The sale of the German portion of national grid operator Tennet’s high-voltage network to the German government has been cancelled. Due to the budget problems of the German Cabinet, negotiations on this issue ended.

Tenet now says it will look for other “public or private capital markets” for the necessary investments in the German high-voltage grid. Tennet operates the entire high-voltage network in the Netherlands and a large part of the high-voltage network in Germany.

Failure to go ahead with the sale would result in a direct setback of $1.6 billion in the national budget, outgoing Minister Van Weyenberg wrote in a letter to the House of Representatives this morning. The network operator is wholly owned by the Dutch Ministry of Finance and the expected revenues have already been budgeted.

In recent years, negotiations have taken place between the two governments about the sale of the German part of Tenet. Since the energy crisis erupted as a result of the Russian invasion of Ukraine, Germany has wanted more control over its energy infrastructure. The Netherlands was afraid to spend the billions of investments needed to strengthen the German high-voltage network.

Now that those negotiations are over, Tenet remains responsible for strengthening much of Germany’s high-voltage grid.

For example, an underground direct current connection must be established from northern to southern Germany. This is necessary to bring electricity generated by large wind farms in the German part of the North Sea to industry in southern Germany.

Tennet itself has never been a big supporter of selling the German segment, and the company sees big advantages in activities on both sides of the border. The grid operator now faces huge financing problems over the coming decades. For this year and next alone, the company has borrowed 25 billion euros.

It is now being studied whether Tennet Germany can go public or whether it can be sold to a commercial party.