TenneT is a Dutch state-owned transmission system operator. Credit: maradon 333 / Shutterstock.

Dutch state-owned transmission system operator TenneT has terminated negotiations with Kreditanstalt für Wiederaufbau (KfW) regarding the full sale of its German operations.

The discussions were terminated as the federal government of Germany, represented by KfW, cited budgetary constraints, preventing the completion of the planned transaction.

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TenneT is now shifting its focus towards alternative structural funding solutions for its German division.

The move follows the German government’s inability to proceed with the purchase, despite its initial interest.

TenneT Holding has been preparing to access public or private capital markets to secure a structural funding solution for its operations in Germany.

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Despite the setback in negotiations, TenneT has reaffirmed its dedication to carrying out substantial investment plans in both the Netherlands and Germany.

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The Dutch state recently provided TenneT with a €25bn shareholder loan for 2024 and 2025.

The cessation of the sale discussions presents a significant challenge for TenneT, which is embarking on a €160bn investment strategy, the largest in Europe, Reuters has reported.

A German government source disclosed to the news agency that while a full acquisition is no longer being considered, the possibility of Germany acquiring a minority stake in TenneT Germany remains open.

Another source indicated that finding an alternative investor capable of purchasing TenneT Germany would be challenging due to the company’s substantial size.

The source also mentioned that rising interest rates and the increasing influence of political parties opposed to renewable energy expenditure have diminished TenneT’s appeal to potential investors.