TenneT, the transmission system operator of the Netherlands, has announced it will invest almost EUR3 billion in its domestic transmission assets in the next 5-7 years. Most of the funds will go towards new connections and upgrading the company’s existing transmission infrastructure. TenneT is undertaking these projects to improve the quality and security of power supply in its service area and to facilitate development of the North-West European energy market. 

The company’s investment plan includes construction of a high-voltage connection across Randstad conurbation involving an investment of EUR1 billion. The connection is expected to be commissioned by 2013. The project also includes grid upgrades and construction of new substations. 

TenneT is also conducting spatial planning procedures for three major transmission projects. It plans to construct two high-voltage connections in the next few years. The first connection will be between Eemshaven and Diemen while the second will be located in Zeeland province. 

TenneT also has plans to construct new cross-border links, like a fourth transmission interconnection between the Netherlands and Germany. Other regional expansion plans are also on the anvil. 

Between 2009 and 2010, TenneT plans to construct new transmission infrastructure for the Westland area and the north-east. These projects are being undertaken to connect wind farms to the national grid and to support horticulture businesses located in the area. 

TenneT intends to raise capital from public and private capital markets to finance these projects. 

Meanwhile, the company is considering several options for funding its acquisition of E.ON’s German transmission grid assets. It will also need funds to meet the investment requirements of its new assets. 

The company already has a bridge-funding option of availing a EUR1 billion loan with a one-year maturity period from ING NV and the Royal Bank of Scotland. It will, however, have to decide whether to use this facility by the end of this year or early next year when the acquisition will take place after regulatory approvals are received. 

If it uses the loan, TenneT has to decide how to roll over or replace it in a year’s time. The company has several options like refinancing in the bond market or directly approaching the bond market to raise funds. 

(EUR1 = USD0.58)