By Vera Eckert and Tom Käckenhoff
BERLIN (Reuters) – Germany’s power grid operators will need the national regulator to raise the cap on their returns on infrastructure spending when it sets new limits in 2029 so they can fund grid expansion and attract investors, the CEO of network company Amprion said on Thursday.
Speaking to Reuters on the sidelines of the Handelsblatt Energy Summit, CEO Christoph Mueller said Amprion, 25% owned by utility RWE, wished for the regulatory agency to consider its plea in decisions about the next five-year regulatory period expected later this year.
“The German equity interest rate for transmission grids cannot keep up with international competition,” he said.
The regulatory agency, Bundesnetzagentur, currently allows write-off rates of return on equity employed of 7% on new infrastructure and 5% for existing infrastructure pre-tax. Those compare to rates between 7% and 9% elsewhere in Europe, according to analysts’ reports.
“If nothing changes, it will present us as a transmission system operator with major challenges in financing the projects of the coming years,” he added.
Amprion and three sector peers in Germany must operate within the regulatory framework while planning billions of euros of spending on power lines and equipment to help transport a growing share of electricity from renewable sources, which requires sophisticated hardware.
They must reach wind and solar generation sites, and transport their output, often via expensive underground cables, that face less resistance from the public than overground lines.
Amprion’s 11,000 km grid in Germany is second in length behind that of TenneT, with the other two being 50Hertz and TransnetBW.
In a fee-model, spreading costs among power consumers, what has been invested flows back to the grid operators via depreciation over 40 years, and interest is paid on the capital still tied up via the grid access fees, that are ultimately financed by the end consumers.
Amprion plans to invest 27.5 billion euros ($28.60 billion)in the current five-year period through 2028, for example on platforms to connect offshore wind turbines and cables from the North Sea to the industrial Ruhr region in Germany’s west.
The grid operators fear the regulator might not set satisfactory levels they want, due to its brief to keep grid costs down for consumers, who share them as part of their power bills.
That scenario could worsen external funding conditions, and endanger their financial ratings, said Mueller.
($1 = 0.9614 euros) (This story has been corrected to remove a bullet point which incorrectly stated 27.5 billion euro investment may be impacted)
(Reporting by Vera Eckert and Tom Kaeckenhoff, editing by Miranda Murray and Tomasz Janowski)
