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We need to make significant investments to upgrade and expand our high-voltage grid, and meet the demand and needs for the transition to renewable energy. To live up to these demands, solid financing and flexible access to equity is fundamental. At the same time, it is important that we keep power transmission and system services affordable.


To fund our extensive investment programme and maintain our credit rating, we increased our external financing during 2017. We strive to maximise capital and operational efficiency by smart capital expenditures and by focusing on reducing operating costs. In addition, we have started a LEAN programme to increase productivity.

Underlying results

(EUR million)20172016Difference in €Diference in %
Operating expenses3,1202,47164926%
Profit for the year53152382%

Monitoring and managing the performance of our business is based on underlying financial information and not on IFRS-reported financials. Underlying financial information involves the recognition of regulatory receivables and payables, which – based on the current regulatory framework – can be recouped or are to be returned through future grid tariffs (see section 2 of our consolidated financial statements). Under IFRS, reimbursement/settlements through future grid tariffs may not be taken into account. As a result, the balance of any expense or income is not recognised as a regulatory asset or a liability under IFRS.


In 2017, revenue rose as a result of significant investments in new assets over the past years. The regulatory regimes in the Netherlands and Germany ensure that we are compensated for the depreciation of our investments and that we make a return on the capital invested in our regulatory asset base.

In 2017, our underlying revenues also increased due to reimbursements for rising grid expenses, mainly redispatch and feed-in management. Since a TSO's ability to influence this type of expense is limited, the regulatory system allows us to pass the majority of these costs on to our customers through tariffs. These reimbursements are part of our revenue, which means that higher grid expenses lead to higher revenues, but do not affect our underlying EBIT. For further information on these grid expenses see the 'Operating expenses' section below.

Operating expenses

Operating expenses rose mainly as a result of rising grid expenses and higher depreciation resulting from past investments.

Under certain conditions, we can temporarily cut off energy suppliers to prevent overloading the grid. This is essential to ensure a stable northwest European grid. The costs of these temporary measures are related to the feed-in of renewable energy sources, mainly consisting of wind energy. Feed-in management costs are reimbursed through higher tariffs.

Low temperatures at the start of 2017 and a one-off energy shortage in France led to higher redispatch measures and associated costs, which are fully reimbursable under current regulation and hence directly result in higher revenue.

Managing the growth of our investment portfolio has also increased our costs, as we need to attract more staff and have expanded our facilities.


Underlying EBIT increased from EUR 834 million in 2016 to EUR 897 million in 2017. EBIT growth was mainly driven by an increase in our asset base, causing a higher (absolute) return on capital. The revenue effects from the higher grid expenses and depreciation -as mentioned above- did not affect our EBIT, since these expenses are pass-through.

In 2017, special items were mainly related to offshore reimbursement in Germany, in excess of actual costs. We receive a fixed-percentage reimbursement on capital invested in offshore projects, to compensate for operating and maintenance costs. From 2018 onwards the regulatory offshore reimbursement in Germany will change and will result in a significant decrease in our revenue and related EBIT, as the aforementioned effect will disappear.


Capital expenditure (capex) totalled EUR 1,770 million in 2017 – a decrease compared to 2016 (EUR 1,848 million). This is due to the composition of our project portfolio, where large projects have been completed in the past few years and some of our new large projects are still at an early stage. These significant investments were the main driver of our net cash outflow from investing activities and were financed by our cash inflows from operating activities, proceeds from equity contributions and external financing resulting in a cash inflow from financing activities (see below).

In 2017 our main projects under construction were:

  • Germany: Dolwin3 and Wahle-Mecklar
  • Netherlands: Randstad 380 and the Net on Sea (Borssele Alpha + Beta)
  • Cross-border: COBRAcable (Netherlands - Denmark), Doetinchem-Wesel (Netherlands - Germany), NordLink (Germany - Norway) and Hamburg Nord-Kassö (Germany - Denmark).

For more detailed information on these and our other projects, please visit the dedicated project section of our website.

Return on invested capital

We use the return on invested capital (ROIC) as our key performance indicator for delivering value to our financial stakeholders. Our target is based on an average of the long-term returns as stipulated in, or implied by, Dutch or German regulation, respectively. For 2017, ROIC slightly decreased compared to 2016, despite our increased EBIT (see “EBIT” paragraph for further details). Main driver for the decline is the (relative) decreasing allowed regulatory return in the Netherlands and Germany. The ROIC significantly exceeded our target of 4.1%.

Capital structure and financing

We seek to maintain a solid financial position, with sufficient flexibility and resilience to manage any necessary or enforced changes to our operations as well as any regulatory amendments. We also need sufficient funding to carry out our extensive and ongoing investment programme. Full access to the financial markets under favourable conditions is a prerequisite for this. Senior unsecured credit ratings for TenneT Holding B.V. remained unchanged in 2017 and were reaffirmed by Standard & Poor’s (A- / stable outlook) and Moody’s Investor Service (A3 / stable outlook).

CSR rating agency Oekom assessed our overall social and environmental performance and upgraded our overall CSR rating from B- to B (status Prime). This recognition for our green-bond programme and our strong CSR ratings boost our investor appeal from a CSR perspective.


In April 2017, we successfully launched and priced the first-ever green hybrid bond, totalling EUR 1 billion. This hybrid bond classifies as equity and was awarded an instrument rating of Baa3 and BB+ by Moody's and S&P, respectively. With the launch of this new hybrid, we decided to redeem the EUR 500 million of hybrid securities, issued in 2010, in June 2017.

Net debt position

Our net debt position increased from EUR 7,347 million in 2016 to EUR 7,687 million in 2017. This mainly reflects the higher funding provided for our capital-investment programme.

In June 2017, we successfully launched and priced another EUR 1 billion green bond issue under the green bond programme, a dual tranche of EUR 500 million each, with an 8-year maturity (coupon of 0.75%) and a 12-year maturity (coupon of 1.375%). S&P Global Ratings awarded our newly-issued green medium-term notes an overall green evaluation score of E1, which is the highest possible score.

The green bonds relate to investments in the transmission of renewable electricity from offshore wind farms to the onshore electricity grid. The eight offshore projects financed with the proceeds from the green bonds are examples of how we use green financing. In 2017, we were awarded two Global Capital Sustainable and Responsible Capital Markets Awards. We were recognised as the 'Most Impressive Green/SRI Bond Issuer' and the ' Most Impressive Corporate Green/SRI Bond Issuer.

For more information on our capital management policy, procedures and financial risks, see note 6 (Capital structure and financing) of our consolidated financial statements. For even more information on our green bonds in our separate Green Finance Report, click here.

Our financial challenges

1The energy market is changing fast and becoming increasingly complex. Substantial long-term investments to secure supply for the near future are needed whereas technology developments might lead to other solutions in the medium, long term. The risk is that our investments become less relevant, resulting in stranded and obsolete assets that serve no purpose.We look beyond our own capabilities and take future developments and technology into account when taking investment decisions thus entering into investments that are necessary to society, based on the current information available. Through dialogue with the regulator and other stakeholders, we aim to create a regulatory framework that integrates new technology in our transmission grid in a cost-effective way, benefitting our customers and society at large.
2Our extensive investment programme requires ongoing access to capital. This presents a challenge as it means that we need access to sustainable and flexible equity, while maintaining our solid creditworthiness for (potential) investors.We will continue to finance substantial sums, through issuing green bonds and loans. We also plan to increase our capital in the short to medium-term through dialogue with our shareholder.
3The rapid growth of our organisation is in itself a challenge as we seek to maximise operational expenditure efficiency even as we grow.We are working to improve our internal processes and performance culture. In 2017, we undertook a company-wide LEAN scan and set a 14% productivity target for the upcoming three years. This should help us handling the increasing amount of work in the most efficient way.


The German government has pledged to move to a decarbonised economy by the middle of the century and has set a target of 80% renewables for gross power consumption by 2050. The country aims to phase out all of its nuclear power plants by 2022. German renewable energy has been rising steadily over the past two decades, boosted by the Renewables Energy Act (EEG) which was adjusted this year to cut renewable energy costs for consumers. There are similar developments in the Netherlands as the government is committed to further accelerating the decommissioning of existing coal-fired power plants. The parties in the new Dutch coalition government have agreed to pass legislation “making it a legal obligation to shut down all coal-fired power plants in the country by 2030.”

All this means that our work to develop a grid that can accommodate even larger quantities of renewable energy is more important than ever. We are also bundling and scaling our investments in innovation and work to streamline our operations as we move ahead. Growing our business to keep pace with these developments will require an expected investment of approximately EUR 28 billion over the coming 10 years.

Our financial results are healthy and the developments addressed above underpin the sustainability of these results. Nevertheless, the regulatory regimes are putting pressure on our operating expenses. As such, we plan to improve our own performance by investing further in talent development, innovation and strategic initiatives aimed at operational excellence, including embedding the LEAN philosophy in our organisation.