January 22, 2020 / 3:24 PM / a month ago

UPDATE 1-Dutch power firm TenneT sets up unit focused on EU green targets

* New unit to draw on 50 staff in Germany, Netherlands

* TenneT CEO sees need to start acting on EU’s Green Deal

* Finance gap deal with Dutch finance ministry due by summer (Adds detail from interview, background)

By Vera Eckert, Christoph Steitz and Tom Käckenhoff

Berlin, Jan 22 (Reuters) - Dutch-German power grid company TenneT IPO-TTH.AS is setting up a new business unit focused on the European Union’s “Green New Deal” project to make the bloc carbon-neutral by 2050.

Chief Executive Manon van Beek told Reuters the new energy systems unit would be tasked with spotting opportunities to raise efficiency and improve cross-border planning.

TenneT, owned by the Dutch state, is already the largest investor in Germany’s shift towards renewable energy.

“The unit will start in the second quarter and will have around 50 employees,” van Beek said at a conference. “That also involves partnerships with gas grid operators, like the one with (Dutch peer) Gasunie,” she added.

The department will be headed by a German national, Peter Hoffmann, currently senior manager system operations.

TenneT’s investments in Germany are financed by grid fees that are charged to electricity consumers. That puts its activities under the scrutiny of the energy regulator, which seeks to cut customer bills.

Massive costs are stretching the company’s ability to keep up with the runaway expansion of power from volatile renewable sources, such as wind and sunshine.

It has published a 35-billion euros ($36 billion) ten-year investment programme for the Netherlands and Germany, including new underground and sea cables to carry green power.

Renewables have grown to account for about 40% of Germany’s power generation, with 65% being the 2030 target.

“For some 2030 is a long way out, for us it’s basically tomorrow,” van Beek said.

Costs to keep networks stable are another burden. Staff and equipment must be in place to cope with the intermittency of renewables supplies, as new grids are only being built slowly.

TenneT in 2019 incurred 925 million euros in grid handling costs in Germany, a sum similar to 2018, van Beek said.

This was made up to 555 million euros for dealing with surplus wind, 180 million for so-called redispatch measures, and the rest for readying network reserves and standby capacity.

These steps are necessary because grids must be balanced and there is not yet enough storage for surpluses.

“I don’t see the magnitude of those costs changing much in the coming years,” van Beek said.

She added that she expected by the summer an agreement with the Dutch finance minister on how to plug a 2-3 billion euros additional equity funding gap to secure the 10-year spending plan.

“We want to keep our credit rating,” she said.

$1 = 0.9020 euros Editing by Thomas Escritt and Mark Potter

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