEG trade receivables 15 9
Trade receivables 316 240
Amounts to be invoiced 490 520
VAT receivables 51 60
Interest receivable - 4
Other 171 119
Total 3,795 2,085
EEG trade receivables and amounts to be invoiced to EEG trade debtors
In accordance with theRenewable Energy Sources Act (EEG) German TSOs like TenneT TSO GmbH are required to
purchase electricity from producers of renewable energy at fixed feed-in tariffs. Subsequently such renewable energy is sold
on power exchanges at spot prices.
EEG revenues and expenses are legally required to be administrated separately and are legally designated to be equal,
except for certain potential bonus amounts payable to TenneT for marketing the energy on the power exchange.The EEG
levy also includes an additional liquidity buffer to avoid a net financing need for the TSOs. We act as an agent with respect
tothese EEG services.
EEG trade debtors and receivables consisted of the accrual of unbilled EEG levy mainly for the month December, the
outstanding invoices for the EEG levy, the accrual for horizontal balancing amounts (i.e. unsettled charges to the other
German TSOs) and energy trading revenues. EEG trade receivables were not at our free disposal. Refer to note 24 for
theEEG accounts payable.
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As a result of the Climate Programme 2030(“Klimaschutzprogramm 2030”) the four German TSOs willreceive EUR 10.8 billion
from the German government tofinance the EEG in 2021. TenneT will receive 32% of thisamount in three instalments
(January 2021: EUR 1,632million, May 2021: EUR 960 million and October 2021: 864million) and will use the payments to
finance paymentsmade to renewable energy producers.
Refer to note16 for EEG deposits.
Trade receivables
As at 31 December, the ageing analysis of the trade receivables was as follows:
Past due
(EUR million) Total Not past due 0-30 days 31-60 days
More than
60 days
2020 316 281 2 2 31
2019 240 207 18 3 12
Changes in the provision for expected credit losses were as follows:
(EUR million) 2020 2019
At 1 January 13 12
Charge for the year 4 4
Utilised -1 -2
Unused amounts reversed - -1
At 31 December 16 13
As at 31 December 2020, receivables with an initial value of EUR 7million (2019: EUR 4 million) were fully provided for.
Amounts to be invoiced
The majority of the amounts to be invoiced related to unbilled grid fees and rechargeable offshore costs in Germany.
i Accounting policy
Refer to note 27, accounting policies for financial instruments.
16Cash, cash equivalents and bank overdrafts
Cash and cash equivalents consist of:
2020 2019
(EUR million)
At free
disposal
Not at free
disposal
Total
At free
disposal
Not at free
disposal
Total
Collateral securities - 85 85 - 79 79
EEG funds - 5 5 - 589 589
EEG deposits < 3 months - - - - 30 30
Deposits 475 - 475 - - -
Cash at bank 2 - 2 202 1 203
Cash and cash equivalents 477 90 567 202 699 901
Bank overdrafts -90 - -90 - - -
Total cash and cash equivalents used
in cash flow statement 387 90 477 202 699 901
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Funds related to EEG activities have been legally separated as required by BNetzA. EEG Funds are not at the Group's free
disposal. For further reference regarding EEG we refer to note 15Cash at banks carry interest at floating rates based on daily
bank deposit rates.
i Accounting policy
In the consolidated statement of cash flows, cash and cash equivalents include cash at bank, deposits held at call with
banks, other short-term highly liquid investments with remaining maturities of three months or less and are presented net
ofoutstanding bank overdrafts. Securities are deposits on collaterals that serve as financial security for auction and energy
exchange transactions. A matching obligation is recognised towards the party that deposited the funds on the collateral.
Securities are initially stated at fair value and subsequently at amortised cost.
17 Capital management
The primary objective of our capital structure is to ensure that we have a solid financial position to absorb changes in the
regulatory environment and to enable us to execute our extensive investment programme which is essential for the success
of the energy transition in the Netherlands and Germany. The majority of the funding for our investment programme is
sourced from the debt capital markets i.e. from institutional investors, commercial banks and international financial
institutions (e.g. the European Investment Bank).
To maintain excellent access to financial markets at favourable conditions, we have defined capital management objectives,
policies and processes which include:
1. maintaining a senior unsecured long-term credit rating of at least A3/A-;
2. maintaining a long-term average Funds From Operations (FFO) to Net debt based on ‘underlying’ financial information of
at least 8.5%;
3. diversifying the maturities of long-term funding instruments to limit refinancing risk;
4. maintaining liquidity through cash and undrawn committed credit lines covering at least our net cash requirement on a
rolling 12-month forward-looking basis.
1. Maintain a senior unsecured credit rating of at least A3/A-
As of 31 December 2020 TenneT Holding B.V. had the following senior unsecured credit ratings from Standard & Poor’s and
Moody's Investor Service, which comply with our financial policy.
Credit rating at 31 December 2020 and 2019
Long-term
rating
Short-term
rating
Standard & Poor's
A– (stable
outlook) A-2
Moody's Investor Service
A3 (stable
outlook) P-2
2. Maintain a long-term average FFO/Net debt ratio based on underlying financial information of at least 8.5%
To maintain a solid financial position, we intend to maintain along-term average adjusted FFO/Net debt ratio of at least 8.5%
based on underlying financial information (see note 2), which meets the minimum requirements for an A-/A3 long-term
unsecured credit rating as formulated by the credit rating agencies Standard & Poor's and Moody's Investor Service.
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A reconciliation of the Adjusted FFO and net debt is provided in the following table.
Based on underlying information (EUR million) 2020 2019
Net profit for the year 516 401
+ amortisation, depreciation and impairments 1,094 994
+ result on disposal of assets (non-cash) - 8
Total FFO 1,610 1,403
Capatilised interest on assets under construction -11 -9
Interest on provisions 2 19
50% Hybrid interest -22 -17
FFO Adjusted 1,579 1,396
Net debt
+ Long term borrowings 10,217 9,137
+ Short term borrowings 2,243 565
+ Bank overdrafts 90 -
- Cash and cash equivalents at free disposal -476 -202
+ Lease liabilities 462 394
+ Net employee defined benefit liabilities 405 361
+ 50% Hybrid loan 1,063 560
Net debt 14,004 10,815
Adjusted FFO/net debt 11.3% 12.9%
* Net profit for the year 2019 changed from 408 into 401 and cash and cash equivalents at free disposal changed from -202 into -194 due to
reconsideration of the amendment on IAS 12 explained in note 1.
3. Diversify maturities of long-term funding instruments to limit refinancing risk
To minimise refinancing risk, we aim to diversify the maturity profile of our senior debt. As of 31 December 2020, our interest
bearing debt (excluding bank overdrafts and credit facilities to temporary finance the EEG) had the following annual
redemption profile:
2021
2022 2023 2024 20282025 2026 2027 2029 2030 2031 2032 2033 2034 2038 2039 20402035 2036 2037
1,000
800
600
400
200
0
EUR million
Annual redemption of debt
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4.Maintaining liquidity through cash and undrawn committed credit lines covering at least
ournetcash requirement on a rolling 12-month forward-looking basis
We monitor the liquidity of the Group on a rolling 12-month forward-looking basis. This means that the sum of (i) cash
andcash equivalents, (ii) undrawn committed credit facilities and (iii) 12-month net cash flow from operating activities should
besufficient to meet the expected aggregate of scheduled debt repayments, investments in fixed assets and dividend
paymentsover the subsequent 12 months.The 12-month liquidity requirement was met on 31 December 2020 and
31December 2019.
18 Equity
Paid-up and called-up capital
The Company’s authorised share capital amounted to EUR 500 million (2019: EUR 500 million), divided into one million
shares of EUR 500 each. Of these shares, two hundred thousand shares have been issued and paid-up.
Share premium reserve
The share premium reserve consists of the capital contribution granted by the shareholder of ordinary shares, the Dutch
State represented by the Ministry of Finance.
Hedging reserve
The hedging reserve related to the cumulative result of sold forward-starting interest rate swaps (hereafter referred to as
'FSIRS'), classified as cash flow hedges. The interest rate swaps were sold at the moment Euro Medium Term Notes
('EMTN') were issued in 2010 and 2011. The end term of the original FSIRS is 2020 and 2021. As at 31 December 2020,
the2021 FSIRS amounts to nil.
Retained earnings
Part of the retained earnings has been presented as legal reserve. For more details see note 40.
Hybrid securities
Hybrid securities are deeply subordinated securities and are, with the exception of common equity, the most junior
instruments in the capital structure of the company. The hybrid securities are undated and do not default on non-payment
ofcoupons (unless such payment was mandatory following a resolution or payment of a dividend to common shareholders,
i.e. as so called ‘dividend pusher’).
The holders of the hybrid securities have limited ability to influence the outcome of a bankruptcy proceeding or a
restructuring outside bankruptcy. Consequently, the hybrid security holders cannot oblige us to pay distributions or
redeemthe securities in part or in full. Payment of distributions on and redemption of the securities is at our sole discretion.
As a result, the hybrid securities are classified as part of the equity attributable to the company's equity holders.
On 31 December 2020, we had EUR 2.1 billion of green hybrid securities outstanding divided in two tranches. The first
tranche is a EUR 1.1 billion green hybrid security that bears an optional, cumulative coupon of 2.995%, payable at
TenneT'sdiscretion annually on 1 June of each year. As at 31 December 2020, the unpaid cumulative dividend amounts
toEUR 18 million (2019: EUR 18 million), relating to the period 1 June until 31 December and payable on 1 June 2021.
In July 2020, TenneT issued a second tranche of EUR 1 billion of green hybrid securities.These green hybrid securities
bearan optional, cumulative coupon of 2.374%, payable at TenneT’s discretion annually on 22 Octoberof each year.
Asat31 December 2020, the unpaid cumulative dividend amounts to EUR 5 million,relating to the period 23 October
until31 December and payable on 22 October 2021.
Dividend distribution
In 2020 a common full-year dividend of EUR 112 million (EUR 560 per share) to our ordinary shareholder was distributed
(2019: EUR 120 million). In agreement with the State of the Netherlands we have established a dividend policy with a pay-out
of 35% of the underlying profit for the year, after payments of distributions to hybrid securities holders and minority investors.
We made a distribution to the holders of hybrid securities of EUR 39 million during 2020 (2019: EUR 33 million).
Theappropriation of the 2020 profit is at the free disposal of the General Meeting of Shareholders.
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19 Non-controlling interests
The proportion of economic interests held by non-controlling interests in the Group’s subsidiaries is as follows:
% Non-Controlling Interests Country 2020 2019
TenneT Offshore 2. Beteiligungsgesellschaft mbH ("TO2") Germany 69% 69%
TenneT Offshore 8. Beteiligungsgesellschaft mbH ("TO8") Germany 63% 63%
TenneT Offshore DolWin3 Beteiligungs GmbH & Co. KG ("TOD3") Germany 67% 67%
TenneT Offshore DolWin3 Verwaltungs GmbH ("TODV") Germany 67% 67%
ETPA Holding B.V. ("ETPA") Netherlands 50% 50%
The Group has the power to control TO2, TO8, TOD3 and TODV and holds 51% of the voting rights in these entities. TenneT
also holds 50.002% of the voting rights and has the power to control ETPA.Movements in the non-controlling interest, to the
extent material, is summarised below.
Movement schedule Non-Controlling interests (EUR million) TO2 TO8 TOD3
At 1 January 2019 246 261 289
Profit attributable to non-controlling interests 14 19 23
Dividends paid -5 -31 -
Capital repayment 4 - -76
At 31 December 2019 259 249 236
Profit attributable to non-controlling interests 8 16 22
Dividends paid -13 -37 -
Capital contribution 4 1 -
Capital repayment - - -55
At 31 December 2020 258 229 203
The non-controlling interest in TO2, TO8, TODV and TOD3 are held by Copenhagen Infrastructure Partners (CIP), which
owns respectively 69% for TO2, 63% for TO8 and a 67% economic interest for TODV and TOD3in the adjusted (for certain
regulatory effects) profits of these companies and 49% of thevoting rights.
Financial information of these subsidiaries, to the extent material, is summarised below on a consolidated basis before
intercompany eliminations and in conformity with our accounting principles.
2020
Statement of financial position (EUR million) TO2 TO8 TOD3
Non-current assets 978 1,410 1,658
Current assets 168 155 168
Non-current liabilities -661 -1,045 -1,413
Current liabilities -113 -155 -86
Equity 372 365 327
Attributable to owners of the parent 114 136 124
Attributable to non-controlling interests 258 229 203
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2019
Statement of financial position (EUR million) TO2 TO8 TOD3
Non-current assets 1,068 1,525 1,667
Current assets 152 134 95
Non-current liabilities -712 -1,129 -1,310
Current liabilities -135 -132 -116
Equity 373 398 336
Attributable to owners of the parent 114 149 100
Attributable to non-controlling interests 259 249 236
2020
Statement of income (EUR million) TO2 TO8 TOD3
Revenue 148 222 182
Depreciation and amortisation -82 -102 -96
Other expenses -31 -52 -23
Operating profit 35 68 63
Finance income and expenses -18 -32 -25
Income tax expense -6 -11 -4
Profit for the year 11 25 34
Other comprehensive income - - -
Total comprehensive income 11 25 34
Attributable to non-controlling interests 8 16 22
2019
Statement of income (EUR million) TO2 TO8 TOD3
Revenue 168 240 125
Depreciation and amortisation -83 -100 -89
Other costs -37 -54 -14
Operating profit 48 86 22
Finance income and expenses -22 -38 -28
Income tax expense -8 -15 2
Profit for the year 18 33 -4
Other comprehensive income - - -
Total comprehensive income 18 33 -4
Attributable to non-controlling interests 14 19 23
2020
(EUR million) TO2 TO8 TOD3
Net cash flows from operating activities 80 157 156
Net cash flows used in investing activities -9 -1 -88
Net cash flows from financing activities -71 -156 -68
Change in cash and cash equivalents - - -
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2019
(EUR million) TO2 TO8 TOD3
Net cash flows from operating activities 136 182 131
Net cash flows used in investing activities -69 -5 -44
Net cash flows from financing activities -67 -177 -87
Change in cash and cash equivalents - - -
20 Borrowings
(EUR million)
Effective
interest rate
Maturity
Redemption
schedule
2020 2019
0.875% green bond 2015 EUR 500 million 0.96% Jun-21 At maturity - 499
4.50% bond 2010 EUR 500 million 4.60% Feb-22 At maturity 499 499
4.625% bond 2011 EUR 500 million 4.70% Feb-23 At maturity 499 499
0.75% green bond 2017 EUR 500 million 0.87% Jun-25 At maturity 497 496
1.000% green bond 2016 EUR 500 million 1.04% Jun-26 At maturity 499 499
1.75% green bond 2015 EUR 500 million 1.83% Jun-27 At maturity 497 497
1.375% green bond 2018 EUR 500 million 1.49% Jun-28 At maturity 496 495
1.375% green bond 2017 EUR 500 million 1.41% Jun-29 At maturity 498 498
0.875% green bond 2019 EUR 500 million 0.98% Jun-30 At maturity 495 495
4.75% bond 2010 EUR 200 million 4.92% Jun-30 At maturity 197 196
1.250% green bond 2016 EUR 500 million 1.35% Oct-33 At maturity 494 493
2.0% green bond 2018 EUR 750 million 2.04% Jun-34 At maturity 746 745
1.875% green bond 2016 EUR 500 million 1.97% Jun-36 At maturity 493 492
1.500% green bond 2019 EUR 750 million 1.58% May-39 At maturity 739 739
0.125% green bond 2020 EUR 600 million 0.20% Nov-32 At maturity 594 -
0.500% green bond 2020 EUR 750 million 0.54% Nov-40 At maturity 744 -
Non-current interest-bearing bonds 7,987 7,142
4.12% loan 2010 EUR 150 million 4.12% Jan-21 At maturity - 150
4.40% loan 2010 EUR 40 million 4.40% 2016-2021 Linear - 3
4.71% loan 2010 EUR 40 million 4.71% 2016-2022 Linear 3 6
2.74% loan 2012 EUR 150 million 2.74% Sep-23 At maturity 150 150
4.44% loan 2010 EUR 140 million 4.44% 2016-2023 Linear 22 32
0.72% loan 2015 EUR 500 million 0.72% 2018-2032 Linear 379 414
0.77% loan 2015 EUR 150 million 0.77% 2018-2037 Linear 120 128
0.813% loan 2016 EUR 125 million 0.81% 2019-2038 Linear 106 113
0.05% loan 2020 EUR 100 million 0.05% 2025-2042 At maturity 100 -
0.436% loan 2020 EUR 350 million 0.44% Sep-26 Linear 350 -
Non-current interest-bearing loans 1,230 996
0.646% green Schuldschein 2016 EUR 77 million 0.67% May-22 At maturity 77 77
0.989% green Schuldschein 2016 EUR 100 million 1.01% May-24 At maturity 100 100
1.310% green Schuldschein 2016 EUR 55 million 1.32% May-26 At maturity 55 55
1.500% green Schuldschein 2016 EUR 50 million 1.51% May-28 At maturity 50 50
1.750% green Schuldschein 2016 EUR 43 million 1.76% May-31 At maturity 43 43
1.750% green Schuldschein 2016 EUR 95 million 1.76% May-31 At maturity 95 95
2.000% green Schuldschein 2016 EUR 80 million 2.01% May-36 At maturity 80 80
Non-current interest-bearing Schuldschein 500 500
1.61% USPP 2019 EUR 160 million 1.63% Jan-29 At maturity 160 160
1.83% USPP 2019 EUR 295 million 1.85% Jan-31 At maturity 295 294
2.01% USPP 2019 EUR 45 million 2.02% Jan-34 At maturity 45 45
Total non-current interest-bearing USPP 500 499
Total non-current interest-bearing borrowings 10,217 9,137
Continuation >
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(EUR million)
Effective
interest rate
Maturity
Redemption
schedule
2020 2019
2.125% bond 2013 EUR 500million 2.22% Nov-20 At maturity - 500
0.875% green bond 2015 EUR 500 million 0.96% Jun-21 At maturity 500 -
Current interest-bearing bonds 500 500
EEG related loans 2020 EUR 1,528 million 0.22% Jan-21 At maturity 1,528 -
Current interest-bearing EEG related loans 1,528 -
4.12% loan 2010 EUR 150 million 4.12% Jan-21 At maturity 150 -
4.71% loan 2010 EUR 40 million 4.71% Nov-21 Linear 3 3
4.40% loan 2010 EUR 40 million 4.40% Nov-21 Linear 3 3
4.44% loan 2010 EUR 140 million 4.44% Nov-21 Linear 11 11
0.72% loan 2015 EUR 500 million 0.72% Sep-21 Linear 34 34
0.77% loan 2015 EUR 150 million 0.77% Jan-21 Linear 8 8
0.813% loan 2016 EUR 125 million 0.81% Oct-21 Linear 6 6
Current interest-bearing loans 215 65
Total current interest-bearing borrowings 2,243 565
Total borrowings 12,460 9,702
Changes in borrowings arising from financing activities are as follows:
(EUR million)
(Non) - current
interest-
bearing bonds
(Non) -current
interest-
bearing loans
Non-current
interest-
bearing
Schuldschein
Current
interest-
bearing EEG
related loans
Non-current
interest-
bearing
USPP
Total
At 1 January 2019 6,404 1,817 499 - - 8,720
Cash inflow from new borrowings 1,232 - - - 499 1,731
Cash outflow from redemptions - -756 - - - -756
Amortisation (non-cash) 6 - 1 - - 7
At 31 December 2019 7,642 1,061 500 - 499 9,702
Cash inflow from new borrowings 1,338 450 - 1,528 - 3,316
Cash outflow from redemptions -500 -66 - - - -566
Amortisation (non-cash) 7 - - - 1 8
At 31 December 2020 8,487 1,445 500 1,528 500 12,460
TenneT has aRevolving Credit Facility (RCF) of EUR 3.3billion as of November 2019. In October 2020, we reached an
agreement to extend the maturity date of our EUR 3.3billion RCF. EUR 3.0billion is now available till November 2025
andEUR 0.3 billion till the original maturity date of November 2024.
The amount of borrowing costs (including fair value adjustment) capitalised was EUR 64 million (2019: EUR 59 million).
For more information about the fair value see note 26.
The EEG related loans are redeemed in January 2021. Interest on EEG related loans is charged to the EEG levies.
For further information see note 15.
i Accounting policy
Refer to note 27, accounting policies for financial instruments.
< Continuation
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21 Contract liabilities
The majority of the contract liabilities relates to investment contributions received from third parties for the construction of new
substations, grid connections or increased connection capacity and amounted to EUR 374million (2019: EUR 339 million).
The change was due to received contributions of EUR 48million minus EUR 13million amortisation. The current part of the
investment contributions amounted to EUR 2 million (2019: EUR 3 million) and has been presented separately in the
statement of financial position. The non-current part has a maturity up and till 2060.
iAccounting policy
Contract liabilities are recognised when payments are made or the payments are due (whichever is earlier) before a related
performance obligation is satisfied. Contract liabilities are recognised in accordance with the related contract. At initial
recognition contributions received from third parties are measured at fair value, presented as contract liabilities (‘investment
contributions’) and are subsequently recognised as revenue over the related asset’s useful life.
22 Provisions
2020 2019
(EUR million) Current Non-current Total Current Non-current Total
Environmental and decommissioning 15 1,144 1,159 15 1,127 1,142
Tariff related 21 101 122 123 5 128
Other 30 37 67 110 31 141
Total 66 1,282 1,348 248 1,163 1,411
(EUR million)
Environmental
management and
decommissioning
Tariff related Other Total
At 1 January 2019 676 33 153 862
Addition 122 98 8 228
Utilisation -6 -3 -5 -14
Changes in estimations 334 - 2 336
Unused amounts reversed -3 - -17 -20
Imputed interest 19 - - 19
At 31 December 2019 1,142 128 141 1,411
Addition 117 -1 22 138
Utilisation - -2 -8 -10
Changes in estimations -94 -2 2 -94
Unused amounts reversed -8 -1 -90 -99
Imputed interest 2 - - 2
At 31 December 2020 1,159 122 67 1,348
Provisions for environmental management and decommissioning
Provisions for environmental management and decommissioning serve to cover future obligationsin relation to high-voltage
connections and underground cables and to cover the decommissioning costs. In 2020 EUR 117 million was
added(2019:EUR 122 million) for future decommissioning costs for projects constructed during 2020. Changes in
estimatesrelated to theprovision for decommissioning amounted to EUR 94million negative (2019: EUR 334 million),
mainlydue to adecrease of the discount rate used. Both were not recognised through the statement of income. There was
no material decommissioning of substations in 2020. The first decommissioning of an offshore grid connection is expected
to start in 2029.
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Tariff related provisions
Tariff-related provisions relate to uncertain regulatory compensations of EUR 91million and to provisions for system service
fees in the Netherlands. We charge electricity consumers a fee for system services performed. Following a change in law,
thecourt in the Netherlands concluded that only parties with a direct connection to a grid maintained by a TSO are required
to pay system service fees for the period prior to 31 December 2014. Consequently, we are required to refund amounts paid
by certain parties to us without a direct grid connection. These refunds can be recouped by us through future tariffs. In 2020,
EUR 1 million(2019: nil) of the provided amount matured and was released through the statement of income.
Other provisions
The majority of the other provisions relate to risks associated with delays and interruptions of offshore connections in
Germany. The connection of OWFs presents additional technical and organisational challenges. A number of factors,
including a lack of supplier resources required for the construction of offshore grid connection systems, as well as weather
conditions and the application of new technologies, hindered the timely realisation and/or interrupted the operational phase
of offshore grid connection systems. TenneT based its assumptions and estimates on parameters available at the time the
consolidated financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising that are beyond control. Such changes are reflected
in assumptions when they occur.
i Accounting policy
Provisions are recognised when there is (i) a legal or constructive obligation as a result of past events, (ii) it is probable that
anoutflow of resources embodying economic benefits will be required to settle the obligation and (iii) when the amount
canbe reliably estimated. The provisions are measured at the present value of estimated cash flows to settle the obligation,
based on expected price levels. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to
theliability. The interest unwinding is recognised in the statement of income as a finance cost.
Estimated future costs are reviewed annually and adjusted as appropriate. Changes in estimated future costs and discount
rates for decommissioning costs are recognised as changes in estimations in the tangible fixed assets.For all other
provisions changes in estimated future costs and discount rates are recognised in the statement of income.
+ Key estimates and assumptions
The estimated decommissioning provision involves 1) decommissioning costs and 2) assessing the expected remaining
useful life of relevant asset. The main uncertainties to the decommissioning costs are the removal method (currently
assuming reverse installation) and the uncertainties around equipment and vessel availability and market rates at expected
time of decommissioning. At this point, there is also limited benchmark information available. Decommissioning costs are
provided for at the present value of expected costs to settle the obligation. The useful life of the offshore grid connections is
estimated at 20 years. This provision assumed a discountrate between 0.0% and 0.1% (2019: between 0.4% and 0.7%)
and an inflation rate of 1.8%(2019: between 2.0% and 3.0%). A change in the discount rate of 1 percent point could have
amaximum impact ofEUR 155million on the asset value and liability value.
A discount rate of 0.0% is applied for environmental management provisions (2019: 2.2%).A change in discount rate of
1percent point could have a maximum impact of EUR 2 million on the related book value.
A discount rate of0.0%was applied for other provisions (2019: 1.49%).A change in discount rate of 1 percent point could
have a maximum impact of EUR 4 million on the related book value.
The estimated amount of risks associated with delays and interruptions concerning the Group’s offshore activities in
Germany is based on the number of offshore grid connections and the compensationpaid to the operators of offshore grid
connections.
We are of the opinion that the recorded provisions reflect the best estimate of the probable outflow of resources. However,
uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of these provisions in future periods.
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Due to the business TenneT operates in and TenneT's legal structure, TenneT faces several contingent liabilities.
Ingeneralthe following issues are recognised as contingent liabilities at TenneT:
• Possible impact of the Dutch and German regulatory frameworks on the TenneT's business financial conditions
andnetincome;
• Operational risks and risks related to material projects;
• Impact of environmental issues;
• Risks relating to the structure of TenneT;
• Risks relating to the financing of TenneT;
• Factors which are material for the purpose of assessing the market risks.
The uncertainties relating to the contingent liabilities makes a reliable estimation of the financial impact impossible.
23 Net employee defined benefit liabilities
Pension plans Germany
We have defined benefit plans for the majority of our German personnel. Said personnel are mainly employed based on
thecollective labour agreement of 'Tarifgruppe Energie' and thus enjoy benefits in the form of old-age, disability and surviving
dependents' pensions. The large majority of the benefit obligations are based on pension schemes that define annual
pension claims based on respective employee's pensionable income of the particular year. Furthermore, each employee
isallowed to defer a certain amount of compensation to raise the annual pension claim within defined bounds.
The Group contributes to two post-employment defined benefit plans in Germany: a works council agreement called
'Betriebliche Alterssicherung' (hereafter referred to as 'pension scheme 2001') and a works council agreement called
'Beitragsplan' (hereafter referred to as 'pension scheme 2008'), as well as to a small number of individual pension
commitments. The pension obligations related to these plans are partly covered by assets held in two Contractual
TrustArrangements (CTA) administrated by ‘Helaba Pension Trust e.V.’ (Helaba). According to German law, TenneT
remainsultimately liable for fulfilling these pension obligations.
Pension scheme 2001
This scheme covers employees who started their employment with TenneT Germany on or before 31 December 2007
(orlater, if the individual employment contract was agreed on or before 1 April 2008). The scheme became effective on
1January 2001 and absorbed older plans. As part of the transition in 2001 to the new plan, employees were guaranteed
avested pension claim based on the old plan for their years of service prior to the transition. The plan offers benefits in the
form of old-age, disability and surviving dependents' pensions and is composed of the employer-funded basic level based
on the respective employee's yearly pensionable income, the employer-funded top-up level based on the respective
company's performance and the employee-funded supplementary level which allows employees to increase their pension
entitlement through deferred compensation. Yearly fixed pension claims are calculated with a fixed internal interest rate
thatsum up to the total earned pension benefits of the respective employee.
Pension scheme 2008
This scheme covers employees who started their employment with TenneT Germany after 31 December 2007
(unlesstheindividual employment contract was agreed before 1 April 2008, for which the pension scheme 2001 applies).
This scheme offers benefits in the form of old-age, disability and surviving dependents’ pensions.
Pension cost is composed of the employer-funded basic level based on the respective employee’s yearly pensionable
income, the employer funded top-up level based on the respective company’s performance and the employee-funded
supplementary level which allows employees to increase their pension entitlement through deferred compensation.
Iftheemployee contribution to the supplementary level reaches a certain level, the company pays an additional contribution
of one-third of the respective basic level contribution.
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Annually, for each year a contribution to the pension claims is calculated with an interest rate that is recalculated based
onthe weighted average current yield of German Federal Government Bonds (Bundesanleihen) with different maturities
(10,20 and 30 years) reflecting the average duration of the plan. The annual pension claim contributions for all years of
service sum up to the total earned pension benefits of the respective employee.
Differences between the plans are limited and refer mainly to the way internal interest rates and the pensionable income
aredetermined. Therefore disclosure in the notes below shows the combined plans.
Components of the net benefit expense recognised in the statement of income were as follows:
(EUR million) 2020 2019
Current service costs (note 4) 14 14
Past service cost - plan amendments (note 4) 6 -
Net interest costs (note 5) 4 4
Net benefit expense 24 18
The funded status of the plans and the amounts recognised in the statement of financial position were as follows:
(EUR million) 2020 2019
Defined benefit obligation 514 465
Fair value of plan assets -107 -104
Benefit liability 407 361
The short-term part of the benefit liability is presented as part of note 22 provisions.
(EUR million) 2020 2019
Defined benefit liability long-term 405 360
Defined benefit liability short-term 2 1
Total defined benefit liability 407 361
Changes in the present value of the long-term defined benefit obligation (‘DBO’) over the year were as follows:
(EUR million) 2020 2019
Defined benefit obligation at 1 January 465 302
Current service costs 14 14
Past service costs 6 -
Interest costs 5 6
Contributions by plan participants 2 2
Benefits paid -4 -4
Re-measurements on obligation 26 145
Defined benefit obligation at 31 December 514 465
Re-measurements on obligation are EUR 24million, mainly due to the change of the discount rate from 1.05% to 0.7%.
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Changes in the fair value of plan assets of the year were as follows:
(EUR million) 2020 2019
Fair value of plan assets at 1 January 104 94
Actual return on plan assets 3 8
Contributions by employer 4 5
Benefits paid -4 -3
Fair value of plan assets at 31 December 107 104
Major categories of plan assets as a percentage of the fair value of the total plan assets were as follows:
2020 2019
Quoted in active markets:
Equity instruments 32% 36%
Debt securities 47% 43%
Other 4% 5%
Unquoted investments:
Debt securities 5% 5%
Real estate 11% 9%
Cash 1% 2%
Re-measurements, including actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions, recognised in the statement of comprehensive income were as follows:
(EUR million) 2020 2019
Accumulated balance at 1 January 258 121
Re-measurements during the year 24 137
Accumulated balance at 31 December 282 258
Re-measurements of the year originate from:
(EUR million) 2020 2019
Re-measurements from actuarial gains(-)/losses in DBO 26 145
Exceeding return on plan assets (over net interest incl. in net liability) -2 -8
Accumulated balance at 31 December 24 137
Thereof:
actuarial gains(-)/losses from experience -7 -4
actuarial gains(-)/losses from changes in demographic assumptions - -
actuarial gains(-)/losses from changes in actuarial assumptions 33 149
Effective 2020, an additional agreement was made to address the negative impacts of the current low interest rate
environment. Part of this addition is a provision that introduces a floor to internal return for employees and capital conversion
rate to calculate final pension payments. The floor is set by 2,5% for the year 2020 and 3,0% thereafter.
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iAccounting policy
For defined benefit plans, pension costs are determined using the projected unit credit method. Re-measurements,
comprising of actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets
(excluding net interest), are recognised in other comprehensive income in the period in which they occur. Re-measurements
are not reclassified to statement of income in subsequent periods.
Service costs comprising current service costs and, if applicable, past-service costs, gains and losses on curtailments and
non-routine settlements are recognised as personnel expenses in the consolidated statement of income. Interest is
calculated by applying the discount rate to the net defined benefit liability or asset and is recognised as part of the finance
result in the statement of income.
Prepaid pension costs relating to defined benefit plans are capitalised only if they lead to refunds to the employer or to
reductions in future contributions to the plan by the employer.
+Key estimates and assumptions
Pension obligations and pension entitlements that are known on the reporting date are valued using economic trend
assumptions including, among others, salary growth rates and pension increase rates, that are intended to reflect realistic
expectations, as well as variables specific to reporting dates such as discount rates. The principal assumptions used in
determining the pension obligation were as follows:
2020 2019
Discount rate 0.70% 1.05%
Inflation rate 2.00% 2.00%
Future salary increases 2.50% 2.50%
Future pension increases 1.75% 1.75%
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics
and actuarial experience. An increase in each of the main assumptions would have had the followings effects:
(EUR million) 2020 2019
0.25% change of discount rate -25 -27
0.5% change of salary increase rate 2 2
0.5% change of pension increase rate 2 2
Change of 1 year in life expectancy 17 18
The sensitivities indicated are computed based on the same methods and assumptions used to determine the present value
of the defined benefit obligations and are based on variations in a single variable only. Note that the sensitivity analyses may
not be representative of an actual change in the defined benefit obligation, as it is unlikely that changes in assumptions
would occur in isolation.
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Due to the strong development of plan assets and the change in (statutory) discount rates, we expect to have an
obligationto contribute to plan assets in 2021 of EUR 3 million. We expect the following, undiscounted, benefit payments
from the plan:
(EUR million) 2020 2019
Within the next 12 months 5 5
Within 2-5 years 25 23
Within 5-10 years 41 38
More than 10 years 382 365
Total 453 431
Pension plan the Netherlands
For the majority of our Dutch personnel we have a multi-employer scheme at ABP Pension Fund (ABP) in the
Netherlands.The pension contribution rate for 2020 was 17.43% of the pensionable salary. In 2021 we expect to contribute
EUR 25million, based on 2020 number of employees, to the multi-employer scheme administered. Compared to the total
participants in the ABP pension fund, our share in ABP is limited.We are not liable for deficits in the multi-employer plan.
ABP has indicated that it is unable to provide the kind of company-specific information required by IFRS for defined-benefit
pension schemes. As such, this scheme is treated as if it were a defined contribution scheme.
Since the financial situation of the ABP pension plan at 31 December 2015 was inadequate from a regulatory perspective,
ABP filed a recovery plan, which was approved by De Nederlandsche Bank (DNB) during the course of 2016. In accordance
with this recovery plan, ABP evaluates how recovery is progressing at the start of each year. Progress is measured by means
of the policy funding ratio at the end of the preceding year. The policy funding ratio is the 12-month moving average of the
nominal funding ratio. ABP’s policy funding ratio as at 31December 2020 was 93.2% (2019: 95.8%) which is above the
critical regulatory coverage rate level under which pensions would have to be reduced.
iAccounting policy
Payments to defined contribution plans are charged as an expense in the period to which they relate.
24 Account- and other payables
(EUR million) 2020 2019
EEG accounts payable 1,245 1,761
Accounts payable 473 269
Payables in connection with tangible fixed asset purchases 337 424
Grid expenses payable 911 1,045
Interest payable 104 105
Social securities and other taxes payable 35 19
Payables to related parties 11 7
Other payables 172 185
Total 3,288 3,815
EEG accounts payable
Refer to note 15.
Payables in connection with tangible fixed assets purchases
Payables in connection with tangible fixed assets purchases relate to unbilled services and deliveries for onshore and
offshore investment projects.
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Grid expenses payable
The grid expenses payable consist mainly of accrued expenses for (i) feed-in management and (ii) redispatch measures.
+ Key estimates and assumptions
In terms of accrued expenses for measures taken to restore the imbalance of the electricity grid, we procure balancing
services and ask various generators to come on or off the grid to help balance supply and demand or to manage
‘constraints’ (i.e. bottlenecks) in the electricity grid. At year-end, we record an accrual for all balancing costs. The accrual
isbased on actual volumes (if available) or forecast volumes derived from models. Several assumptions are made in these
models such as weather conditions, requested volumes and capacity per plant. Prices are based on the underlying contracts
and/or historical data. The complexity of the electricity market and uncertainties in assessing variable renewable energy
production makes estimating the grid expenses payable a complex task.
Other payables
Other payables mainly comprise compensation payments to offshore wind farm operators (OWFs), personnel related
liabilities and accruals for which invoices were not yet received.
+ Key estimates and assumptions
Compensation payments to OWFs are based on amounts of electricity which could not be fed into the grid. The pass-
through accrual is based on a comparison of the costs incurred and the revenue generated by the offshore grid surcharge.
25 Financial risk management
Our business activities are exposed to a number of financial risks such as interest rate risk, credit risk, liquidity risk and
refinancing risk, which are described in detail in this note. Our financial risk management strategy primarily focuses on
protecting liquidity, equity capital and net profit in order to safeguard our ability to continue active operations while providing
an adequate return to our shareholders. Our approach to managing financial risks, including a number of specific disclosures
(such as a maturity analysis of contractual undiscounted financial obligations) required by accounting standards, are set out
in this note. For details about regulatory risks we refer to the 'Risk Management' section of our Executive Board report.
Risk management related to financing activities is conducted by our Treasury department under policies included in the
Treasury Statute approved by our Executive Board. The Treasury Statute was updated in 2020.The Treasury department's
objective is to facilitate the realisation of our financial and strategic objectives from a funding and financial risk perspective.
The Treasury Statute includes principles covering specific areas such as interest rate risk, liquidity risk, the use of derivatives
and the investment of excess liquidity. The use of all ordinary course financial instruments is permitted, provided these are
used solely to cover open positions. Any speculative use of financial instruments is explicitly not authorised.
Interest rate risk
We are exposed to interest rate risk on our debt portfolio. To limit this risk, our policy is to base the majority of our loan
portfolio on fixed interest rates. As of 31 December 2020, the long-term loan portfolio was entirely based on fixed
interestrates. An increase or decrease in interest rates of 2 percentage points would result in an increase or decrease
ofEUR 8 million in our net interest cost (2019: EUR 4 million).
Furthermore, there is a risk that interest payable on borrowings exceeds the interest compensation received by TenneT under
the prevailing regulatory systems. The ACM has set the relevant interest rate which will linearly decrease from 3.58% in 2016
to 2.29% in 2021. In 2022 a new regulatory period will start in the Netherlands. In Germany, actual interest costs are
compensated up to a level customary to the market. The BNetzA determines marketability on the basis of reference interest
rates published by the Deutsche Bundesbank. Currently we expect that actual costs of debt for TenneT are below the
predefined maximum reference rates. Therefore, there is currently no risk for TenneT.
Credit risk
In general we are exposed to the risk of loss resulting from counterparties’ defaulting on their commitments including failure
to pay or make a delivery on a contract. Our exposure to credit risk from operating activities and treasury activities is inherent
to our business activities.
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Operational credit risk
In respect of our operating activities, we have a credit policy in place, which takes into account the risk profiles of our
counterparties. We also have policies in place to monitor the financial viability of counterparties.
In both the Netherlands and Germany, we are responsible for maintaining the balance between supply and demand of
energy. The associated costs are covered by income from parties with balance responsibility, which are charged for any
imbalances attributable to them. Any surplus is deducted from subsequent tariffs for system services. For certain situations,
securities in the form of bank guarantees and collaterals are held as protection against the default risk of parties with balance
responsibility.With respect to investment projects, we require counterparties to deliver bank guarantees or collaterals as a
protection against defaults.
The management of energy exchanges, the execution of the Renewable Energy Act in Germany and the maintenance of the
energy balance between supply and demand requires transfer of large cash amounts. Our policies are aimed at minimising
the risks associated with the clearing transactions in connection with these cash flows.
Credit risk on trade and other receivables is limited, because most of our trade and other debtors have a low risk of default.
Consequently, TenneT has no material collateral as security and no insurance for credit risk.The maximum exposure to credit
risk at the reporting date is the carrying value of each class of financial assets disclosed in note 13and 15. The movement of
the allowance for expected credit losses of trade receivables is included in note 15.
The provision rates for expected credit losses are based on groupings of various customer segments with similar loss
patterns (such as customer type and arrears in payments). Any expected credit losses for financial guarantee contracts
andcommitment letters (if any) are also provided for. The calculation reflects the probability-weighted outcome, the time
value of money and reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables and other financial assets are written-off
if there is no reasonable expectation of recovering the contractual cash flows. The Group considers a financial asset in
default when contractual payments are 90 days past due. However, in certain cases, TenneT may also consider a financial
asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group.
Financial credit risk
In 2020, financial credit risk arose mainly from our transactions and positions with several financial institutions.
Asat31December 2020, the maximum credit risk amounted to EUR 475million (2019: EUR 36 million).
In 2020 these fundsare related to funds at free disposal. In 2019 these funds related to EEG and are not at our free
disposaland are legallyseparated from our cash at bank. In accordance with EEG legislation, shortfalls are reimbursed
through the subsequent year's EEG levy. As a result, there is no credit risk on the side of TenneT TSO GmbH regarding
theEEG fundsand these are therefore not included in the aforementioned credit risk amount.
In accordance with our treasury policies, counterparty credit exposure is monitored frequently against the counterparty
creditlimits. We have concentration limits in place when funds are placed on deposit or when financial derivatives are
entered into.At 31 December 2020 we had EUR 475 million free at disposal. These depositshad a maturity of less than
3months (2019: nil), see note 15.At 31 December 2020 we had nil deposits with third parties for EEG cash amounts
(2019:EUR 30 million) and no financial derivatives outstanding.
Management does not expect any significant losses from non-performance by treasury counterparties.
Liquidity risk
Liquidity risk is defined as the risk that the Group cannot meet its short-term financial obligations. Our objective when
managing liquidity is to be able to meet our short-term obligations at all times. Liquidity is monitored every quarter on a
rolling 12-month forward-looking basis. The liquidity requirement was met each quarter including 31 December 2020
and31December 2019.
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The following maturity schedule presents our financial obligations on a contractual, non-discounted basis:
(EUR million)
Notes
<1 month
1 to 3
months
3 to 12
months
1 to 5 years
More than
5 years
Total
At 31 December 2020
Lease liabilities 9 12 23 103 263 125 526
Borrowings 20 158 47 683 2,592 8,972 12,452
EEG related Borrowings 20 1,528 - - - - 1,528
Account- and other payables 24 1,011 517 1,660 -5 - 3,183
Other financial liabilities 85 - - - - 85
Total 2,794 587 2,446 2,850 9,097 17,774
At 31 December 2019
Lease liabilities 9 10 19 87 202 139 457
Borrowings 20 7 48 692 2,777 7,771 11,295
Account- and other payables 24 2,091 417 1,200 1 - 3,709
Other financial liabilities 79 - - - - 79
Total 2,187 484 1,979 2,980 7,910 15,540
Our borrowings, have a diversified maturity profile, which reduces refinancing risks (see also note 20).
In order to minimise our exposure to liquidity risk, we have a EUR 3.3 billion committed revolving credit facility (RCF) at
ourdisposal for general corporate purposes. At 31 December 2020, this facility was undrawn. Furthermore, we had
EUR250 million of undrawn long-term loan commitments from the EIB available at 31 December 2020. Finally, we had
EUR450 million of short-term uncommitted credit facilities available at year end drawn EUR 90 million (2019: nil).
On 31 December 2020 we had EUR 1.35 billion committed credit facilities and EUR 0.5 billion uncommitted credit facilities
available (drawn EUR 1.528 billion) to finance temporary fluctuations in working capital related to our clearing activities for
renewable energy in Germany. In accordance with EEG legislation, shortfalls are reimbursed through EEG levy and/or
government contributions for the subsequent years.
The EEG has a significant impact on TenneT’s working capital position and to prevent negative EEG bank account balances
and additional short-term bridge financing, a liquidity buffer is included in the EEG levy. Nevertheless, TenneT raised
additional committed financing of EUR 1.5 billion and uncommitted financing of EUR 0.5 billion in 2020, due to significant
unforeseen variations in renewable energy volumes and electricity prices.
As a result of the Climate program 2030 (“Klimaschutzprogramm 2030”) the four German TSOs will receive EUR 10.8 billion
from the German government to finance the EEG in 2021. TenneT will receive 32% of this amount in three instalments
(January 2021: EUR 1,632 million, May 2021: EUR 960 million and October 2021: 864 million) and will use the payments
tofinance payments made to renewable energy producers.
The size of our credit facilities is such that we expect that all substantial adverse financial developments and events
canreasonably be expected to be accommodated and that continuation of day-to-day operations is ensured for at least
12months. The terms and conditions of our credit facilities include negative pledge and pari passu clauses. No security
interest over any of the Group's assets has been provided. All credit facilities have floating-rate interest conditions.
We also have access to diversified funding sources through our medium-term note (EMTN) programme and our commercial
paper (CP) programme. Both programmes significantly reduce our dependency on the banking sector.
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We expect to meet our financial obligations for 2021 with (i) cash and cash equivalents, (ii) funds from operations, (iii) unused
credit facilities and (iv) capital market transactions. We expect to meet our financial obligations for the subsequent years
through various capital market transactions and equity contributions and intend to manage future refinancing risks by
spreading the tenors of new financing arrangements.
Refinancing risk
There is a risk of a lack of access to equity on a sustainable basis. This risk reflects the inability to raise additional equity
inatimely fashion in case of unexpectedly large increases in our investment portfolio or negative regulatory developments.
Actions taken in order to mitigate this risk are: (i) anactive financing strategy to create and maintain an optimal capital
structure as well as to diversify funding sources and manage financial risks, (ii) aproactive approach of potential investors
and active discussion with our shareholder to contribute additional equity and (iii) lobbying activities to ensure that regulatory
frameworks remain adequate to safeguard regulators income and returns to investors.
Commodity price risk
Energy purchase contracts for the forward purchase of electricity or gas that are used to satisfy physical delivery
requirements to customers, or for energy that the Group uses itself, meet the expected purchase or usage requirements of
IFRS 9. They are, therefore, not recognised in the financial statements until they are realised. Disclosure of commitments
under such contracts is made in note 28.
Under IFRS, where these supply contracts are not accounted for as finance leases, they are considered to comprise two
components, being a forward purchase of power at spot prices, and a forward purchase of environmental certificates at a
variable price (being the contract price less thespot power price). With respect to our current contracts, neither of these
components meets the requirement to be accounted for as a derivative. The environmental certificates are currently required
for compliance purposes, and at present there are no liquid markets for these attributes. Accordingly, this component meets
the expected purchase or usage exemption of IFRS 9. We expect to enter into an increasing number of these contracts,
inorder to meet our compliance requirements in the short to medium term. It is possible that in future, if and when liquid
markets develop, and to the extent that we are in receipt of environmental certificates in excess of our required levels, this
exemption may cease to apply, and we may be required to account for forward purchase commitments for environmental
certificates as derivatives at fair value through profit and loss.
26 Fair values
The table below provides an overview of the carrying value and fair value of financial instruments, including IFRS treatment
and the level in the valuation hierarchy. The instruments are measured at fair value.
Carrying amount Fair value
(EUR million)
Notes
2020 2019 2020 2019 Hierarchy
Financial liabilities
Borrowings:
- Borrowings – bonds 20 8,487 7,642 9,478 8,354 Level 1
- Borrowings – other 20 2,445 2,060 2,665 2,203 Level 2
- Borrowings – EEG related 20 1,528 - 1,528 - Level 2
Total 12,460 9,702 13,671 10,557
As at 31 December 2020, no instruments carried at fair value were held (2019: nil). Furthermore, we concluded that the fair
value of the loans and receivables, cash and cash equivalents, account- and other payables and other financial liabilities
approximate their carrying amounts at year end 2020, due to the short-term maturities of these instruments.
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The following hierarchy by valuation techniquewas used tocalculate the fair value of assets and liabilities:
• Level 1: Measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: Measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset
orliability, either directly (that is, as prices) or indirectly (that is, derived from prices).
• Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
The fair value of the level 2 borrowings is based on discounted cash flows. A change in the assumptions used to calculate
the fair value will not result in a significantly different outcome. There were no transfers between the fair value hierarchy levels
during 2020 or 2019.
27i Accounting policies for financial instruments
Financial assets
All financial assets are recognised initially at fair value, net of directly attributable transaction cost.
After initial recognition financial assets are measured at amortised cost, fair value through other comprehensive income (OCI)
and fair value through profit or loss. All TenneT's financial assets are classified as amortised cost, because the following two
conditions are met:
• The financial assets are held within a business model with the objective to hold financial assets in order to collect
contractual cash flows.
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment.
The Group recognises an allowance for expected credit losses (ECLs) for financial assets. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. For trade receivables and contract assets, the
Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting date.
Financial liabilities
All financial liabilities are recognised initially at fair value and, in case of loans and borrowings and payables, net of directly
attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts.
After initial recognition at fair value, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in statement of income when the liabilities are derecognised as well
as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance expense in the
statement of comprehensive income.
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28 Contingencies and commitments
Off-balance sheet rights and obligations related consist of the following categories:
(EUR million) 2020 2019
Investment related off-balance items
Off-balance sheet rights
Bank guarantees received 1,227 1,765
Comfort letters received 1,202 878
Total 2,429 2,643
Off-balance commitments
Capital commitments 7,133 4,059
Comfort letters issued 776 774
Total 7,909 4,833
Other off-balance items
Other off-balance rights
Government guarantees received - 300
Other off-balance sheet rights - 76
Total - 376
Other off-balance obligations
Grid-related commitments 920 1,109
Other off-balance sheet commitments 43 69
Total 963 1,178
The expected cash flows in respect of capital commitments are equal to the amounts in the above table. For comfort letters
issued, no cash flows are expected.
Bank guarantees received
Bank guarantees received include guarantees for investment projects.
Comfort letters received
The majority of comfort letters received is from construction companies involved in the construction of German onshore and
offshore projects.
Capital commitments
Capital commitments are commitments entered into with regard to the purchase of tangible fixed assets.
Approximately EUR 2.7 billion of capital commitments are payable within the next 12 months (2019: EUR 2.2 billion).
Comfort letters issued
The comfort letters issued relate to offshore projects in Germany.
Government guarantees received
TenneT benefited from a financial guarantee issued by the Dutch State for an amount of EUR 300 million which expired in
February 2020, relating to its (indirect) investment in TenneT TSO GmbH.
Grid related commitments
Grid-related commitments included received but unused auction receipts in the Netherlands amounting to EUR 322 million
(2019: EUR 470 million).
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Other
Other off-balance sheet commitments mainly consisted of:
• TenneT's commitment to provide the NOKA joint venture with sufficient funds for the construction of the Southern Part of
the NordLink cable;
• Several parties claim compensation for the delay or non-availability of the offshore grid connection. The related legal
proceedings are still pending. If and to the extent the claims are (partly) justified and the payments resulting therefrom
could not be passed through to the end customers, the binding rulings may have a negative impact on the financial
position;
• TenneT TSO B.V. is currently involved in a claim procedurebecause of alleged wrongful termination of construction
contracts and in a counter claim procedure against this counter party regarding financial settlement & damages due to
thealleged non-fulfilment of theconstruction contracts;
For these items it is not practicable possible to determine the financial effect and possible timing of cash outflows.
Various other off-balance sheet commitments and contingencies as well as other off-balance sheet rights existed but were
immaterial from a disclosure perspective. The majority of these claims relate to (i) construction contracts and planning
damage where additional payments would be capitalised, or (ii) claims relating to compensation for delays and interruptions
where any compensation would be pass-through for TenneT or (iii) claims relating to refunds of transmission services, which
would be compensated in future tariffs. In the unlikely event that these claims would prevail in court, this could have a
material impact on the company’s financials.
Environmental obligations
The Group is exposed to risks regarding environmental obligations arising from past activities. For example, a number
ofsites have to be decontaminated and restored to their original condition before being handed back at the end of the
contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed
with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations
arise, a provision is formed based on the most reliable estimate possible of future expenses. TheExecutiveBoardis of the
opinion that the currently recognized provisions are adequate, based on information currently available. However, given the
degree of difficulty in making estimates, this does not guarantee that noadditional costs will arise going forward.
29 Related parties
Note 30provides an overview of legal entities included in the consolidated financial statements.
TenneT has entered intotransactions with the following related parties:
• State of the Netherlands: TenneT Holding B.V. is controlled by the Dutch State, which owns 100% of the Company’s
ordinary shares (refer to note18);
• Joint ventures NOKA and BritNed (refer to note 12);
• Associates HGRT and OTC(refer to note 12) and indirect associate Mobile Radio Networks Vehicle B.V.(refer to note 13);
• Members of the Executive and Supervisory Board of TenneT Holding B.V.(refer to note 4).
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30 Consolidated subsidiaries
The following legal entities were included in the consolidation of TenneT Holding B.V:
Voting interest Economic interest
Subsidiary Legal seat Country 2020 2019 2020 2019
Direct subsidiaries
ETPA Holding B.V. Amsterdam Netherlands 50% 50% 50% 50%
NLink International B.V. Arnhem Netherlands 100% 100% 100% 100% *
NOVEC B.V. The Hague Netherlands 100% 100% 100% 100%
Relined B.V. Utrecht Netherlands 100% 100% 100% 100%
TenneT Duitsland Coöperatief U.A. Arnhem Netherlands 100% 100% 100% 100% *
TenneT Green B.V. Arnhem Netherlands 100% 100% 100% 100% *
TenneT Orange B.V. Arnhem Netherlands 100% 100% 100% 100%
TenneT TSO B.V. Arnhem Netherlands 100% 100% 100% 100%
TenneT TSO Duitsland B.V. Arnhem Netherlands 100% 100% 100% 100% *
Indirect subsidiaries
B.V. Transportnet Zuid-Holland Voorburg Netherlands 100% 100% 100% 100% *
CertiQ B.V. Arnhem Netherlands 100% 100% 100% 100%
Duvekot Rentmeesters B.V. Bathmen Netherlands 100% 100% 100% 100%
ETPA B.V. Amsterdam Netherlands 50% 50% 50% 50%
Nadine Netwerk B.V. Arnhem Netherlands 100% 100% 100% 100% *
Omroepmasten B.V. Vianen Netherlands 100% 100% 100% 100%
Saranne B.V. Arnhem Netherlands 100% 100% 100% 100% *
Stichting Beheer Doelgelden Landelijk Hoogspanningsnet Arnhem Netherlands N/A N/A N/A N/A
TransTenneT B.V. Arnhem Netherlands 100% 100% 100% 100% *
DC Netz DolWin4 GmbH Bayreuth Germany 100% 100% 100% 100%
DC Netz HelWin1 GmbH Bayreuth Germany 100% 100% 100% 100%
DC Netz SylWin2 GmbH Bayreuth Germany 100% 100% 100% 100%
Globalways GmbH Stuttgart Germany 100% 0% 100% 0%
NOVEC GmbH Emsbüren Germany 100% 100% 100% 100%
Relined GmbH Emsbüren Germany 100% 100% 100% 100%
TenneT GmbH & Co. KG Bayreuth Germany 100% 100% 100% 100% **
TenneT Offshore 1. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 31% 31%
TenneT Offshore 2. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 31% 31%
TenneT Offshore 8. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 37% 37%
TenneT Offshore 9. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 37% 37%
TenneT Offshore Dolwin3 Beteiligungs GmbH & Co. KG Bayreuth Germany 51% 51% 30% 30% **
TenneT Offshore Dolwin3 GmbH & Co. KG Bayreuth Germany 51% 51% 30% 30%
TenneT Offshore Dolwin3 Verwaltungs GmbH Bayreuth Germany 51% 51% 33% 33%
TenneT Offshore GmbH Bayreuth Germany 100% 100% 100% 100%
TenneT TSO GmbH Bayreuth Germany 100% 100% 100% 100%
TenneT Verwaltungs GmbH Bayreuth Germany 100% 100% 100% 100%
WL Winet GmbH (in liquidation) Emsbüren Germany 100% 100% 100% 100% ***
* For these companies TenneT has issued a declaration of liability as referred to in Book 2, Part 9, Section 403 of the Netherlands Civil Code.
** This company, which has been consolidated in these financial statements, has opted for the exemption of Section 264b of the German Commercial Code.
*** WL Winet GmbH exists since 2016 but never showed a positive result. Although sales were increasing, management didn't expect an improvement of the
result due to the lack of finding qualified personnel. Therefore it was decided to liquidate WL Winet GmbH. The liquidation commenced on 1 March 2019.
As TenneT is able toexercise direct control over its management and financial and operational policies, the consolidation
includes Stichting Beheer Doelgelden Landelijk Hoogspanningsnet, a foundation which temporarily manages funds arising
from the maintenance of the energy balance and auctioning of cross-border capacity by TenneT TSO B.V.
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31 Events after the reporting period
No significant events occurred after the reporting period.
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Company financial statements
Company statement of financial position
For the year ended 31 December (EUR million)
Assets
Notes
2020 2019
Non-current assets
Investments in subsidiaries 36 8,651 7,552
Investments in joint ventures and associates 37 31 29
Other financial assets 38 9,828 6,655
Total non-current assets 18,510 14,236
Current assets
Other financial assets 38 2,093 1,777
Account- and other receivables 39 14 30
Cash and cash equivalents 475 194
Total current assets 2,582 2,001
Total assets 21,092 16,237
Equity and liabilities
Notes
2020 2019
Equity 40
Paid up and called-up capital 100 100
Share premium 1,790 1,790
Revaluation reserve 22 32
Reserve for participating interests 94 62
Reserve for internally generated assets 55 62
Hedging reserve - 1
Retained earnings 2,515 2,117
Unappropriated result 748 532
Equity attributable to ordinary shares 5,324 4,696
Hybrid securities 2,125 1,120
Equity attributable to owners of the company 7,449 5,816
Non-current liabilities
Borrowings 41 10,217 9,137
Deferred tax liability 6 5
Total non-current liabilities 10,223 9,142
Current liabilities
Borrowings 41 2,243 565
Bank overdraft 90 -
Account- and other payables 42 1,087 714
Total current liabilities 3,420 1,279
Total equity and liabilities 21,092 16,237
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Company financial statements
Company statement of income
For the year ended 31 December (EUR million)
(EUR million)
Notes
2020 2019
Revenue - -
Other operating expenses -6 -3
Other gains/(losses) - -
Total operating expenses -6 -3
Share in profit of joint ventures and associates 5 -
Operating profit -1 -3
Finance income 33 159 177
Finance expenses 34 -202 -192
Finance result -43 -15
Profit before income tax -44 -18
Income tax expense 1 -9
Profit from subsidiaries 36 835 593
Profit for the year 792 566
Income tax expense 2019 changed from EUR -1 million to -9 million compared to last year’s report. Further reference can be found in note 1 Basis for
reporting.
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Company statement of income
Notes to the company financial statements
These notes contain information about the company financial statements of TenneT
Holding B.V. Details related to TenneT Holding B.V.’s financial results and position are
provided, as well as a description of the specific accounting policies applied when
compiling these company financial statements.
32 Company accounting policies
The company financial statements for TenneT Holding B.V. have been prepared in accordance with the provisions of Part 9,
Book 2 of the Netherlands Civil Code. The same principles governing valuation and the determination of results (including the
principles governing the classification of financial instruments as equity or liability) have been applied when compiling the
company financial statements and the consolidated financial statements, as permitted by Article 2:362, clause 8 of the
Netherlands Civil Code.
Expected credit loss (ECL) provisions for receivables from subsidiaries will be eliminated as intercompany positions. Changes
in these ECL provisions will impact the carrying amounts of the financial assets in the company statement of the financial
position due to a possible provision. This will result in a difference between the company equity and the consolidated
equity.No ECL provision was deemed necessary.
33 Finance income
Result on finance income is mainly related to the interest received on intercompany loans and other in- house financing
activities (see note 37). The intercompany agreements have terms equivalent to those that prevail in arm’s length
transactions.
34Finance expenses
Finance expenses mainly relate to interest on borrowings and credit facilities (2020: EUR 187 million; 2019: EUR 178 million).
35 Personnel expenses
TenneT Holding B.V. did not employ any personnel in 2020 (2019: nil), and as such did not incur any personnel expenses in
those periods. The members of the Executive Board and Supervisory Board of the Company received their remuneration, as
disclosed in note 4 of the consolidated financial statements, from other entities within the Group.
36 Investments in subsidiaries
Changes in investments in subsidiaries can be broken down as follows:
(EUR million) 2020 2019
At 1 January 7,552 6,690
Share in result 835 593
Capital contribution 284 410
Dividends received -3 -44
Re-measurement of defined benefit pension -17 -97
At 31 December 8,651 7,552
Investments in subsidiaries related to the legal entities included in the consolidation as disclosed in note 30of the
consolidated financial statements.
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Notes to the company financial statements
Notes to the company financial statements
i Accounting policies
The investments in subsidiaries are measured at net asset value. The net asset value of a participating interest is determined
by valuing the assets, provisions and liabilities and calculating the result using the accounting principles applied to the
consolidated financial statements.
When our share of losses in an investment equals or exceeds our interest in this investment, (including separately presented
goodwill or any other unsecured non-current receivables, as part of the net investment), we do not recognise any further
losses, unless we have incurred legal or constructive obligations or made payments on behalf of this investment. In such
case, we will recognise a provision.
37 Investments in joint ventures and associates
Investments in joint ventures and associates mainly related to HGRT.In 2020, TenneT’s share in HGRT’s result amounted to
EUR 5 million (2019: EUR 3 million) and EUR 3 million(2019: EUR 5 million) dividends were received. In 2019 the carrying
amount was adjusted to better reflect the equity value of the investment.Further reference is made to note 12of the
consolidated financial statements.
38 Other financial assets
(EUR million) 2020 2019
Receivables from subsidiaries 9,818 6,646
Other financial assets 10 9
Total 9,828 6,655
Receivables from subsidiaries mainly related to intercompany loans and cash management activities of TenneT Holding B.V.
The agreed interest rate for the intercompany loans is our cost of fund rating +0.125%. These receivables are unsecured.
The movement schedule is as follows:
(EUR million) 2020 2019
At 1 January 6,655 6,232
Additions 3,377 1,941
Repayments -93 -1,408
Transfer to current -110 -109
Other movements -1 -1
At 31 December 9,828 6,655
Besides non-current other financial assets, the company had EUR 2.1billion (2019: EUR 1.8 billion)ofcurrent other financial
assetswhich were related to receivables from subsidiaries. Certain subsidiaries have guaranteed the payment to creditors of
TenneT Holding up to an aggregate amount of EUR 2.5 billion (2019: EUR 2.5 billion).
39 Account- and other receivables
Account- and other receivables mainly relates to income tax receivable.
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40 Equity
(EUR million)
Reserve
Participating
interests
Reserve for
internally
generated
assets
Hedging
reserve
Revaluation
reserve
Total legal
reserve
At 1 January 2019 61 22 3 43 129
Result NOKA and HGRT 5 - - - 5
Dividend NOKA and HGRT -4 - - - -4
Internally generated intangible assets - 52 - - 52
Depreciation on internally generated intangible assets - -12 - - -12
Depreciation revaluation tangible fixed assets - - - -11 -11
Amortisation of hedges - - -2 - -2
At 31 December 2019 62 62 1 32 157
Result NOKA and HGRT 35 - - - 35
Dividend NOKA and HGRT -3 - - - -3
Internally generated intangible assets - 55 - - 55
Depreciation on internally generated intangible assets - -62 - - -62
Depreciation revaluation tangible fixed assets - - - -11 -11
Amortisation of hedges - - -1 - -1
At 31 December 2020 94 55 - 21 170
The statement of changes in equity and disclosures to that statement are included in the consolidated financial statements.
For details on the hybrid securities see note 18.
The revaluation reserve covers the IFRS 1 revaluation of tangible fixed assets in 2004.The reserve for participating interests
relates to HGRT and NOKA, for which we do not control payment of dividends. In the consolidated financial statements, the
revaluation reserve, the reserve for internally generated assets and the reserve for participating interestswere included in
retained earnings.
The legal reserves are not freely distributable.
Appropriation of result for the year ended 31 December 2019
The annual report 2019 was approved in the General Meeting held on March 11, 2020. The General Meeting has determined
the appropriation of result in accordance with the proposal being made to that end.
The appropriation of the 2020 profit is at the free disposal of the General Meeting of Shareholders and has not been
recorded in the financial statements.
41 Borrowings
Details on borrowings are included in the consolidated financial statements, see note 20.
42 Account- and other payables
(EUR million) 2020 2019
Payables to subsidiaries 983 606
Interest payable 104 105
Other payables - 3
Total 1,087 714
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43 Events after the reporting period
See note 31of the consolidated financial statements.
Arnhem, 8 March 2021
Executive Board TenneT Holding B.V.
M.J.J. van Beek
O. Jager
T.C. Meyerjürgens
M.C. Abbenhuis
Supervisory Board TenneT Holding B.V.
A.C.C.. van Els
L.J. Griffith
E. Kairisto
E.M. Schöne
A.F. van der Touw
TenneT Holding B.V.
Utrechtseweg 310
6812 AR Arnhem
The Netherlands
Chamber of Commerce register 09083317
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Other
information
Other
information
Profit appropriation
Profit appropriation is governed by Section 38.3 of the Articles of Association, which states the following “To the extent that
the profit is not used to make up prior losses in accordance with the provision of paragraph 2, it shall be at the free disposal
of the general meeting. In the calculation of the profit amount to be distributed on every share, only the amount of the
compulsory payments on the nominal amount of the shares shall be taken into consideration. In the event of a tied vote
onaproposal to distribute or reserve profits, the profits to which the proposal relates shall be reserved”.
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Other information Profit appropriation
Independent auditor’s report
To: the Shareholder and Supervisory Board of TenneT Holding B.V.
Report on the audit of the financial statements 2020 included in the integrated annual report
Our opinion
We have audited the accompanying financial statements 2020 of TenneT Holding B.V. (the “Company” or “TenneT”) based
in Arnhem, The Netherlands. The financial statements include the consolidated financial statements and the company
financial statements.
In our opinion:
• the accompanying consolidated financial statements give a true and fair view of the financial position of TenneT Holding
B.V. as at 31 December 2020, and of its result and its cash flows for 2020 in accordance with International Financial
Reporting Standards as adopted by the European Union (“EU-IFRS”) and with Part 9 of Book 2 of the Dutch Civil Code;
and
• the accompanying company financial statements give a true and fair view of the financial position of TenneT Holding B.V.
as at 31 December 2020, and of its result for 2020 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at 31 December 2020;
2. The following statements for 2020: the consolidated statement of income, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows; and
3. The notes comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
1. The company statement of financial position as at 31 December 2020;
2. The company statement of income for 2020;
3. The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under
those standards are further described in the “Our responsibilities for the audit of the financial statements” section of our
report.
We are independent of TenneT Holding B.V. in accordance with the EU Regulation on specific requirements regarding
statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the
Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional
Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands.
Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at
EUR60million. The materiality is based on 7% of underlying operating profit, as set out in note 2 of the consolidated
financial statements. The applied percentage of 7% is at the lower end of the range reflecting this is our first year as auditors
of TenneT. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for
the users of the financial statements for qualitative reasons.
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Independent auditor’s report
Component audits are performed using the materiality levels determined by the judgement of the group engagement team,
considering materiality for the consolidated financial statements as a whole and the reporting structure of the group. For the
largest reporting entities, the audits are performed using the following component materiality levels:
• TenneT TSO GmbH (“TSO DE”): of EUR 38.4 million;
• TenneT TSO B.V. (“TSO NL”): EUR 28.8 million; and
• TenneT Holding B.V.: EUR 24 million.
For the other reporting entities, the component materiality levels did not exceed EUR 24 million.
We agreed with the Supervisory Board that misstatements in excess of EUR 3 million, which are identified during the audit,
would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
TenneT Holding B.V. is the head of a group of entities. The financial information of this group is included in the consolidated
financial statements of TenneT Holding B.V.
Because we are ultimately responsible for the opinion, we are responsible for directing, supervising and performing the group
audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for reporting
entities. Decisive were the size and/or the risk profile of the reporting entities or operations. On this basis, we selected
reporting entities for which an audit had to be carried out on the complete set of financial information or specific items.
In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed at the
components by the group engagement team and the component auditors.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in the
audit work at those components to be able to conclude whether sufficient appropriate audit evidence was obtained as a
basis for our opinion on the group financial statements as a whole, also considering COVID-19 related travel restrictions.
Foreach component we determined whether we required an audit of their complete financial information or whether other
procedures would be sufficient.
Our group audit mainly focused on significant group entities TenneT Holding B.V., TSO DE and TSO NL, because combined
they make up more than 90% of the group’s revenue, underlying operating profit and assets. We included additional
reporting entities in the scope of our group audit to have additional audit coverage on the group’s consolidated financial
statements, and performed other procedures with respect to residual risk in components and account balances that have
not been included in audit scope.
The group consolidation, financial statements disclosures and certain centrally coordinated accounting topics were audited
by the group engagement team. These topics included among others treasury and corporate income tax. Specialists were
involved in the areas of tax, accounting, decommissioning, pension, data analysis and information technology.
We have obtained the following audit coverage of the group with our audit procedures:
Audit coverage
Revenue 99%
Underlying operating profit 97%
Assets 99%
Due to the COVID-19 travel restrictions during 2020 we were not able to visit Germany. Consequently, we revised our
strategy for direction and supervision of the TSO DE component auditors. The group engagement team among others held
audit planning calls with all the individual component auditors, held bi-weekly update calls with component management and
the component auditors, and conducted remote file reviews to evaluate the work undertaken and to assess their findings.
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By performing the procedures mentioned above at group entities, together with additional procedures at group level, we
have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an
opinion about the consolidated financial statements.
Scope of fraud and non-compliance with laws and regulations within our audit
In accordance with the Dutch Standards on Auditing, we are responsible for obtaining reasonable assurance that the
financial statements taken as a whole are free from material misstatements, whether due to fraud or error. Non-compliance
with law and regulation may result in fines, litigation or other consequences for the Company that may have a material effect
on the financial statements.
Consideration of fraud - Description
In identifying potential risks of material misstatement due to fraud, we obtained an understanding of TenneT and its
environment, including its internal controls. We evaluated TenneT’s fraud risk assessment and made inquiries with
management, those charged with governance and others within TenneT, including but not limited to the functions (i) Internal
Audit, (ii) Compliance & Integrity and (iii) Financial Governance & Services. We evaluated several fraud risks factors to
consider whether those factors indicated a risk of material misstatement due to fraud. We involved our forensic specialists in
our risk assessment and in determining the audit response.
Following these procedures, and the presumed risks under the prevailing auditing standards, we considered the fraud risks
in relation to management override of controls, including evaluating whether there was evidence of bias by the Executive
Board, the executive leadership team and other members of management, which may represent a risk of material
misstatement due to fraud. Furthermore, we identified and considered the fraud risk related to classification of operational
expenditure as capitalized expenditure due to the differences in related regulatory accounting and thus future revenues.
Consideration of fraud - Response
• We made inquiries of management, those charged with governance and others within TenneT regarding the risk of
material misstatements in the financial statements due to fraud, their process for identifying and responding to the risk of
fraud, the internal communication regarding their views on business practices and ethical behaviour and whether they
have knowledge of any actual, suspected or alleged fraud affecting the Company.
• We obtained an understanding of how those charged with governance exercise oversight of management’s processes for
identifying and responding to the risks of fraud in the Company and the internal control that management has established
to mitigate these risks.
• We evaluated whether unusual or unexpected relationships have been identified in performing analytical procedures, that
may indicate risks of material misstatement due to fraud.
• We held discussions amongst team members and component auditors to identify fraud risk factors and considered
whether other information obtained from our risk assessment procedures indicated risks of material misstatement due to
fraud.
• We determined overall responses to address the assessed risks of material misstatement due to fraud at the financial
statement level or at the assertion level by:
• assigning and supervising personnel with the adequate knowledge, skills and ability;
• evaluating whether the selection and application of accounting policies by TenneT, particularly those related to
subjective measurements and complex transactions, may be indicative of fraudulent financial reporting;
• incorporating an element of unpredictability in the selection of the nature, timing and extent of our audit procedures
which was achieved given this was our first year audit and TenneT did (thus) not have a detailed expectation of our
audit approach;
• testing the appropriateness of journal entries recorded in the general ledger and other adjustments made in the
preparation of the financial statements;
• evaluating whether the judgments and decisions made by management in making the accounting estimates included
in the financial statements indicate a possible bias that may represent a risk of material misstatement due to fraud.
Management insights, estimates and assumptions that might have a major impact on the financial statements are
disclosed in note 1 of the financial statements. Grid expense payables and the provision for decommissioning were
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focus areas in our audit as the related account balances are subject to significant management judgment. Reference is
made to the section “Our key audit matters”;
• performing a retrospective review of management judgments and assumptions related to significant accounting
estimates reflected in prior year financial statements; and
• evaluating whether the business rationale of significant transactions suggests that they may have been entered into to
engage in fraudulent financial reporting or to conceal misappropriation of assets.
The procedures described are in line with the applicable auditing standards and are not primarily designed to detect fraud.
Our procedures to address fraud risks did not result in a Key Audit Matter.
Because of the characteristics of fraud, particularly when it involves sophisticated and carefully organized schemes to
conceal it, such as forgery, intentional omissions, misrepresentation and collusion, an unavoidable risk remains that we may
not detect all fraud during our audit.
Consideration of compliance with laws and regulations
As part of obtaining an understanding of TenneT and its environment we obtained a general understanding of (i) the legal and
regulatory framework applicable to TenneT and the industry in which it operates and (ii) how TenneT is complying with that
framework. We assessed the laws and regulations relevant to the Company through discussion with management, those
charged with governance and others within TenneT, including but not limited to the functions (i) Internal Audit, (ii) Compliance
& Integrity, (iii) Legal Affairs, (iv) Regulatory Affairs and (v) Financial Governance & Services. We have read related minutes and
reports. We involved our forensic specialists in our evaluation.
As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could considerably
vary, we considered adherence to (corporate) tax law and financial reporting regulations, the requirements under EU-IFRS
and Part 9 of Book 2 of the Dutch Civil Code with a direct effect on the financial statements as an integrated part of our audit
procedures, to the extent material for the related financial statements. We obtained sufficient appropriate audit evidence
regarding provisions of those laws and regulations generally recognized to have a direct effect on the financial statements.
Apart from these, TenneT is subject to other laws and regulations where the consequences of non-compliance could have
amaterial effect on amounts and/or disclosures in the financial statements, for instance, through imposing fines or litigation.
Given the nature of TenneT’s business and the complexity of energy laws and regulations in The Netherlands and Germany,
as well as environmental laws, there is a risk of non-compliance with the requirements of such laws and regulations.
Inaddition, we considered relevant laws and regulations applicable to listed companies.
Our procedures are more limited with respect to other laws and regulations that do not have a direct effect on the
determination of the amounts and disclosures in the financial statements. These laws and regulations compliance may
befundamental to the operating aspects of the business, to TenneT’s ability to continue its business, or to avoid material
penalties (e.g., compliance with the terms energy laws in The Netherlands ang Germany or compliance with environmental
regulations) and therefore non-compliance with such laws and regulations may have a material effect on the financial
statements. In addition, we considered major laws and regulations applicable to listed companies. Our responsibility is
limited to undertaking specified audit procedures to help identify non-compliance with those laws and regulations that
mayhave a material effect on the financial statements.
Our procedures are limited to (i) inquiry of management, the Supervisory Board and others within TenneT as to whether
theCompany is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant
licensing or regulatory authorities to help identify non-compliance with those laws and regulations that may have a material
effect on the financial statements.
Naturally, we remained alert to the indications of (suspected) non-compliance throughout the audit.
Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws
andregulations have been disclosed to us.
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Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a
comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters How the key audit matter was addressed in the audit
Investments in grid connections
Securing supply and facilitating the integration of sustainable energy
sources into the high-voltage grid require substantial investments and
flexible access to (equity) funding. TenneT plans to invest an amount
growing to EUR 5-6 billion annually within the next 5 years in on-
and offshore grid connections.
We have tested the internal control environment related to tangible fixed
assets through testing of operating effectiveness of relevant controls,
including controls related to investment approval and the financial closing
of assets under construction as well as the periodic determination of the
useful life of tangible fixed assets. In addition, we have tested relevant
controls for design and implementation around the liquidity forecast
safeguarding TenneT’s ability to finance investments.
At yearend, we have performed test of details on the additions and other
movements. We obtained and discussed internal management reports
about progress of the key assets under construction.
We have included this as a key audit matter because of:
• the financial significance of the capital expenditures; and
• the risks associated with large investment projects, complexity in
procurement, construction and timely completion.
Observation
No reportable matters were identified as a result of our procedures.
Provision for decommissioning of (offshore) assets
Decommissioning of offshore assets will be an important topic over the
next 20 years for TenneT as a large part of these assets come to the end
of their economic life. Furthermore, moving towards a renewable future
involves significant investments in offshore assets, requiring recognition
ofnew provisions. The corresponding provisions are based on estimates
of costs, timing of decommissioning, discount rates and inflation.
We have obtained management’s position papers on the cost
assumptions and alignment of the methodology across The Netherlands
and Germany. Our audit procedures include testing of design and
implementation of relevant controls around the periodical assessment
ofthese assumptions and the evaluation of the financial model used to
calculate the provision.
Our substantive audit procedures further include an assessment of the
reasonability of the key assumptions (including involvement of a specialist
with regards to the cost assumptions) through comparison with
observable market data and procedures to address the completeness
ofthe provision.
Furthermore, we evaluated the appropriateness of the disclosure of the
accounting policy and estimation uncertainty of these provisions.
We have included this as a key audit matter because of:
• the significance of the provision and additions for the year triggered
by the start of construction of new (offshore) assets; and
• the uncertainty involved in measuring the provision and sensitivity to
changes in key assumptions, including the cost base, the inflation
rate and the discount rate.
Observation
We considered management’s key assumptions, to be within the
reasonable range of our own expectations.
Accrual for in-feed management expenses
Due to a larger share of renewable energy production in Germany, supply
of energy may sometimes exceed demand. In such instances, TenneT
initiates redispatch measures to maintain the energy balance on its grids
at 50 Hertz. If there is no redispatch possibility on the transmission grid,
TenneT will direct distribution system operators to curtail producers of
(renewable) electricity to secure system stability. These producers are
then entitled to reimbursement for their lost in-feed.
We obtained an understanding of the external factors and market
processes that drive the estimation uncertainty, including an evaluation
onthe correlation between average wind developments and in-feed
management expenses for 2019 and 2020.
We have tested the internal control environment related to the in-feed
management expenses by testing design and implementation of relevant
controls. This includes an assessment of the methodology applied by
TenneT to estimate the accrual at reporting date.
We have included this as a key audit matter because the accrual for
in-feed management is significant and subject to estimation uncertainty
in assessing variable renewable energy production, where TenneT is
dependent on information from other market participants.
We performed the following combination of substantive testing proce-
dures:
• We tested quantity (GWh) and pricing data of the accrual estimation
with underlying contract and counterparty quantity data.
• We performed back-testing of historical estimates, primarily aimed to
test quantity estimations (GWh) with the use of observable market
data, as well as the pricing estimations of the transactions based on
contracts. We evaluated underlying drivers of historical estimate
updates to the current period estimates.
Moreover, final settlement of in-feed management measures may take
up to six years to resolve due to regulatory terms.
Observation
Our procedures did not identify material observations and we considered
management’s key assumptions (quantity and price) to be within the
reasonable range of our expectations.
First year engagement
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Key Audit Matters How the key audit matter was addressed in the audit
Initial audit engagements involve numerous considerations not associated
with recurring engagements. The audit transition, including the audit of
the opening balance has been identified as a key audit matter as it
involves additional planning activities and considerations to establish an
appropriate audit strategy. We have included this as a key audit matter
because scientific researchindicates a higher rate of audit errors for initial
audit engagements, resulting from lack of understanding of the business
drivers, control environment including information systems understanding
and financial flows. That may result in insufficiently substantiated risk
assessments as well as inadequate internal controls and substantive
testing evidence.
To address the pervasive risk on our first year audit engagement,
we have e.g. performed the following procedures:
• We have read various sector and Company reports and evaluated the
content of those for our risk assessment of the audit of TenneT.
• We have set-up ‘audit transition-labs’ with both financial and
operating management of TenneT, providing us with a good initial
understanding of the business drivers, control environment, financial
flows and information systems.
• We have performed an in-depth review of TenneT’s accounting
policies and disclosure practices, and subjected the integrated
annual report to various quality reviews.
• We held transition meetings with the predecessor auditor on holding
and component level, as well as performed a review on their audit file
to rely on the opening balance sheet work done by them.
Observation
Following these procedures, we believe that we obtained sufficient and
appropriate audit evidence that mitigated the pervasive risk on our first
year audit engagement
Report on the other information included in the integrated annual report
In addition to the financial statements and our auditor’s report thereon, the integrated annual report contains other
information that consists of the:
1. Director’s Report, consisting of:
• About TenneT;
• About our connection with our stakeholders and the world around us;
• Our Performance in 2020; and
• Governance and risk management;Supervisory Board Report.
2. Other Information as required by Part 9 of Book 2 of the Dutch Civil Code.
3. Other information included in the integrated annual report.
Based on the following procedures performed, we conclude that the other information:
1. is consistent with the financial statements and does not contain material misstatements; and
2. contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the
Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our
audit of the financial statements.
Management is responsible for the preparation of the other information, including the Director’s Report in accordance with
Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.
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Report on other legal and regulatory requirements
Engagement
We were appointed by the General Meeting as statutory auditor of TenneT Holding B.V. on 18 December 2019.
The audit of the financial year 2020 is our initial audit engagement.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific
requirements regarding statutory audit of public-interest entities.
European Single Electronic Format (“ESEF”)
The Commission Delegated Regulation (EU) 2019/815 of 17 December 2018, supplementing Directive 2004/109/EC of
theEuropean Parliament and of the Council with regard to regulatory technical standards on the specification of a single
electronic reporting format, stipulates that the integrated annual report of the Company has to be prepared in an ESEF.
Therequirements to be met are set out in the aforementioned delegated regulation (the “RTS on ESEF”).
In our opinion, the integrated annual report made up in XHTML format, including the partly tagged consolidated financial
statements as included in the reporting package by the Company, has been prepared in all material respects in accordance
with the RTS on ESEF.
Management is responsible for preparing the integrated annual report including the financial statements in accordance with
the RTS on ESEF, whereby management combines the various components in a reporting package. Our responsibility is
toobtain reasonable assurance for our conclusion whether the integrated annual report in this reporting package, is in
accordance with the requirements. We have taken into consideration what is stated in Alert 43 ‘Vaststellen dat voldaan is
aanESEF-vereisten’ as issued by The Royal Netherlands Institute of Chartered Accountants.
Our procedures included:
• obtaining an understanding of the Company’s financial reporting process, including the preparation of the reporting
package;
• obtaining the reporting package and performing validations to determine whether the reporting package containing the
Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the
technical specifications; and
• examining the information related to the consolidated financial statements in the reporting package to determine whether
all required tagging has been applied and whether they are in accordance with the RTS on ESEF.
Description of responsibilities regarding the financial statements
Responsibilities of management and the Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS
and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the Director’s Report in accordance with Part 9 of
Book 2 of the Dutch Civil Code.
Furthermore, management is responsible for such internal control as management determines is necessary to enable the
preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the
financial statements using the going concern basis of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the Company’s ability to continue
as a going concern in the financial statements.
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The Supervisory Board is responsible for overseeing the Company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate
audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material
errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Themateriality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance
with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:
1. Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error,
designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
2. Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.
3. Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
4. Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
5. Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.
6. Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the
group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group
entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group
entities for which an audit or review had to be carried out on the complete set of financial information or specific items.
We communicate with management and the Supervisory Board regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant findings in internal control that we identified during
our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the
EURegulation on specific requirements regarding statutory audit of public-interest entities. The information included in this
additional report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
onour independence, and where applicable, related safeguards.
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From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were
of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the
matter is in the public interest.
Rotterdam, 8 March 2021
Deloitte Accountants B.V.
Signed by J.A. de Bruin
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Assurance report of the independent auditor with
respect to the 2020 Sustainability Information of
TenneTHolding B.V.
To: the Shareholder and the Supervisory Board of TenneT Holding B.V.
Our conclusion
We have reviewed the 2020 sustainability information included in the Integrated AnnualReport for 2020 (the “Sustainability
Information”) of TenneT Holding B.V. (“TenneT”) based in Arnhem. A review is aimed at obtaining a limited level of
assurance.
Based on our procedures performed nothing has come to our attention that causes us to believe that the Sustainability
Information does not present, in all material respects, a reliable and adequate view of:
• the policy and business operations with regard to sustainability; and
• the thereto related events and achievements for the year 2020, in accordance with the reporting criteria as included
inthesection ‘Reporting Principles’.
The Sustainability Information consists of the performance information in chapters ‘2020 at a glance’, ‘Letter from the
Board’, ‘About TenneT’, ‘Our Performance in 2020’ (excluding the sections ‘Secure a solid financial performance and
investor rating’ and ‘Statements of the Executive Board’) and the section ‘About this report’ in the 2020 Integrated
AnnualReport.
Basis for our conclusion
We have performed our review on the Sustainability Information in accordance with Dutch law, including Dutch Standard
3810N ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability
reports) which is a specified Dutch Standard that is based on the International Standard on Assurance Engagements (ISAE)
3000 ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’. This assurance engagement
is aimed at obtaining limited assurance. Our responsibilities under this standard are further described in the section
‘Ourresponsibilities for the review of the Sustainability Information’.
We are independent of TenneT in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and
other relevant independence regulations in The Netherlands. This includes that we do not perform any activities that could
result in a conflict of interest with our independent assurance engagement. Furthermore we have complied with the
‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Reporting criteria
The Sustainability Information needs to be read and understood together with the reporting criteria. TenneT is solely
responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to
reporting.
The reporting criteria used for the preparation of the Sustainability Information are the Sustainability Reporting Standards of
the Global Reporting Initiative (“GRI”) and the applied supplemental reporting criteria as disclosed in the chapter ‘About the
report” of the 2020 Integrated Annual Report.
The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for
different, but acceptable, measurement techniques and can affect comparability between entities and over time.
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a glance
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Assurance report of the independent auditor
Limitations to the scope of our review
The Sustainability Information includes prospective information such as ambitions, strategy, plans, expectations and
estimates. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance on
the assumptions and achievability of prospective information in the Sustainability Information.
The references to external sources or websites in the Sustainability Information are not part of the Sustainability Information
as reviewed by us. We therefore do not provide assurance on this information.
Responsibilities of the Executive Board and the Supervisory Board for the sustainability information
The Executive Board is responsible for the preparation of the Sustainability Information in accordance with reporting criteria
as disclosed in the chapter ‘Reporting Principles’, including the identification of stakeholders and the definition of material
matters. The choices made by the Executive Board regarding the scope of the Sustainability Information and the reporting
policy are summarised in the chapter ‘Our strategy and value creation’ of the Integrated Annual Report.
The Executive Board is also responsible for such internal control as the Executive Board determines is necessary to enable
the preparation of the Sustainability Information that is free from material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for overseeing the reporting process of TenneT.
Our responsibilities for the review of the sustainability information
Our responsibility is to plan and perform the review in a manner that allows us to obtain sufficient and appropriate evidence
to provide a basis for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in
nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained
in review is therefore substantially less than the assurance obtained in an audit.
Misstatements can arise from fraud or errors and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the decisions of users taken on the basis of the Sustainability Information. The
materiality affects the nature, timing and extent of our review procedures and the evaluation of the effect of identified
misstatements on our conclusion.
We apply the ‘Nadere voorschriften kwaliteitssystemen)’ (NVKS, regulations for quality management systems) and
accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.
We have exercised professional judgement and have maintained professional skepticism throughout the review, in
accordance with the Dutch Standard 3810N, ethical requirements and independence requirements.
Our review included amongst others:
• Performing an analysis of the external environment and obtaining an understanding of relevant social themes and issues,
and the characteristics of TenneT.
• Evaluating the appropriateness of the reporting policy and its consistent application, including the evaluation of the results
of the stakeholders’ dialog and the reasonableness of management’s estimates.
• Obtaining an understanding of the reporting processes for the Sustainability Information, including obtaining a general
understanding of internal control relevant to our review.
• Identifying areas of the Sustainability Information with a higher risk of misleading or unbalanced information or material
misstatements, whether due to fraud or error.
• Designing and performing further assurance procedures aimed at determining the plausibility of the Sustainability
Information responsive to this risk analysis. These procedures consisted amongst others of:
• interviewing management, KPI owners and/or other relevant staff at corporate and business level responsible for the
sustainability strategy, policy and results;
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• interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and
consolidating the data in the Sustainability Information; anddetermining the nature and extent of the review procedures
for KPI’s. For this, the nature, extent and/or risk profile of the KPI’s are decisive. Based thereon we selected the KPI
owners or other relevant who we will interview. Due to the COVID-19 travel restrictions during 2020 we were not able
to execute the on-site visits. Consequently, we revised our strategy in which we performed the interviews and
documentation inspection virtually. For selected KPI’s we performed remote documentation inspections with the KPI
owners that were intended with the goal to:
• obtaining assurance information that the Sustainability Information reconciles with underlying records of TenneT;
• reviewing, on a limited test basis, relevant internal and external documentation; and
• performing an analytical review of the data and trends.
• Evaluating the consistency of the Sustainability Information with the information in the Integrated Annual Report which is
not included in the scope of our review.
• Evaluating the presentation, structure and content of the Sustainability Information;Considering whether the Sustainability
Information as a whole, including the disclosures, reflects the purpose of the reporting criteria used.Assessing whether the
Sustainability Information has been prepared in accordance with the Sustainability Reporting Standards Core option of the
GRI.
We communicated with the Executive and Supervisory Board regarding, among other matters, the planned scope, timing
and outcome of the review and significant findings that we identified during our review.
Rotterdam, 8 March 2021
Deloitte Accountants B.V.
Signed by J.A. de Bruin
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information
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About this report
Scope of this report
The scope of this report is TenneT B.V. and the subsidiaries in which it has a controlling interest (generally speaking a
votinginterest of over 50%). For example, our 50% stake in BritNed and BritNed’s activities are not included in our results.
This integrated report covers the full year 2020, i.e. 1 January 2020 to 31 December 2020. TenneT’s Integrated Annual
Report 2020 was published on 12 March 2021and is available online.
The 2019 Annual Report was published on 12 March 2020.
In2020, there were no significant acquisitions or divestments impacting our non-financial reporting. A complete overview
ofall the entities consolidated in this Integrated Annual Report can be found in note 31 of the consolidated financial
statements.Our reporting policy in the event of acquisitions or divestments can be found in Notes to the consolidated
financial statements, 11 Business combinations. For non-financial performance we report acquisitions and divestments
fromthe day of purchase or when an entity is sold respectively. We recognise that in the event of acquisitions, reporting
improvements may be required which may result in data being estimated.
Reporting principles
Our non-financial qualitative and quantitative information is prepared according to the Global Reporting Initiative (GRI)
Standards, following the in-accordance option: ‘Core’. We also adhere to the sector guidelines for our industry (G4 sector
disclosures - electric utilities). For more information, please refer to the reporting guidance document on our corporate
website.
The GRI context index, as included on our corporate website, shows which GRI aspects are material to TenneT and refers to
those sections in the report describing this aspect. In addition, and in accordance with the policy on state-owned companies
(Nota Deelnemingenbeleid Rijksoverheid 2013), TenneT complies with the Dutch Corporate Governance Code, as laid down
in the Corporate Governance section of this report.
We have used the Integrated Reporting (IR) framework, as defined by the International Integrating Reporting Council (IIRC)
asa basis for this integrated report. This allows us to be transparent about our impact as an organisation. The financial
information in this report was prepared in accordance with IFRS, as adopted by the EU, and complies with Section 9 of
Book 2 of the Dutch Civil Code.
Furthermore, our Integrated Annual Report complies with the EU directive on the disclosure of non-financial and diversity
information, which was translated to Dutch legislation and has been mandatory for annual reports since 2017.
This report is also a Communication on Progress, i.e. an update on how we implement the 10 principles of the United
Nations Global Compact (UNGC). We have endorsed these principles since 2015, not just to underline our own
commitment, but also to drive CSR performance in the value chain. The UNGC principles are the basis of our TenneT
Supplier Code of Conduct and mandatory for all suppliers. New suppliers who do not meet our standards during factory
audits, are disqualified from our tender procedures. Our Communication on Progress document can also be found on
ourwebsite.
In 2015, the UN launched theSustainable Development Goals (SDGs). These goals are accepted worldwide as driving
sustainability. The section in our integrated annual report ‘The Sustainable Development Goals and TenneT’ describes
ourimpact and the contribution we make to the SDGs that are most relevant to our business.
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About this report
Stakeholders and materiality
In accordance with the applied reporting principles, this integrated report covers topics considered material to our
organisation. TenneT uses the materiality principle to determine which subjects to include in the report and which activities
and supply chain to take into account. Our corporate website (www.tennet.eu) includes additional information which was not
considered material for integrated-reporting purposes. How we defined the material topics and the results of this assessment
can be found in the materiality section. The fact that we report on selected topics does not mean we do not manage aspects
that are not considered material to our business. Our activities and CSR policy are broader and are not limited to the
outcome of the materiality analysis. For more detailed information, go to theCSR section of our website.
In 2019, we performed our materiality analysis, which is performed on a bi-annual basis. This is basedon a survey of
stakeholders in which we ask them toprovide their views on the importance of specific aspectsincluded on the topic
list.Furthermore, TenneT’s economic, social and environmentalimpact was determined through internal analysis.
Thisdetermines whether our impact per topic is either high,medium or low. This, together with the outcome of
thestakeholder questionnaire, is the basis of the materialityanalysis. This resulted in four keymaterial topics: financial
health,security of supply, stakeholder engagement and driving the energy transition.The materialityprocess is thoroughly
embedded in the TenneT organisation.The final step in the validation process was the approval of the CSR board, which
included both the CEO and CFO. After validation by the CSR board, the materiality analysis was completed and resulted
inthe following matrix.
Scope and boundaries
The table below provides a clear overview of the material topics, their impact, our contribution and the boundaries.
Adetailed disclosure of our management approach on each material topic can be found in the CSR section of our website.
Subject#
Relevance for stakeholders
Significance of TenneT’s Economic, Environmental en Social impact
Economic
Environmental
Social
9
1 2
11
4
6
12
3
10
7
813
1
2
3
4
5
6
7
9
11
13
Financial health
Security of supply
Our own environmental impact
Health and development of our people
Diversity and inclusiveness
Safety
Talent attraction
Responsible supply chain practices
Stakeholder engagement
Strategic partnerships
Driving the energy transition
(Cyber) security
Accessibility of our grid
Low Medium High
Low Medium High
5
8
10
12
Materiality
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Reference Why material?
What is the
impact?
What is our
role?
What are the
bounderies?
Key
Performance
Indicators
(KPIs)
Targets/
ambitions
Unit(s) respon-
sible within
organisation
Material topic
Security of
supply
Deliver a high
security of
supply
Our main task is to
ensure security of
electricity supply to
over 42 million people
across the Nether-
lands and Germany.
Electricity is the
backbone of the
economy of the
countries we
operate in.
We are respon-
sible for main-
taining a balance
between supply
and demand; we
operate and
manage the
high-voltage
grid.
We are responsible
for transmission
services. Production
is the responsibility
of producers, distri-
bution lies with
DSOs.
Security of
supply: uptime
in %
99.9999%
grid availabil-
ity onshore
Asset
Management
(AM)
93.97% grid
availability
offshore
Large Projects
departments
(LPG), (LPN),
(LPD), (LPO)
System
Operations (SO)
Grid Field Opera-
tions, Mainte-
nance &
(Baseload) Proj-
ects (GFO)
Financial
health
Have a solid
financial per-
formance and
reputation
Having a solid finan-
cial performance and
reputation will enable
us to drive the energy
transition against
lower societal costs.
We need to invest in
onshore and offshore
grid infrastructure to
realise the energy
transition over the
next ten years, which
includes additional
investments in under-
ground DC cables in
Germany following the
German govern-
ment's decision
hereon. Therefore it is
important to carefully
make the right invest-
ment decisions and to
manage them prop-
erly to be sure we are
doing the right things.
To finance our
investments, we
plan to increase
our investment
level up to
EUR5-6 billion
per year within
the next 5 years
We are respon-
sible for realising
the investment
programme and
living up to our
stakeholders’
expectations.
We are responsible
for realising our
investment portfolio.
The investment
programme is
based on the task
we are given by the
Dutch and German
governments.
Adjusted under-
lying EBIT
group
EUR 3,080
million
Strategic Invest-
ment Committee
FFO/Net debt Supervisory
Board
ROIC Business Guid-
ance Corporate
(BGD)
Stakeholder
engagement
About TenneT To drive the energy
transition, we believe
that partnerships are
essential to transition
to a low carbon econ-
omy in a better and
faster way. Further-
more, we believe it is
crucial to connect
with local communi-
ties, NGOs and politi-
cians at the earliest
stage of a project to
address their con-
cerns and gain their
understanding and
acceptance.
There is increas-
ing public atten-
tion with respect
to the impact of
climate change
and with that the
topic of transition-
ing to a low car-
bon economy.
This can also
impact the oppo-
sition to grid
expansion, espe-
cially where new
assets are con-
cerned.
To enter into
partnerships that
can unlock new
possibilities and
to be honest,
open and fair to
all stakeholders
involved.
The decision to
expand the grid is
taken by the Dutch
and German gov-
ernments. Execut-
ing our work and
explaining the
necessity of it is our
responsibility.
Corporate repu-
tation
Live up to
our values
(i.e. being
responsible,
engaged and
connected)
when
addressing
our stake-
holders’
concerns.
Public Affairs &
Communications
(PUC)
Drive the
energy transi-
tion
Deliver a high
security of
supply, Solve
societal chal-
lenges with
stakeholders
and through
partnerships
With our knowledge,
experience and vision
with respect to the
future energy land-
scape, we believe that
we can serve society
by helping to drive the
energy transition in an
effective and efficient
manner.
National govern-
ments in the area
we serve have
committed them-
selves to national
and international
climate agree-
ments. We are an
important stake-
holder to them to
help realise this.
To lead as a
green grid oper-
ator, be a
thought leader in
the energy tran-
sition, develop
innovative instru-
ments to unlock
flexibility and
establish a piv-
otal role in the
energy data
world to facilitate
innovation.
Our boundaries with
respect to leading
as a green and
responsible grid
operator are not
restricted to our
own organisational
boundaries. We
strive to also con-
sider our impact in
our supply chain.
For our Carbon
emissions we con-
sider not only our
scope 1 and scope
2, but we have also
started with identify-
ing scope 3 emis-
sions.
Carbon foot-
print Amount of
GWh of offshore
capacity
realised
Live up to
our values
(i.e. being
responsible,
engaged and
connected)
when
addressing
our stake-
holders’
concerns
Large Projects
departments
(LPG), (LPN),
(LPD), (LPO)
Digital & Process
Excellence (DPE)
Strategy and
Partnerships
(STP)
For most of our figures, our reporting focus is on our own operations, although we do take some aspects of the value chain
into account in our carbon footprint and safety (TRIR). We recognise that reporting outside our gate (so-called ‘value chain
reporting’) provides a better overview of our impact. We have therefore decided to include the impact of our offshore
operations in our carbon footprint reporting.
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a glance
Performance
2020
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the Board
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statements
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and risk
management
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information
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EU Directive on Non-Financial and Diversity Information
Our annual report complies with the EU directive on non-financial reporting. The table below provides a clear overview of
where the different aspects of this directive are reported.
A description of the
policies pursued,
including due
dilligence.
The outcome of
those policies.
Principle risks in
own operations and
within value chain.
How risks are
managed.
Non-financial key
performance
indicators.
Topic
Relevant social and per-
sonnel matters (e.g. HR,
safety etc.)
Create a sustainable work-
place
Create a sustainable
workplace
Create a sustainable
workplace
Create a sustainable
workplace
Create a sustainable
workplace
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Solve societal challenges
with stakeholders and
through partnerships
Solve societal challenges
with stakeholders and
through partnerships
Solve societal challenges
with stakeholders and
through partnerships
Solve societal challenges
with stakeholders and
through partnerships
Solve societal challenges
with stakeholders and
through partnerships
Relevant Environmental
matters (e.g. climate-
related impacts)
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Climate related risks
Relevant matters with
respect for human rights
(e.g. labour protection)
Ensure critical infrastruc-
ture for society
Ensure critical infrastruc-
ture for society
Ensure critical infrastruc-
ture for society
Ensure critical infrastruc-
ture for society
Ensure critical infrastruc-
ture for society
Create value to transition
to a low carbon economy
Create value to transition
to a low carbon economy
Relevant matters with
respect to anti-corruption
and bribery
Governance and risk man-
agement, Risk manage-
ment and internal control,
compliance and integrity
Governance and risk man-
agement, Risk manage-
ment and internal control,
compliance and integrity
Governance and risk man-
agement, Risk manage-
ment and internal control,
compliance and integrity
Governance and risk man-
agement, Risk manage-
ment and internal control,
compliance and integrity
Governance and risk man-
agement, Risk manage-
ment and internal control,
compliance and integrity
A description of the
policies pursued. Diversity targets
Description of how the
policy is implemented
Results of the
diversity policy
Topic
Insight into the diversity (execu-
tive board and the supervisory
board)
Create a sustainable workplace
Supervisory Board report, Diver-
sity and culture
Create a sustainable workplace
Supervisory Board report, Diver-
sity and culture
Create a sustainable workplace
Supervisory Board report, Diver-
sity and culture
Create a sustainable workplace
Supervisory Board report, Diver-
sity and culture
Data collection process
The reported data is obtained from financial and non-financial data management systems in our own operations, such as IFS
and SAP for financial and HR data, Mecoms for our electricity transport data, and iTask for our safety data. The key non-
financial qualitative and quantitative data is included in the regular planning and control cycles and reported internally at least
once a quarter by the Business Guidance department which performs a check on the quality and reliability of the data.
TenneT’s Executive Board and senior management contribute to the context of the report and the quantitative data.
The definitions and calculations used are disclosed in the abbreviations and definitions section of this integrated report and in
the CSR section of our corporate website. The definitions and calculations used were re-assessed based on such things as
process improvements, further alignment within the group and the materiality analysis. As a result, certain originally reported
comparative figures were re-classified to conform to the current year’s presentation.
The data for this report was measured, and where no data was available, it was estimated. An example of this is the energy
use at some of our smaller offices. Due to the nature and maturity level of non-financial data, we acknowledge that it is a
journey to fully align this with the level of financial systems and processes. Therefore, improvements can be made over time
with the aim to provide our stakeholders better and more relevant information. That is why 100% completeness and
accuracy of our data cannot be guaranteed as processes may be subject to a higher degree of manual data collection.
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a glance
Performance
2020
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External assurance
The financial statements included in this report are subject to an independent external audit and TenneT’s non-financial
reporting is subject to a limited assurance review. These were both conducted by our external auditor, Deloitte Accountants
B.V.. Reliable data is essential in our dialogue with stakeholders, so we decided to have our non-financial data reviewed by
an externalassurance provider. We have requested Deloitte to reviewthe Integrated Annual Report sections ‘At a Glance’,
‘Letter from the Board’, ‘About TenneT’ and ‘Our Performance in2020’ (excluding ‘Have a solid financial performance and
reputation’ and ‘Statements of the Executive Board’) in accordance with the GRI Standards and audit the financial
statements in accordance with IFRS as adopted by the EU and Part 9 of Book 2 of the Dutch Civil Code.
Governance of CSR
For TenneT, CSR covers a broad range of subjects, all aimed at creating a sustainable future for our internal and external
stakeholders. CSR is embedded in our current strategy. We have set clear priorities, targets and key performance indicators
in this. For some areas we are currently developing new or updating key performance indicators. On an overall level, our
Executive Board is responsible for our strategy and company target setting, which includes the areas with respect to CSR.
Our Strategy and Partnerships department, is mandated by the Executive Board to make decisions based on the CSR areas
in our overall strategy and to execute studies for future ambitions with respect to CSR. In case new decisions and directions,
this will be approved by the relevant decision committee within our organisation depending on the topic (Future Design,
Asset, Integrated Work Planning or Systems & Market committee).
Progress with respect to our CSR policy and actions is reported and reviewed by our Executive Board and Supervisory
Board on a quarterly basis.
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a glance
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Strengths
High level of security of supply
Attractive employer with, competent, well educated and
experienced employees with high degree of engagement
Broad experience as a leading (North Sea) offshore
grid operator
First cross border TSO in Europe and a favorable
corporate reputation amongst stakeholders
Proven track record in leading European
marketintegration in North West Europe
Strong financial health with strong
credit ratings
Opportunities
Green deal and increase
in decarbonisation targets
(40% to 55%)
New (digital) technologies for better maintenance
and a smarter grid
Strong growth in electrification of industry
System integration / sector coupling (a.o. hydrogen)
Elections in NL and GE and new energy act
Weaknesses
Suboptimal performance culture (bureaucratic
internal processes and decision making procedures)
Transport capacity reaching it’s limits in certain
areas in NL due to high influx of renewable energy
Aging assets
Scarcity in availability of technical staff
Threats
Growing infeed of volatile
renewable energy
Insufficient public acceptance of
new infrastructure and rising cost
of the energy transition
Prolonged lock down and a result of covid-19
Supplier shortages and lack of technical
staff possibly leading tot project delays
Negative developments in the regulatory
framework, growing regulatory interventions
Growing and evolving cyber security threat landscape
SWOT Analysis
WS
O
T
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a glance
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SWOT Analysis
Company addresses
Head office
TenneT Holding B.V. and TenneT TSO B.V.
Mariëndaal Centre of Excellence
Utrechtseweg 310
6812 AR Arnhem
The Netherlands
Phone +31 (0)26 373 11 11
Postbus 718
6600 AS Arnhem
The Netherlands
communicatie@tennet.eu
www.tennet.eu
Regional offices
The Netherlands
TenneT region West
Tielweg 28
2803 PK Gouda
The Netherlands
TenneT region North
De Stroom 2
7901 TE Hoogeveen
The Netherlands
TenneT region South
Copernicusstraat 9
6003 DE Weert
The Netherlands
Germany
Head office Germany
TenneT TSO GmbH
Berneckerstraße 70
95448 Bayreuth
Germany
Phone + 49 (0) 921 50740-0
TenneT Lehrte
Eisenbahnlängsweg 2a
31275 Lehrte
Germany
TenneT Berlin
Friedrichstraße 150
10117 Berlin
Germany
Belgium
TenneT Brussels
TenneT Holding B.V.
European Office
Rue des Deux Eglises 29
1000 Brussels
Belgium
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2020
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the Board
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Company addresses
Key figures: five-year summary
(based on underlying figures)
2020 2019 2018 2017 2016
Net debt 14,003 10,815 8,712 7,687 7,347
Underlying EBIT group 910 768 853 897 834
Underlying profit for theyear 516 401 450 531 523
Investments in tangible fixed assets 3,412 3,012 2,212 1,763 1,848
Onshore grid availability 99.9999% 99.9998% 99.9988% 99.9986% 99.9999%
Interruptions 3 14 17 11 6
Interconnectors 16 15 14 13 13
Internal headcount 4,321 3,768 3,409 3,187 3,040
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a glance
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2020
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the Board
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Key figures: five-year summary
Glossary
2 GW project
To realise such an innovative direct current system, TenneT
launched the design phase with five HVDC suppliers on
thebasis of an innovation partnership: ABB Power Grids,
GERenewable Energy’s Grid Solutions (Netherlands),
Consortium Global Energy Interconnection Research
Institute Co. Ltd. (GEIRI) & C-EPRI Electric Power
Engineering Co. Ltd. (C-EPRI) (China), Siemens (Germany),
and Xian Electric Engineering Co., Ltd (China). These
suppliers will develop this innovative 2 GW 525 kV HVDC
solution based on criteria set by TenneT. They will provide
specific information on this to Iv-Offshore&Energy b.v.,
which is carrying out the Front-End Engineering Design
(FEED) study on behalf of TenneT. On this basis, a
standardised platform design will be developed for all
HVDC solutions.
ABP – Algemeen Burgerlijk Pensioenfonds
ABP is the civil service pension fund for government,
education and energy employees in the Netherlands.
AC – Alternating current
In alternating current (AC), the flow of electricity periodically
reverses direction. By contrast direct current (DC), electricity
only flows in one direction. AC is used to transport electricity
over relatively shorter distances and DC longer ones.
ACER – Agency for the Cooperation of Energy
Regulators
The European network organisation for energy regulators.
Ithas a key role in the integration of European electricity and
gas markets, providing a framework for cooperation at EU
level and regulatory certainty.
ACM – Autoriteit Consument & Markt
Dutch national regulatory authority
Adjusted FFO – Adjusted funds from operations
Profit for the year plus depreciation, amortisation and
impairments minus gain/loss on the disposal of assets
minus capitilised interest on assets under construction, plus
interest on provisions, minus 50% of Hybrid interest.
Adjusted FFO/net debt
Adjusted funds from operations divided by net debt.
Balance Responsible Parties
A marketparty that is recognised as, and is permitted
toexercise, Programme Responsibility by TenneT.
Blockchain
The digital process of verifying and documenting the
performance of distributed flexible devices. Blockchain is
suited to connecting multiple parties and large numbers of
distributed computed nodes and enabling them to undertake
joint action in a scalable, transparent and trusted network.
BNetzA – Bundesnetzagentur für Elektrizität,
Gas, Telekommunikation, Post und Eisenbahnen
German national regulatory authority
BritNed
The 260 km-long high-voltage direct current BritNed cable
has a capacity of 1,000 MW and connects the Dutch and
British electricity grids.
Capex – Capital expenditure
Capital expenditure (capex) is the amount spent on acquiring
or improving long-term assets. Its benefits are enjoyed over
a long period time, not only in the current year. Capex is
ofanon-recurring nature and results in the acquisition of
permanent assets.
Carbon footprint
The total amount of greenhouse gases produced to directly
and indirectly support human activities, usually expressed in
equivalent tons of carbon dioxide (CO
2
).
CEP – Clean Energy Package
On 30 November 2016, the European Commission
published its long-anticipated ‘Clean Energy for All
Europeans’ package, more commonly referred to as the
‘Winter Package’, consisting of numerous legislative
proposals together with accompanying documents, aimed
at further completing the internal market for electricity
andimplementing the Energy Union.
CGU – Cash-generating unit
A cash-generating unit is the smallest group of assets that
independently generates cash flow and whose cash flow is
largely independent of the cash flows generated by other
assets.
CIGRE – International Council on Large Electric
Systems
Founded in 1921, CIGRE, the Council on Large Electric
Systems, is an international NGO for promoting
collaboration with experts from all around the world by
sharing knowledge and joining forces to improve electric
power systems of today and tomorrow.
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Glossary
CIP – Copenhagen Infrastructure Partners
Copenhagen Infrastructure Partners is a fund management
company that is joined between four senior partners and
PensionDenmark.
CO
2
–Carbon dioxide
Carbon dioxide is a greenhouse gas formed by the burning
of carbon-based fuels. Its concentration in the atmosphere
is rapidly increasing, leading to global warming.
COBRAcable
A 275 km-long high-voltage direct current cable that is
under construction to connect the Dutch and Danish
electricity grids. It will have a capacity of 700 MW.
COSO – Committee of Sponsoring Organisations
of the Treadway Commission
COSO has established the common internal control model
against which companies and organisations assess their
control systems.
CP programme – Commercial paper programme
A commercial paper is a flexible short-term debt instrument
that is issued directly to the market with different maturities
and is offered continuously.
CPI index
A consumer price index measures changes in the price level
of a weighted average market basket of consumer goods
and services purchased by households.
CSR – Corporate social responsibility
Corporate social responsibility relates to the socially
responsible business practices of a company, balancing
people, planet and profit.
CSR Board
Former board which was established to monitor progress
on the CSR Ambition plan and advised the Executive Board
on the integration of CSR into the business. The CSR
board, was chaired by the CSR manager and included the
CEO, CFO and senior managers from Asset Management,
Large Projects, Communication, Public Affairs and Finance.
For more information on the new governance structure of
CSR, refer to the ‘Governance of CSR’ section on page 171.
Cross-border TSO
A cross-border TSO is a TSO that operates in more than
one country
CTA - Contractual Trust Arrangements
Acontractual trust arrangementis essentially a form of
company pension fund where the fund’s assets have been
transferred to a legal entity separate from the company.
DBO - Defined Benefit Obligation
Adefined benefit obligation pension planis a type of
pension planin which an employer/sponsor promises
aspecified pension payment, lump-sum or combination
thereof on retirement that is predetermined by aformula
based on the employee’searningshistory, tenure of service
andage, rather than depending directly on
individualinvestmentreturns.
DC – Direct current
In direct current (DC), the flow of electricity is only in one
direction. In alternating current (AC), the electricity flows
periodically reverses direction. DC is used to transport
electricity over relatively longer distances and AC over
shorter ones.
DGUV– Deutsche Gesetzliche
Unfallversicherung
The DGUV (German Social Accident Insurance) is the
umbrella association of the accident insurance institutions
for the industrial and public sectors (the BGs and the public-
sector accident insurers respectively).
DMAIC – Define, Measure, AnalySe, Improve and
Control
DMAIC is the problem-solving methodology behind Lean
Six Sigma. It consists of five Phases: Define, Measure,
Analyse, Improve and Control.
DSO – Distribution system operator
A regional electricity distribution company, that is connected
with end users and is responsible for providing (1) power
distribution services, by constructing and maintaining
arobust high-voltage grid, and (2) facilitating a smooth
functioning, liquid and stable electricity market.
E-wet – Elektriciteitswet 1998
The Dutch electricity law.
EBIT – Earnings before interest and tax
Earnings for the period before income tax expense and
interest payments are deducted.
EBITDA – Earnings before interest, tax,
depreciation and amortisation
Earnings for the period before income tax expense, interest
payments depreciation and amortisation are deducted.
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EC – European Commission
The European Commission is the executive of the European
Union and promotes its general interest.
ECL - Expected Credit Loss
Expected Credit Loss is the probability-weighted estimate
ofcredit losses(i.e., the present value of all cash shortfalls)
over theexpected lifeof aFinancial Instrument.
EEG – Erneuerbare-Energien-Gesetz
German Renewable Energy Act, designed to govern the
preferred supply of electricity from renewable sources into
the grid with guaranteed, fixed minimum producer prices.
Itis intended to serve and protect the climate and is one of
several statutory provisions aimed at reducing Germany’s
dependence on fossil fuels such as oil, natural gas or coal,
and nuclear power.
EIB – European Investment Bank
The European Investment Bank is one of the key financial
institutions of the EU. It is the only bank owned by and
representing the interests of the EU member states,
providing financing for sustainable investment projects
thatcontribute to furthering EU policy objectives.
EIR - Effective Interest Rate
Theeffective interest rateis theinterest rateon a loan or
financial product restated from thenominal interest rateand
expressed as the equivalent interest rate ifcompound
interestwas payable annually in arrears.
EMTN – Euro medium-term note
A flexible medium-term debt instrument that is issued
directly to the market with different maturities and is offered
continuously rather than all at once like a bond issue.
Energinet
Energinet is the Danish TSO that TenneT is partnering with
to build the COBRAcable between the Netherlands and
Denmark. Energinet.dk is also participating in the
development of the North Sea Wind Power Hub.
ENTSO-E – European Network of Transmission
System Operators for Electricity
ENTSO-E is the organisation of transmission system
operators at a European level, representing 41 TSOs from
34 countries. Its mission is to promote important aspects
ofenergy policy, especially integrating renewable energy
and the completion of an internal energy market.
Equigy B.V.
Together with TenneT (Germany and the Netherlands),
Swissgrid (Switzerland) and Terna (Italy), four of the largest
European transmission system operators are now jointly
developing a cross-border blockchain platform - Equigy.
This will enable millions of European households and
owners of e.g. electric vehicles to actively offer the flexible
capacity of their cars and house batteries on the energy
markets to stabilise the electricity system and thus earn
money from the energy transition.
EU – European Union
The European Union (EU) is a political-economic union
of28member states located in Europe.
FCR – Frequency containment reserve
Frequency containment reserves are the active power
reserves available to contain a system frequency of 50 Hz
after the occurrence of an imbalance.
Flexumers
Energy consumers simultaneously acting as producers
FTE – Full-time equivalent
Full-time equivalent is a unit that measures work by
converting work load hours into the number of people
required to complete that task.
Gasunie – N.V. Nederlandse Gasunie
Gasunie is a European gas infrastructure company that
transports natural gas and green gas in the Netherlands and
the northern part of Germany. Gasunie is participating in the
development of the North Sea Wind Power Hub.
GDPR – General Data Protection Regulation
The General Data Protection Regulation (EU) 2016/679
(“GDPR”) is a regulation in EU law on data protection and
privacy for all individuals within the European Union (EU) and
the European Economic Area (EEA). It also addresses the
export of personal data outside the EU and EEA areas.
GIS – Gas insulated switchgear
A switchgear insulated via SF
6
gas.
Green (hybrid) bonds
The proceeds of the green bonds are used to finance,
refinance and/or invest in projects relating to the
transmission of renewable electricity from offshore wind
power plants into the onshore electricity grid using direct
current technology or alternating current technology.
Green hybrid bonds are perpetual bonds without an
end-date.
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GRI – Global Reporting Initiative
The Global Reporting Initiative is a non-profit organisation
that promotes sustainability and produces global standards
for sustainability reporting.
GW – Gigawatt
A unit of power equal to one billion watts.
GWh – Gigawatt hour
A unit of energy equivalent to delivering one billion watts of
power for a period of one hour.
Helaba – Helaba Pension Trust e.V.
Helaba Pension Trust e.V. is a subsidiary of German bank
Landesbank Hessen-Thüringen and holds a part of the
assets of the German pension plan.
HGRT – Holding des Gestionnaires de Réseaux
de Transport d’Électricité S.A.S.
Holding des Gestionnaires de Réseaux de Transport
d’Électricité S.A.S. is a holding company of EPEX SPOT
power exchange.
HR – Human resources
Our HR department aims to make a distinctive contribution
to TenneT’s position as a leading TSO by attracting,
recruiting and retaining qualified staff, as well as by creating
a healthy and stimulating working environment.
HVDC – High-voltage direct current
A high-voltage, direct currentsystem can transmit bulk
electricity over longer distances than an alternating current
system and with lower grid losses. As such, HVDC is used
for linking offshore wind farms to the onshore grid and for
our Interconnectors NorNed to Norway, BritNed to the UK
and COBRAcable to Denmark and NordLink to Norway.
IAS - International Accounting Standards
International Accounting Standards (IAS) are older
accounting standards issued by the International
Accounting Standards Board (IASB), an independent
international standard-setting body based in London.
TheIASwere replaced in 2001 by International Financial
Reporting Standards (IFRS).
ICF – Internal control framework
Framework for the set of internal controls, to provide
reasonable assurance on the reliability of our internal and
external reporting.
IFRIC - International Financial Reporting
Interpretations Committee
IFRIC Interpretations are developed by the IFRS
Interpretations Committee (previously the International
Financial Reporting Interpretations Committee, IFRIC) and
are issued after approval by the International Accounting
Standards Board (IASB).
IFRS – International Financial Reporting
Standards
The internationally prescribed and recognised reporting
guidelines.
IIRC –International Integrated Reporting Council
The International Integrated Reporting Council (IIRC)
isaglobal coalition of regulators, investors, companies,
standard setters, the accounting profession, academia and
NGOs. The coalition promotes communication about value
creation as the next step in the evolution of corporate
reporting.
Inbound / outbound flows of TenneT
Inbound flows are the amount of electricity in GWh
transported from connected grids into our grid via the
interconnections. Outbound flows are the amount of
electricity in GWh transported from our grid via the
interconnections to connected grids.
JAO – Joint Allocation Office
The merger of regional auction offices CASC.EU and CAO
in June 2015 created the Joint Allocation Office for cross-
border electricity transmission capacity; JAO is a collaboration
of 20 TSOs from 17 European countries. It significantly
increases the efficiency and transparency of the European
electricity market, creating a single point of contact for
market participants with harmonised auction rules that
simplify trading and promises substantial savings to TSOs
inthe coming years.
KfW – Kreditanstalt für Wiederaufbau
KfW is the Reconstruction Credit Institute development
bank owned by the German government.
kV – kilovolt
A unit of electric voltage equal to 1,000 volts.
KWK-G – Kraft-Wärme-Kopplungs-Gesetz
The German Combined Heat and Power Act.
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LEAN
The core idea of LEAN is to maximise customer value while
minimising waste. Simply, LEAN means creating more value
for customers with fewer resources. The principles of LEAN
were developed by the Japanese car manufactory Toyota.
LoR – Letter of Representation
A Letter of Representation is signed by the management of
the Group and/or performance unit to attest to the accuracy
of the financial statements.
MIGRATE – Massive InteGRATion of power
electronic devices
The MIGRATE research programme seeks to develop
solutions to technical issues
Moody’s
Moody’s Investors Service provides credit ratings, research,
and risk analysis.
MW – Megawatt
A unit of power equal to one million watts.
MWh – Megawatt hour
A unit of energy equivalent to delivering one million watts
ofpower for a period of one hour.
Net debt
Gross debt minus cash and cash equivalents at free
disposal plus lease liabilities plus net employee defined
benefit obligation plus 50% of hybrid securities.
Netbeheer Nederland
Netbeheer Nederland is the association in the energy sector
representing the interests of national and regional electricity
and gas network operators in the Netherlands.
NEN
NEN is a Dutch non-profit organisation that supports the
standardisation process in the Netherlands.
NGO – Non-governmental organisation
A non-governmental organisation is a voluntary citizens’
group that is neither a government initiative nor a
conventional for-profit business.
NOKA – DC Nordseekabel GmbH & Co. KG
NOKA is jointly owned by TenneT and German development
bank KfW. It is responsible for financing and building the
German part of the NordLink cable.
NorNed
NorNedis a 580-kilometre longhigh-voltage direct
currentsubmarine power cable between
FedainNorwayand the seaport ofEemshavenin
theNetherlands, which interconnects both
countries’electrical grids.
NordLink
TenneT is jointly developing the NordLink interconnector
with its project partners, the Norwegian TSO Statnett and
German development bank KfW. With an overall
transmission capacity of 1,400 MW, the subsea cable will
run between Tonstad in the South of Norway and Wilster
inNorthern German.
NOVI – Nationale Omgevingsvisie
The Netherlands’ new Environment and Planning Act
comesinto effect in 2021, part of which is a single national
roadmap for the living environment called the ‘National
Omgevingsvisie’.
NWb – WENB Sector Energie NWb
NWb is a Dutch NGO for employers in the energy sector.
NSWPH – North Sea WindPower Hub
The consortium of theNorth Sea Wind Power Hub
programmehas joined forces to realize climate goals.
Theconsortiums work is based on research, stakeholder
interaction and experience from earlier projects. Partners
inthe consortium are Energinet, Gasunie and TenneT.
OCI - Other comprehensive Income
Other comprehensive income comprises items
ofincomeand expense (including reclassification
adjustments) that are not recognised inprofitor loss as
required or permitted by other IFRSs.
OECD – Organisation for Economic Co-
operation and Development
The Organisation for Economic Co-operation and
Development is an intergovernmental economic
organisation with 36 member countries, founded in 1961
tostimulate economic progress and world trade.
Oekom
Oekom research AG is a sustainability rating agency
andexternal assessor for benchmarking CSR reports.
Opex – Operational expenditure
Operating expenditure (opex) is the expense that
acompany incurs as a result of its normal business
operations.
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OWF – Offshore wind farm operators
Offshore wind farms are constructed in bodies of water
togenerate electricity from wind.
PCI– Projects of Commen Interest
PROMOTioN – Progress on Meshed HVDC
Offshore Transmission Networks
A leading European research programme that will result in
an offshore grid development plan for 2020 and beyond
RCF – Revolving credit facility
A line of credit where TenneT pays a commitment fee
andcan then use the funds as and when needed.
RES – Renewable Energy Sources
All sources of renewable energy including sunlight, wind,
tides, waves, biomass and geothermal heat.
RGI – Renewables Grid Initiative
The Renewables Grid Initiative is a unique collaboration
ofNGOs and TSOs from across Europe. It promotes
transparent, environmentally sensitive grid development
toenable the further steady growth of renewable energy
and the energy transition.
ROIC – Return on invested capital
Underlying EBIT Group expressed as a percentage of the
average underlying equity plus loans and bank overdrafts
minus cash at free disposal.
S&P – Standard & Poors
Standard & Poors provides credit ratings, research, and risk
analysis.
SASB – Sustainability Accounting Standards
Board
The Sustainability Accounting Standards Board is
anonprofit organisation that sets financial reporting
standards. SASB was founded in 2011 to develop
anddisseminate sustainability accounting standards.
SCL – Safety Culture Ladder
TenneT uses the Safety Culture Ladder (SCL) as a tool
toincrease safety awareness and enhance safety culture,
notonly within our own organisation but also for our
contractors. The Safety Culture Ladder is a requirement
inthe selection phase of a tender as described in the
‘Safety by Contractor Management’ programme.
SDG – United Nations Sustainable Development
Goals
TheSustainable Development Goals(SDGs) are a universal
call to action to end poverty, protect the planet and
improvethe lives and prospects of everyone, everywhere.
The17aspirational ‘global goals’ with 169 targets between
them were adopted by all UN Member States in 2015,
aspart of the2030 Agenda for Sustainable Development
which set out a 15-year plan to achieve the Goals.
SF
6
– Sulphur hexafluoride
An inorganic, colourless, odourless and non-flammable
greenhouse gas that is used in the electricity industry to
insulate high-voltage circuit breakers, switchgear and other
electrical equipment.
SHE – Safety, Health & Environment
SHE is the set of activities relating to safety, health &
environment.
SIC - Standard Interpretation Committee
SIC Interpretations were previously issued by the Standard
Interpretations Committee (SIC), and were subsequently
endorsed by the International Accounting Standards Board
(IASB). The IFRS Interpretations Committee has reissued
Interpretations in this series if it considers it necessary.
SINTEG – Schaufenster Intelligente Energie
With the SINTEG funding programme, the Federal Ministry
for Economic Affairs and Energy (BMWi) aims to carry out a
large-scale practical test for the energy supply of the future
and the digitisation of the energy sector.
SLA – Service level agreement
A service-level agreement is an agreement between two or
more parties, where one is the customer and the others are
service providers.
SuedLink
A DC connection to transport electricity generated in the
north of Germany to the South.
SuedOstLink
A DC connection to transport electricity generated in north
of Germany to the South-East.
Sustainalytics
Sustainalytics is a sustainability ratings agency and external
assessor for benchmarking CSR reports.
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TransnetBW
One of the four German TSOs
TRIR –Total recordable incident rate
The total recordable incident rate is the number of total
recordable incidents per million hours worked. Recordable
incidents are fatalities, lost work day cases, restricted work
day cases and medical treatment cases.
TSCNET
TSCNET Services is one of Europe’s Regional Security
Coordinators (RSCs). The company based in Munich,
renders integrated services for power transmission system
operators (TSOs) and their control centres to maintain the
operational security of our electricity system – 24 hours
aday, seven days a week.
TSO – Transmission system operator
A transmission system operator transports electricity at
national or regional level from producers to distributers.
ATSO is responsible for providing (1) power transmission
services, by constructing and maintaining a robust high-
voltage grid, (2) system services, by maintaining the balance
between supply and demand of electricity 24/7 and (3)
facilitating a smooth functioning, liquid and stable
electricitymarket.
UN – United Nations
An international organisation formed to promote
international peace, security, and cooperation under the
terms of the charter signed by 51 founding countries in
SanFrancisco in 1945.
UNGC – United Nations Global Compact
A call from the UN to companies to align strategies and
operations with universal principles on human rights, labour,
environment and anti-corruption, and take actions that
advance societal goals.
VKE – Versorgungskasse Energie VVaG
Versorgugnskasse Energie VVaG ispension fund for energy
mutuals and a subsidiary of E.ON SE. It holds a part of the
assets of the German pension plan.
WACC – Weighted average cost of capital
The WACC is the rate that a company is expected to pay
on average to all its capital providers to finance its assets.
XLPE–High-voltage cross-linked polyethylene
XLPE is a very good insulation in terms of electrical
properties.XLPE has very high insulation resistance,
astable dielectric constant over all frequencies, and
alowdielectric constant.
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TenneT is a leading European grid operator. We are committed to
providing a secure and reliable supply of electricity 24 hours a day,
365 days a year, while helping to drive the energy transition in our
pursuit of a brighter energy future – more sustainable, reliable and
affordable than ever before. In our role as the first cross-border
Transmission System Operator (TSO) we design, build, maintain
and operate 23,900 km of high-voltage electricity grid in the
Netherlands and large parts of Germany, and facilitate the
European energy market through our 16 interconnectors to
neighbouring countries. We are one of the largest investors in
national and international onshore and offshore electricity grids,
with a turnover of EUR 4.5 billion and a total asset value of
EUR27billion. Every day our 5,700 employees take ownership,
show courage and make and maintain connections to ensure
thatthe supply and demand of electricity is balanced for over
42million people.
Together, we are lighting the way ahead
TenneT Holding B.V.
Utrechtseweg 310, 6812 AR, Arnhem, the Netherlands
P.O. Box 718, 6800 AS Arnhem, the Netherlands
Telephone: +31 (0)26 – 37 31 111
E-mail: communication
@
tennet.eu
Website: www.tennet.eu
© TenneT – March 2021
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