Negotiations between the German government and Dutch state-owned power grid operator TenneT over the sale of TenneT's German transmission grid have failed.
TenneT announced on Thursday that the negotiations between the company and the German state-owned development bank KfW on behalf of the federal government regarding a complete sale of Tennet Deutschland had ended.
The German government had informed the Dutch state that it would not be able to carry out the planned transaction due to budgetary problems, according to the company.
Germany's governing coalition is currently locked in tough negotiations over the 2025 budget, with billions of euros in projected shortfalls and disputed savings proposals from the Finance Ministry.
TenneT had sought the deal because it viewed the high costs of grid expansion in Germany as too expensive for the firm, which is the primary grid operator in the Netherlands.
In February 2023, the company made public its interest in selling its German transmission grid to the German government.
German Economy Minister Robert Habeck expressed disappointment over the collapse of the deal while travelling in South Korea on Thursday, saying he'd hoped that TenneT's German grid could be merged together with the country's other three grid operators into a single company.
Habeck said that consolidating the companies could have made electricity cheaper for consumers. Now the country would need to find a new path forward on grid expansion to avoid delays.
"It is a great pity and very regrettable that it was not possible to find a political solution here, including making the capital stock available," Habeck said.
Dutch Finance Minister Steven van Weyenberg also expressed disappointment on Thursday, noting to parliament that the collapse of talks could leave the Dutch government saddled with a €1.6 billion ($1.7 billion) budget gap at TenneT.
"Of course I am disappointed that the negotiations, which were started at the request of the German government and have already lasted a good year and a half, have not led to a successful outcome," van Weyenberg said.
TenneT is preparing "concrete options for a (partial) private sale or an [initial public offering] of TenneT Deutschland," the minister said.
TenneT Holding also said on Thursday that it is preparing to tap into public or private capital markets for a structural funding solution for its German operations," the company said in a statement, adding that the German government is committed to supporting "such alternative solutions."
In the meantime, TenneT said it is sticking to its extensive investment plans in both countries and is being supported by the Dutch government. The latter had recently granted Tennet a shareholder loan of €25 billion for the years 2024 and 2025.
In Germany, TenneT is one of four main electricity transmission grid operators, alongside 50 Hertz, Amprion and TransnetBW, and covers the largest geographical area of the four. Tennet took over the German part of its grid from the German energy company EON in 2010.
TenneT's grid in Germany stretches from the North Sea to the Austrian border.
As part of the energy transition away from fossil fuels, thousands of kilometres of new power lines need to be built so that wind power - which is mainly produced in northern Germany - can reach large consumption centres in the south.
The work is expected to cost many billions of euros.