Drive the energy transition
Secure supply today and tomorrow
Safeguard our financial health
Environmental
impact % Greened
of our carbon footprint
Healthy financial
operations
Adjusted underlying EBIT group*
(in EUR million)
Unlocked flexibility
Number of GW
of new flexibility
Satisfied capital
providers
ROIC group* (%)
Impact on
energy system
Number of scalable/scaled
system initiatives
Safeguarded
capital structure
Adjusted FFO/Net debt* (%)
69.0% 801
4.2
10.5
Energise our people and organisation
Internal Engagement Index 80%
2020: 82%
Reputation survey
Fairly strong to very strong
Overarching indicators
Key figures 2021
2021 at
a glance
Performance
2021
Letter from
the Board
Supervisory
Board Report
Financial
statements
About
TenneT
Governance
and risk
management
Other
information
2021: NL 3.1, GE 2.6
2020: NL 2.7, GE 2.5
2019: NL 3.4, GE 2.8
Safe workforce
TRIR group
(including contractors)
Healthy workforce
Absentee rate
Netherlands and Germany
Diverse workforce
Diversity
(% female inflow of total inflow)
5.8
NL 3.1
GE 2.6
31%
2021
5.8
2020
4.1
2019
4.8
4.5
2021 2020
33
30
2019
3131
2021
801
2020
796
2019
753
2021
4.2
2020
5.1
2019
5.1
4.0
2021
10.5
2020
11.3
2019
12.9
8.5
2021
69.0
2020
62.0
2019
27.4
Onshore grid availability
(in %)
Grid utilisation
Grid loading
Future proof grid
Investments
(in EUR million)
99.99999%
2021: 99.99999%
2020: 99.99995%
2019: 99.99982%
One of the ways to measure our grid utilisation is the degree
ofredispatch volumes we record. In 2021, we noticed higher
volumes of redispatch, which is an indication that our grid is
utilised more extensively.
3,969
2021
3,969
2020
3,412
2019
3,
064
* Reference is made to the chapter Secure sustainable financial
performance and investor ratings.
The progress made with respect to the Crowd Balancing
Platform Equigy this year supported us in our efforts toincrease
the number of GW of new flexibility.
The completion of the InnoSys2030 and the launch of our
Windstrom-Booster concept were key highlights with respect
tothe impact we have on the energy system in 2021.
How we
create value
Our performance
in 2021
Page 14
Page 22
Governance and risk
management* 81
Corporate governance structure 81
Corporate risk management and
Internal control 83
Compliance and integrity 86
Risk appetite 88
Key risks 89
Financial statements 95
Consolidated financial statements 96
Notes to the consolidated financial
statements 103
Company financial statements 156
Company statement of income 157
Notes to the company financial
statements 158
Other information 162
Profit appropriation 162
Independent auditor’s report 163
Assurance report of the
independent auditor 172
About this report 175
SWOT Analysis 181
Company addresses 182
Key figures: five-year summary 183
Glossary 184
At a glance 2021 4
Letter from the Board 6
About TenneT* 9
Our role in Europe 9
Our strategy and value creation 11
The Sustainable Development
Goals and TenneT 21
Our performance in 2021* 22
Deliver a high security of supply 22
Ensure critical infrastructure for
society 29
Create a sustainable workplace 39
Create value to transition to a
climate neutral economy 46
Secure sustainable financial
performance
and investor ratings 54
Solve societal challenges with
stakeholders andthrough
partnerships 60
Statements of the Executive Board 63
Our Executive Board 64
Supervisory Board Report 67
Remuneration policy 73
Board remuneration 75
Our Supervisory Board 78
In this
year’s
report
* These sections reflect the director's report as mentioned by Part 9 of Book 2 of the Dutch Civil Code.
3
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At a glance
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Windstrom-Booster
TenneT presented a new technological innovation
that can significantly accelerate the expansion of
theoffshore wind grid in the North Sea. With the
Windstrom-Booster, 6 GW of offshore capacity can
be realised 3 years earlier. In comparison, 6 GW of
capacity corresponds to 6 large power plants.
NordLink
In May, NordLink was officially inaugurated by
Angela Merkel. NordLink is a 623 km long subsea
cable for the exchange of Norwegian hydropower
and German windenergy.
Green Eurobonds
TenneT issued EUR 2.8 billion of senior Green
Bonds in 2021. Proceeds will be used to invest
in eligible green projects focused on connecting
large-scale offshore wind farms to the onshore
electricity grid and enhancing the onshore
transmission capacity for renewable energy.
At a
glance
2021
Announcement of congestion areas
In several regions of the Netherlands, the
maximum capacity to feed in electricity has been
reached. TenneT is investing in the expansion
ofthe grids and is investigating whether flexibility
can be used to create more grid capacity.
Diversity charter
Our CEO Manon van Beek and COO
Tim Meyerjürgens signed a new
diversity charter, a manifesto in which
organisations declare their commitment
to more diversity in the workplace, on
behalf of TenneT in the Netherlands
and in Germany.
New Chief Financial Officer
The Supervisory Board has appointed Arina Freitag
as Chief Financial Officer (CFO). She succeeds
OttoJager, who has been TenneT CFO since 2013.
At a glance 2021
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Alliance of Prosperity
In order to emerge stronger from the pandemic,
TenneT, together with other infrastructure
companies, is taking steps towards a different
society with a greater focus on ecology and social
welfare in the new ‘Verbond van Brede Welvaart’.
2,100-tonne offshore jacket installed
The jacket for TenneT’s Hollandse Kust (Noord)
platform has been successfully installed off
the coast of North Holland. The 2,100-tonne
construction was developed in Vlissingen.
Electrical Sustainable Power Lab
To prepare the electricity grid for the future, TenneT,
the government and Delft University of Technology
have developed a brand new laboratory: the
Electrical Sustainable Power Lab. In this laboratory,
innovations are developed and tested which
contribute to the future energy system.
Tender 2 GW project
Together with market parties, TenneT developed
a new 2 GW (Gigawatt) standard to be able to
accelerate offshore wind deployment. The tender
for the new offshore connections IJmuiden Ver has
started. Such a grid connection is not yet existing.
New connection in Schleswig-Holstein
The new Westküstenleitung in Schleswig Holstein
plays a central role in the Energiewende in Germany
to secure both the regional supply and the transport
of green electricity to the south. New parts of the
140 kilometer long connection went into operation.
In2023, the connection will be finished.
Safety Leadership Programme
Tragically, three fatal incidents occurred this
year, which affected us deeply. TenneT is doing
everything in its power to ensure that everyone
gets home safely. A new Safety Leadership
Programme started this year to improve safety.
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Letter from the Board
2021 was what one might call a stop-and-go year for TenneT; exciting, surprising, strenuous,
challenging and with several twists and turns. Navigating the COVID-19 pandemic required
constant adjustment, while at the same time TenneT needed to work at full capacity to meet
the demands of a dynamic and fast-growing sustainable energy system. Whatever the
external circumstances, TenneT remained steadfast in our mission: keeping the lights on,
today and in the future.
The Dutch and German governments have set ever more
ambitious CO
2
reduction targets, requiring a steep increase
in renewable energy. With grids being the backbone of the
energy transition, TenneT needs to take the next leap in its
growth agenda and corresponding transformative priorities.
TenneT stepped up these efforts in 2021, as we work
towards our goal of realising a green, integrated onshore
and offshore grid for a zero CO
2
economy. Like a tree with
strong roots, TenneT aims to build a system that is prepared
for and can deal with the fluctuating supply of weather-
dependent energy sources that change with the seasons.
To achieve this, TenneT is following a policy of responsible
growth. Just as a tree or a forest is a vital part of the
ecosystem, so TenneT’s work is crucial for the energy
system. Both flourish when they are firmly grounded on
solid foundations. They need to stay connected with their
roots and to be strong but also flexible, with branches that
can bend but not break. TenneT has grown substantially
inthe past years, accelerating the energy transition and
moving out of its comfort zone. But where comfort zones
end, growth starts. And because growth and comfort do
not co-exist easily, we need to innovate and collaborate
inorder to stay successful.
Manon van Beek
Chief Executive Officer
Tim Meyerjürgens
Chief Operating Officer
Maarten Abbenhuis
Chief Operating Officer
Arina Freitag
Chief Financial Officer
Responsible Growth
The publication of our annual report comes at a time of great uncertainty in the world due to developments in Ukraine. Apart
from the consequences this may have for the European energy system, the war in Ukraine has a big impact on all of us, also
on an individual level. We sympathise deeply with all those affected by the imposed violence.
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Growing safely
Safety is a top priority for us, and we are committed to
ensuring our work is executed safely and with limited
incidents. However, during 2021, three fatalities occurred
among our contractors’ employees while working on our
projects. The loss of these colleagues deeply saddens us,
and our sympathy goes out to their families. These tragic
accidents re-emphasise the many risks associated with our
daily work and further strengthen our belief that every safety
incident is one too many. We strive for zero harm and want
all our employees, and all the employees of our contractors,
to come home safely, every day. To further embed a
stringent safety culture at TenneT and maintain this focus
foryears to come, we introduced additional safety
measures and rules during 2021 and also launched a
newleadership programme, Safety needs our energy.
Green accelerators
Our strategy is rock solid. Based on the four pillars of
energising our people and organisation, securing supply
today and tomorrow, driving the energy transition and
safeguarding our financial health, we believe we are well
ontrack to connect everyone with a brighter energy future.
The strategy underlines the importance of working
collaboratively with partners across the European energy
system and recognises that there are three accelerating
external developments that affect TenneT at its core.
First, external expectations are rapidly increasing. The ambitious
climate policy goals for fast decarbonisation have increased
the pace of the energy transition. In short: this could
implicate that we need to accomplish twice as much in half
the time.
Second, the energy system is getting more complex, volatile
and interdependent and with more renewable energy being
fed into the grid, often in remote locations, planning and
steering the system becomes more dynamic every day.
Despite these challenges, our grid is still expected to meet
ahard availability target of 99.99%.
Lastly, TenneT – along with other players in the energy
system – faces increasing competition for people and
materials. The energy transition requires the deployment of
tens of thousands of new talents as well as a huge demand
for raw materials, components and finished goods.
Choices for a feasible path
To double our output towards an annual investment level of
atleast EUR 6 billion by 2025 will require us to grow towards
10,000 employees. Annual investments could further rise if
planning and approval periods are shortened and supply
chain delivery and talent hires can be ensured. We are
convinced this quantum leap can only succeed if we make
responsible choices, for ourselves and for the people and
industries we serve. Thatmeans building an organisation
that is firmly rooted and well-grounded in society and is
structured with the right delivery capabilities. With this
approach, we can ensure a stable and secure supply of
electricity in a system that will largely rely on weather-
dependent energy sources. We are pleased that we were able
to achieve a very high grid availability of 99.99999% in 2021.
We are convinced that responsible growth must be the
guiding principle for TenneT and all stakeholders in our value
chain. By making the right choices, TenneT will embark on
an ambitious and feasible pathway so that we - together
with partners, suppliers, policy-makers and colleagues -
canbuild, maintain and operate a high-voltage electricity
grid that supports a green energy future.
Together responsible for green growth
As CO
2
reduction targets become more ambitious, we
mustensure that the electricity system can facilitate these
developments. To achieve this, TenneT requires streamlined
and modern planning and approval procedures, as well as
political support for grid reinforcements and expansion at
alllevels. It is encouraging to see that the newly formed
governments in Germany and the Netherlands are paying
attention to this in their coalition agreements. Furthermore,
we also need the right legislative and regulatory environment
to transform the energy system: forward-looking regulation
fostering innovation is instrumental to speed up progress.
Market parties are waiting for frameworks that encourage
them to invest heavily in renewables, flexible electricity
supply and demand and other grid innovations.
Collaboration and collective responsibility will determine
thesuccess of the energy transition. TenneT may be an
important link in the system, but sustainable growth, green
jobs and investments in innovations will only be achieved
together with our stakeholders, alongside European and
national political decision-making and regulations. We are
committed to advising our partners and stakeholders on
technology and the systemic impact of the energy
transition, on market integration and security of supply.
Proud of our sustainable progress
We are proud of our contributions to green growth in 2021.
Never has TenneT invested so much in the expansion and
maintenance of its grids. We were able to enlarge the
onshore grid with 118kilometres of high-voltage
connections in close collaboration with our suppliers and
contractors. Offshore, we realised 623kilometres of new
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connections and introduced impactful innovations to
transport electricity to the shore faster and on a larger scale.
Together with our suppliers, we are planning and developing
offshore grid connection systems, each with a capacity of
2gigawatts (GW). This is more than two or three times
thesize of our existing systems in Germany and the
Netherlands, enabling the supply of electricity to the
equivalent of two million households. We expect to build
atleast six of these 2 GW connections by 2030, three in
Germany and three in the Netherlands.
We are already delivering critical projects to drive the energy
transition in Europe. For example, commercial operations of
our NordLink cable began in 2021, connecting Germany
and Norway through a 623-kilometre subsea cable. When
electricity prices in Germany are high, because of little wind
or sun, consumers could profit from lower-priced
hydroelectric power from Norway. This ‘green link’ can
supply more than 3.6 million German households with
renewable energy.
Green and sustainable financing
Our large-scale investment programme requires broad,
sustainable and timely access to financing with a good
balance between equity and debt to maintain our solid
credit ratings. To that end, we are very pleased that
theDutch government announced to contribute
EUR4.25billion of equity capital for our activities in the
Netherlands. For TenneT’s equity capital requirements
inGermany the options are still being explored.
TenneT is confident that a solution will be reached in 2022
in coordination with its shareholder, the Ministry of Finance.
The (social) benefits of TenneT as an integrated cross-border
company are central to finding a solution.
During 2021, access to the debt financing markets
remained exceptionally good. Last May, TenneT issued its
largest ever (EUR 1.8 billion) and first green triple tranche
Euro bond transaction, reinforcing TenneT's top-3 status
ascorporate issuer of sustainable, green debt financing
inEurope, with currently around EUR 13 billion of green
debt issued across different debt formats.
Thank you!
Our great appreciation goes to all our colleagues who gave
their all in this extraordinary year. We will need them and
many new colleagues in the coming years to build, maintain
and operate a secure, affordable and sustainable high
voltage electricity grid. 2021 was also the last year in
TenneT for our Chief Financial Officer, Otto Jager.
Throughout his career at TenneT, Otto not only ensured
weremained a financially robust and stable company, but
he was also a driving force behind the professionalisation
and cultural transformation of the company, through his
responsibility for our People agenda. We warmly welcome
Arina Freitag as his successor as CFO, who will be vital
inleading TenneT into the coming decade of record
investments for the energy transition in Germany, the
Netherlands and Europe.
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About
TenneT
Our role in Europe
In years to come, 2021 could be seen as a turning point in the climate debate. In August,
during a summer of wildfires, floods and other climatic extremes, UN Secretary-General
António Guterres issued a “code red warning for humanity’’, based on a stark assessment
byThe Intergovernmental Panel on Climate Change (IPCC), the world’s leading authority
onclimate science.
Two months later, the COP26 UN Climate Change Conference
convened in Glasgow, resulting in the Glasgow Climate
Accord aimed at intensifying global efforts to fight climate
change worldwide. The agreement from this conference is
expected to have far-reaching implications, as countries
across the world come together to tackle global warming.
As part of this journey, with its Green Deal, Europe aims to
be the first climate-neutral continent by 2050.
The energy transition will require many changes in society.
As the first cross-border European TSO, TenneT intends to
play a pioneering role in the transition to a clean, circular
decarbonised energy system. For many years, we have
already demonstrated our active contribution to the
transition towards a sustainable, reliable and affordable
European energy system.
With approximately 25,000 kilometres of high-voltage
connections, we ensure a secure supply of electricity to
almost 43 million end-users. TenneT is also one of Europe’s
largest investors in national and cross-border electricity
transmission capacity on land and at sea, bringing together
the Northwest European energy markets and efficiently
unlocking large-scale renewable electricity sources.
Wecollaborate with a wide range of partners in the
energymarket to develop and apply new, smart
technologies and contribute to integration of the
energytransition in the future.
Our primary tasks are to provide electricity transmission
services, system services and facilitating the energy market.
These tasks follow from our appointment as grid operator
under the Dutch 'Elektriciteitswet' (E-wet) and the German
'Energiewirtschaftsgesetz' (EnWG).
Challenges ahead
The urgency of climate action and the complexity of tackling
this issue mean that TenneT is faced with a challenging
context, consisting of interlinked and rapid developments.
Political developments
Governments are stepping up their ambitions to tackle
climate change and accelerate the transition to a climate
neutral economy. The European Green Deal, flanked by
the“Fit for 55” package of 10 legislative proposals, is
touching on a broad range of aspects that a TSO such as
TenneT needs to consider. It includes the EU climate law,
the EU offshore strategy, the EU sector coupling strategy
and the EU taxonomy legislation.
About TenneT
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Also the recently installed governments in the areas we
serve have formulated more ambitious climate targets, as
Germany aims to have 80% renewables in the electricity mix
already in 2030, instead of the previous target of 65% and
in the Netherlands the new cabinet announced that they
aregoing to formalise the 55% reduction of carbon
emission levels in 2030 compared to 1990 in line with the
European ambition and at the same time make policies that
would reduce up to 60% by 2030, 70% by 2035 and 80%
by 2040. This might also impact our project portfolio as we
are an important partner for these governments to realise
these ambitions.
Economic developments
As economies decarbonise, we expect a global trend of
strong electrification from for example industries, placing
significant additional demands on our grid. This is why we
need to continue and step up our extensive grid investment
programme to ensure that we are able to transmit electricity
from where it is generated (e.g. offshore wind farms) to
where it is consumed (e.g. large industrial clusters).
Significant investments are needed in every scenario we
foresee to cater for the growing need in electricity.
Technical developments
The growing share of renewables in the energy mix creates
new challenges. Many new production/generation facilities
of renewable electricity, grow at a faster pace than the grid
causing a backlog in connections and congestions on the
existing grids. Another constant challenge is to keep the
grid in balance as the infeed of renewable electricity is
weather-related and therefore volatile and intermittent.
Furthermore, as a grid operator, TenneT needs to plan for
changes that can impact the energy mix early on, such as
the development of green hydrogen to make economic
sectors that are difficult to decarbonise sustainable.
Societal developments
Global supply chains are currently fragile: delays and
shortages in various categories are observed, raw material
prices are increasing and competition in the market is high
for required resources. We also recognise scarcity in human
resources, both internal and external. Shortage of talent
combined with demographic changes such as the
implications on our workforce due to an ageing society,
arerelevant risks for us which we actively try to mitigate.
Taking these developments into account, TenneT has a
critical role to play in this impactful journey to a reliable,
affordable and zero-carbon energy system. As an electricity
transmission system operator, we are the backbone of the
green energy transition and need to upgrade and expand
our grid as well as our grid operations to serve changing
energy needs. A commitment to responsible growth is
guiding our approach to these challenges, alongside our
purpose, principles and strategy with clear objectives.
Our purpose
To connect everyone with
a brighter energy future
Our promise
Lighting the way ahead together
Our principles
The energy transition is a challenge that requires new ideas,
new technologies and new behaviours that build on the
strong foundations we have laid.
Connection
We are involved and work actively with other parties.
Thechallenge of the energy transition requires us to do things
differently and collaborate with a wide range of partners.
Weknow that we do not have all the answers ourselves.
Ownership
We are accountable for our words, actions and decisions.
Courage
We are honest, open and clear about what we think.
Wedare to make bold decisions, take ambitious initiatives
and are willing to learn from our mistakes.
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Our strategy and value creation
Our strategy and value creation
TenneT is one of Europe’s major investors in national and cross-border grid connections on
land and at sea, bringing together the Northwest European energy markets and driving the
energy transition. The energy transition is one of the most impactful challenges facing society
and energy supply. To fulfil our role in the energy transition, we are working on a responsible
growth based on four strategic pillars:
Strategic goals
Secure supply today
and tomorrow
By maintaining the grid to meet reliability targets
and operating it effectively. We will design solutions
to balance electricity supply and demand in the
future, while meeting societal objectives and
realising our infrastructure projects as promised.
Energise our people
and organisation
With an inclusive and safe environment where
people enjoy coming to work. We will build a
leadership model that empowers, inspires and
creates growth opportunities, so everyone can
perform at their best and work as one team.
Strategic goals 2025
Provide a great and safe place to work for up
to10,000 internal and external employees.
Strategic goals 2025
Deliver EUR 6 billion in projects annually while
securing a healthy asset base where customers can
be connected within a set number of months and
security of supply is at least 99.9999%.
Safeguard our
financial health
By ensuring a regulatory framework to support our
strategy and by delivering a return in line with what
our capital providers expect, as well as by raising
the necessary external financing.
Drive the energy
transition
As a green grid operator and thought leader,
developing innovative solutions and playing
a key role in the energy data world.
Strategic goals 2025
Realise at least 5 significant energy innovations
(grid, operations, market) including an accepted
North Sea grid design.
Strategic goals 2025
Secure sufficient equity, while achieving at least
regulatory returns, to maintain our current A-/ A3
credit ratings.
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Target grid
2
0
2
1
+
4
y
e
a
r
s
+
9
y
e
a
r
s
TenneT has built
the integrated onshore
and offshore grid
TenneT operates a
carbon free electricity
system with 99,99%
security of supply
Building grids with extra
capacity factored in
ahead of time for e.g.
industry clusters
Faster delivery of Target
Grid thanks to pro-active
preparations
CAPEX
6 billion €/year
10,000 headcount
Standardised and modular
concepts, intensified
collaboration with supply chain,
flexibility innovations deployed
CAPEX
4 billion €/year
6,620 headcount
Maturing delivery capability
programs for increased output
Start designing the Target
Grid
CAPEX
2.3 billion €/year
4,538 headcount
2045
Target Grid
built
2030
Target Grid
prepared
2025
Ready for delivery
on the peak
NOW
Responsible
growth
2018
Transforming
TenneT
Strong integration TenneT
Netherlands and Germany
towards one company
approach
+24 years
-
3
y
e
a
r
s
Goal Delivery
Delivery
capabilities
Investment
and growth
Our path towards 2050
By 2050 the European Union aims to turn Europe into
theworld’s first climate-neutral continent. Germany is on an
even more ambitious path with targets to be climate-neutral
by 2045. As an interim goal, the EU aims for a 55%
reduction of CO
2
emissions by 2030. Although these
clean-energy milestones of 2030, 2045 and 2050 seem
faraway to some, for TenneT they loom large on the
horizon. The energy transition is moving much faster now
than how infrastructure used to be overhauled or upgraded
in the past decade. We need to move ahead now so we
can drive the energy transition as more and more energy
consumption will be electrified.
We are preparing our target grid, which will be the blueprint
for a future grid that can support the energy transition for
generations to come. It is prepared in stages to coincide
with important climate goals in 2025, 2030 and 2045.
Thisis not just about growing our infrastructure, but
shouldalso include smart solutions and innovative
technology. As a first step, we plan to be ready to deliver
atfull capacity on the peak by 2025. By 2030, we plan to
have a reliable backbone in place and through pro-active
preparations for future transmission projects, we are in a
position to move forward faster to support the next steps
inthe energy transition. And by 2045, we will have delivered
the grid required for a climate-neutral energy system,
inaccordance with the Paris Agreement and the national
climate goals. By then, we will also have integrated
large-scale offshore and onshore renewable generation
andindustrial customers to meet their climate goals.
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How we create value
TenneT has an important role within the electricity supply
chain and helps enable the lives of people working and
living in the areas we serve. The way we create value is
represented visually on the next pages, using the concept
of value creation as described by the International
Integrated Reporting Council (IIRC), which together with the
Sustainability Accounting Standards Board (SASB) formed
the Value Reporting Foundation.By means of the six inputs
defined by this framework (financial, manufactured,
intellectual, human, social & relationship and natural)
wedescribe our input, output, outcome and impact.
Thismodel is the basis of our Integrated Annual Report.
Ourinputs, through which we create impact for society, are
influenced by our strategy, our purpose and our principles.
All of these are described in this chapter. Moreinformation
on the specific inputs, our related outputs,outcomes and
impacts are disclosed in the chapter ‘Our Performance in
2021’. The way we aim to create long-term value is defined
alongside the six inputs from our value creation model.
Herewe aim to:
Deliver a high security of supply
Delivering a high security of supply in today’s fast changing
more volatile energy system is a growing challenge.
However, thanks to TenneT’s decades of experience in
operating our grid, together with a vision of how the future
grid and electricity markets should be designed, we are able
to secure supply of electricity both today and in the future.
And with this, we support the daily lives and activities of
people and businesses in the areas we serve.
Ensure critical infrastructure for society
Electricity plays a vital role in the lives of our stakeholders
and society as a whole. TenneT builds and maintains the
high-voltage grid that is needed for this secure supply of
electricity. With the materials and products we use to build
and maintain our grid, such as our cables, (sub)stations,
pylons and interconnectors, we realise the critical
infrastructure that supports today’s electricity needs
aswellas enabling the energy system of the future.
Create a sustainable workplace
We consider our employees to be our most important
assetand essential to realise our ambitions. Our programmes
andactions, including how we train our people and how
wecreate an inclusive environment where people are
energised to work, help us create a stable, safe and
sustainable workplace.
Create value to transition to a climate neutral economy
The transition to a climate neutral economy will be essential
to mitigate climate change. As a company with a key role
inthe energy landscape and a vision for a greener energy
future, our aim is to drive the energy transition and
contribute to achieving the climate targets of the
Netherlands, Germany and the European Union. On the
onehand, we aim to do this by contributing to a sustainable
energy system, where we are able to connect everyone in
the areas we serve to green electricity. On the other, we also
strive to reduce the environmental impact of our operations.
This is related to our use of energy sources, our work in
thenatural environment and the materials we need to build,
operate and maintain our grid.
Secure a sustainable financial performance
andinvestor ratings
In order to create long-term value, we are focused
onmaintaining a healthy financial position.Our main
sources of financing are our regulatory revenue and
externally raised capital, which is increasingly stemming
from green financing.To safeguard our financial health,
weaim to optimise our financing costs and deliver a return
oncapital that meets the expectations of our capital
providers. In addition it is essential to maintain our strong
creditand ESG ratings.
Solve societal challenges with stakeholders
andthrough partnerships
We are convinced that collaboration with stakeholders
andstrong partnerships with suppliers, customers and
other parties are essential to finding solutions that will help
us transition to a climate neutral economy to address and
mitigate climate change. Combining experience and
knowledge from different organisations around the world
willhelp us to do so.
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Employees
Governments and
policy-makers
Suppliers
Customers
Stakeholders Input How we create value
Strategic partnerships
and our engagement with (project)
stakeholders
Our skilled and
motivatedemployees
Cables, lines, stations, offices and
interconnectors
Energy, natural environment and
materials to build, maintain and
operateourgrid
Extensive knowledge
of and experience with
operating the systemand
integrating energymarkets
How we operate
Enable the energy market
Designing the energy system
Build the electricity grid
Maintain the electricity grid
Operate the electricity grid
Enable the core activities
Regulatory revenue,
(Green)Financing
To connect
everyone with
a brighter
energy future
Secure supply
today and
tomorrow
Safeguard
our financial
health
Drive the
energy
transition
Energise our
people and
organisation
Shareholders
Regulators
Energy market
participants
NGOs
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Output
Ensure critical infrastructure for society, see page 29
With our assets, we ensure that we are able to fulfill our core activities and tasks. We keep building and
maintaining our grid to realise the critical infrastructure, which helps us drive the energy transition and
supports the economic development and human wellbeing of the people that live in our service area.
We expected to invest EUR 3.9 billion in 2021, and we were able to realise EUR 4.0 billion.
Create value to transition to a climate neutral economy, see page 46
We want to drive the energy transition, because we believe we are able to make a significant contribution.
Realising our investment programme and innovation portfolio will contribute to the climate targets in
theNetherlands and Germany, which is essential on the pathway to a climate neutral economy.
As of 2021, we realised a total of 8.5 GW of offshore capacity and connecting renewable energy sources
to the electricity grid in the Netherlands and Germany. At the same time, we ourselves have the firm
ambition to be climate neutral as early as 2025, so that we too will contribute to part of the solution.
In2021 our (gross) carbon footprint was 2,312,139 tonnes CO
2
, which has been greened for 69.0%.
Solve societal challenges with stakeholders and through partnerships, see page 60
Webelieve in the power of cooperation. Working together will help us achieve the next steps with respect
to the energy transition faster and better. Furthermore, in realising our future grid, weengage with our
stakeholders to consider societal objectives. That is why we also measure our reputation on abi-annual
basis. The outcome of this is a reputation that can be classified as ‘fairly strong to very strong’.
Deliver a high security of supply, see page 22
With our knowledge and experience in operating the system and following up on our ambition
to further integrate Europeanenergy markets, we are able to provide a secure supplyof energy.
In2021, we have been able to achieve a 99.99999% availability of our grid. The instances we were
unable to secure supply, were the result of 3 interruptions. Our knowledge, experience and vision
withrespect to an integrated European energy market is reflected in our grid and the 17interconnectors
that are operational.
Create a sustainable workplace, see page 39
Our goal is to create a working environment where our people feel safe and valued. We strive
to bring out the best in our people to help them develop themselves and organise this in a way that
energises them. That is why we track our absentee rate, which was 3.1 in the Netherlands and
2.6in Germany in 2021. Unfortunately we did not manage to have zero safety incidents and recorded
aTotal Recordable Incident Rate (TRIR) of 5.8.
Outcome & Impact
Our societal financial
impact on anaverage
household in our
service area
Equivalent number of
households that in theory
would have been able
to receive 100% green
electricity
Avoided CO
2
emissions
Societal impact due to
availability of our grid
Secure sustainable financial performance and investor ratings, see page 54
TenneT isa regulated company, that has an important societal role. That is whywe strive to make
choices considering the impact on societal costs. To finance our grid investments, we raise the
necessaryfinancing and meet the expectations of ourcapital providers. This is reflected invarious ways,
such as our credit rating of A- S&P and A3 Moody’s, our ROIC of 4.2 and aS&P ESG evaluation,
with a score of 84 out of 100 and a classification ‘strong’.
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Measuring our societal impacts
Our ambition is to show our societal impacts as part
of our value creation model. We have succeeded
in doing so for some areas and are working to
expand this model in the coming years. Disclosing
an organisation’s impact(s) is a relatively new area
of reporting. We aim to disclose the outcomes and
impacts which we create on a societal level as a
European TSO. This provides insights from a broader
perspective on how the people living in the areas we
serve experience the positive or negative impact we
create and have on them. By showing these impacts
and the way we are able to full our purpose, we
believe that we provide more meaningful insights
for stakeholders rather than to focus on translating
a variety of our company level outputs to outcomes
and impacts.
In 2020, we started to show the societal impact in
two important new areas: the value we create by
ensuring the availability of our grid and our progress
in connecting more renewable energy to our grid.
The latter is shown in the tonnes of CO
2
emissions
that we have been able to avoid each year and the
equivalent number of households that in theory
would have been able to receive 100% green
electricity that year. In 2021, we added an additional
societal impact– the nancial impact we have on
the electricity costs of an average household in the
areas we serve. As we are a regulated company,
ourimpact on household costs is an important
factorthat we want to address in thisreport.
More information can be found in the chapters
'Deliver a high security of supply', 'Create value to
transition to a climate neutral economy' and 'Secure
sustainable nancial performance and investor
ratings' where we included our societal impacts
inthese areas.
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Connectivity table
Strategic pillar
• Stakeholder engagement
• Compliance
Page 2
Page 39
Page 22
Page 29
Page 29
Page 46
Page 60
Page 54
• Internal engagement index
• Reputation survey
Chapter Topics in materiality matrix Key KPI’s SDG
• Security of supply
• Responsible supply chain practices
• (Cyber) security
• Connectivity of our grid
• Customer relations
• Grid availability
• Investments
Secure supply today
and tomorrow
• Create a sustainable workplace
• Safety
• Absentee rate
• % female inflow
• Total Recordable Incident Rate
Energise our people
and organisation
• TenneT’s own environmental impact
• Stakeholder engagement
• Strategic partnerships
• Driving the energy transition
• Sustainability performance
• # of GW of new flexibility
• # of scalable / scaled system
initiatives
Drive the
energy transition
• Financial health • Adjusted underlying EBIT
• ROIC
• Adjusted FFO/Net debt
Safeguard our
financial health
Overarching
How our strategy creates value
Our Integrated Annual Report 2021 has been set
upalongside the outputs of our value creation model.
Theimage on next page shows how this is connected
toour fourstrategic pillars and where more information
about eachtopic can be found.
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Our supply chain
Our main task is to secure electricity supply to almost
43million people that live in the areas we serve. To realisethis,
we transmit electricity via our high-voltage grid. We also
need to design, build, maintain and operate our grid. These
dimensions have their own challenges andopportunities.
First, we need to design, build and maintain a high quality,
reliable, sustainable, and resilient grid that can support the
energy system of the future. This requires the development
of new technologies and causes an increase in demand
forproven technology and skilled resources, next to raw
materials (such as steel, copper and aluminium)
whicharemanufactured or mined by third parties and
usedin ourprojects to build and maintain our assets.
Theseassets arecrucial to operate ourgrid. Some of
theraw materials we use are scarce resources, such as
virgin copper, which have an environmental impact due to
their extraction. We want to be a green and responsible grid
operator, takingmeasures to reduce our negative impacts
and even creating positive impacts, wherever possible.
Wehave formulated ambitions to become more circular
andmake less use of scarce resources, including virgin
copper. Once our assets are commissioned, we aim to
extend their useful lives through regular maintenance, which
will help us to reduce the use of (raw) materials. When our
assets reach the end of their lifecycle, we aim to recycle all
materials or components that can be safely re-used.
Building and maintaining the energy grid of the future is
acombined effort, involving thousands of people. For
TenneT’s employees and those employed by our partners,
we strive to do this in a safe and responsible way. The
nature of our work, especially where high-voltage is
involved, requires the most stringent adherence to safety
standards. We are proud of everyone who helps us to drive
the energy transition.
However, our work involves more than designing, building
and maintaining assets. We also need to operate them, by
providing transmission and system services and facilitating
the market. In this way, we play a pivotal role at the centre
of the electricity supply chain, transmitting electricity to
end-users via the grids of the distribution system operators
(DSOs), which is either generated on land or at sea, or
imported from or exported to neighbouring grids via
cross-border interconnectors.
This electricity supply chain has changed significantly over
the past decades, but TenneT has long been an established
key player and important partner of governments and other
key stakeholders since its founding in 1998. As the energy
transition forces the system to undergo significant changes
in the path towards zero-carbon emission, TenneT can play
a key role in helping stakeholders in the supply chain to
work together. Sharing our experience and knowledge
gained from the past decades, and also learning from
others, we aim to help our entire supply chain overcome the
challenges ahead to deliver the energy system of the future.
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Designing, building, maintaining and operating the grid
Construction
Safety is very important when working with
heavy machinery andhigh voltage when
building and maintaining our grid
Raw material extraction and production of materials
Finding sufcient and the right resources remains achallenge,
todeliver a greener energy system and in away where we reduce
our impact on the planet
By creating efcient markets that support
our task to transmit electricity toour customers
we aim tomake our grid future proof
Decommisioning
In our projects, we strive to re-use our
materials as much as possible or dispose
theminaproper way
Generation / In-feed
Renewables
More offshore wind farms
are connected to our grid
Renewables
Onshore, we aim to create
more capacity to enable more
renewables to be connected
Powerplants
Conventional power plants
are also still in the mix, but
are increasingly being
phased out by governments
Import
We import electricity to
balance our grid which can
also save societal costs
DSOs
Export
We transport electricity to
other areas if this helps
them secure supply in a
consistent or more cost-
efcient way
Consumers/flexumers
With a society that is
gradually electrifying, we
strive to supply households
of electricity together with
the DSOs and work together
with them in nding new
solutions to power society
Large industries
More and more large
industries are greening their
processes which results
in an increasing greener
electrication need. As
partner for industries we
therefore play an important
role in the transition to a
climate neutral economy
DSOs
Consumption
TenneT in the supply chain
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Our stakeholders
Shareholders
• Financial health
• Security of supply
Customers
• Security of supply
• TenneT’s own environmental impact
• Responsible supply chain
Governments and policy-makers
• Financial health
• Driving the energy transition
• Strategic partnerships
Regulators
• Financial health
• Security of supply
• Driving the energy transition
Suppliers
• Responsible supply chain practices
• Strategic partnerships
Energy market participants
• Driving the energy transition
• Connectivity of our grid
• Security of supply
Employees
• Safety
• Creating a sustainable workplace
NGOs
• TenneT’s own environmental
impact
• Stakeholder engagement
• Driving the energy transition
Our stakeholders
TenneT’s vital role in the European energy sector involves
strong collaboration with a wide range of partners and
stakeholders. We aim to build and maintain our stakeholder
relationships in the best way possible. This year, we
reassessed our stakeholder landscape, as the environment
we are operating in continues to change. We performed
thisassessment together with our business units. Although
we value our relations with all our stakeholders, big or small,
there are some groups that have a greater influence on us
and vice versa. Our key stakeholders are summarised in
thevisual included below.
Every two years, we conduct a survey to assess how
wellwe are performing in the perception of our key
stakeholders.This survey was performed amongst our
previous list of key stakeholders.
The most recently conducted survey resulted in the
perception of TenneT’s reputation as ‘fairly strong to
verystrong’ and TenneT’s customer satisfaction gave
anoveralllevel of satisfaction of 85% (customers gave
ascore of 7 or higher).
Next to these stakeholders, we very much also value
ourengagement with specific project stakeholders in
localcommunities. We are open to the concerns of people
and organisations in the areas where our assets are built,
and actively seek to engage with them. We hold regular
stakeholder dialogues (workshops, talks, events and
onlinesessions) where we aim to build awareness of
andunderstanding for our work. In these interactions,
welisten to the concerns of local stakeholders to see how
we can address them properly. We measure our community
relations efforts through stakeholder surveys.
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The Sustainable Development Goals and TenneT
The Sustainable Development Goals (SDGs) were
determined by the United Nations as global goals that
member statesshould translate into national policy. The
aimof the SDGs is to create a sustainable future for all
people. The cooperation between governments and other
important partners, such as businesses and NGOs, arekey
to achieving these important goals. TenneT is committed
tothe SDGs and in 2021 we re-assessed which SDGs
aremost applicable to us. We reached out to our key
stakeholder groups and discussed their views on this.
SDG 13 – Climate action
The world is facing major global challenges,
including the consequences of climate change.
This affects TenneT’s core business. And it is our choices
and business conduct which can have a large impact on
this the global challenge. That is why we have identified
SDG 13 ‘Climate Action’ as the main societal objective
wecontribute to.Theimpact ofclimate factors is also
becoming increasingly important inour activities and
business operations. This is why we strive to ensure
atransition to a sustainable energy system at a socially
acceptable costwhile maintaining security of supply.
SDG 7 – Ensure access to affordable,
reliable, sustainable and modern energy
for all
SDG 7 is where we feel that wecontribute most with our
core business activities. The underlying targetwe contribute
to is target 7.2: By 2030, increase substantially the share
ofrenewable energy in the global energy mix. This is clearly
reflected in TenneT’s activities. Our investments are
expected to connect 26.7 GW of offshore wind to the
onshore grid by 2030. As of 2021, we were able to connect
8.5 GW of offshore wind energy so far. Onshore, we are
facilitating the fast-growing supply of wind and solar energy
with grid expansions and smart solutions. We have been
able to achieve our target this year to progress on our
investments. More information on this is included in the
‘Ensure a critical infrastructure for society’ chapter. By
realising our investments, we are able to contribute to the
increase of renewables in the energy mix in the Netherlands
and Germany and to drive the energy transition.
SDG 9 – Build a resilient infrastructure,
promote inclusive and sustainable
industrialisation and foster innovation
Our core activities also make a significant contribution to
SDG 9. Our role is particularly linked to target 9.1: Develop
quality, reliable, sustainable and resilient infrastructure,
including regional and transborder infrastructure, to support
economic development and human well-being, with a focus
on affordable and equitable access for all. By driving the
energy transition and by operating as a European TSO,
wesupport economic development and human well-being
by empowering society and providing a secure supply of
electricity today and in the future. We invest in our grid
toensure that our system is reliable, sustainable, resilient
andfuture-proof for a changing energy mix. We can
furtherensure security of supply for the areas we serve
byconnecting our grid to other European countries.
Anexample ofthis is the opening of the NordLink cable,
thefirst direct power connection between Germany and
Norway in 2021.The high-voltage DC link will enable the
exchange of 1,400 MW of renewable energy – wind power
from Germany and hydropower from Norway. NordLink is
thus making a contribution to the energy transition in
Germany and Europe. Byincreasing the number of
interconnectors – from the current 16 – we create more
opportunities to import and export electricity. This enables
amore cost-efficient supply, making electricity more
affordable for end-users.Furthermore, we also continue to
investigate ways to make our grid more resilient, including
protecting our assets against the effects of climate change.
Extreme weather conditions such as floods and high winds,
or the longer-term risk of rising sea levels, are factors we
take into account. More information on this has been
included inour Key risks section.
Other SDGs
In the execution of our activities, we also have an impact
onother SDGs. We contribute to SDG 5 and SDG 8
whenwe look at policies relating to our people (including
our contractors) and SDG 12, SDG 14 and SDG 15 with
respect to the choices we make that affect our planet.
SDG12 for instance, relate to our circularity ambitions,
which also has an effect on climate change. Reducing the
use of virgin materials, such as copper, will have a positive
climate effect as it avoids emissions in the extraction phase.
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Deliver a high security of supply
TenneT has a clear and critical task: to ensure the continuous supply of electricity for almost
43 million end-users across the Netherlands and Germany, 24 hours a day, 365days a year.
This goal has inspired us since the company was founded in 1998. Ourcommitment to
provide a high level of security of supply continues to drive us today, butwe must do so in
afar more complex, dynamic and challenging energy landscape.
With our knowledge and experience built over the last
decades, we are dedicated to providing a secure supply of
electricity, today and for decades to come. Our end-users
expect a near-perfect 99.99% supply of electricity. But
maintaining this level is challenging in combination with the
European roadmap to achieve climate-neutrality by 2050.
The targets to reach this goal continue to grow. For example,
in July, the European Union announced its “Fit for 55”
package of legislation, committing to a 55% reduction in
overall carbon emissions by 2030. As a large share of total
greenhouse gas emissions in the EU comes from the energy
sector, TenneT can play a key role in enabling this goal.
While green electricity has many advantages and will be
keyto achieving Europe’s climate goals, its supply by
natureis intermittent. The volumes are steadily increasing
interms of wind energy – especially from the North Sea –
as well solar power. But we cannot just simply connect
more and more renewable energy production facilities to the
grid.Thecharacteristics of renewable energy sources (RES)
concerning variability and uncertainty impacts generation
dispatch, system balancing, system stability and the power
flow pattern in the network. As a result, the challenge is not
just to build a RES-dependent grid, but also to keep it in
balance and stable at all times so we can continue to
provide a high security of supply - today and tomorrow.
It is important to make responsible choices when building
agreener energy future. We do not only need to make sure
our grid is prepared for more RES to be connected, we also
have to find flexible solutions and ensure the stability of our
grid. We aim to secure supply of electricity when the sun
does not shine or the wind does not blow and at the same
time making the transition to a climate neutral economy.
We describe our performance in 2021 in the following
six chapters, each describing one of the sixoutputs/
outcomes as mentioned in our value creation model.
Our performance
in 2021
Our performance in 2021
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Our onshore grid availability
was again one of our best
performances in the past
decade.
99.99999%
2020: 99.99995%
2019: 99.99982%
99.99962%
Target StatusPerformance Trend
Onshore grid
availability
Despite recording a grid
availability higher than 2020,
we did not meet our target as
we have increased our target
compared to last year.
94.09%
2020: 94.03%
2019: 93.20%
95.10%
Target StatusPerformance Trend
Offshore grid
availability
Secure supply today
We are proud to have been able to have kept our grids
available 99.99999% of the time in all of our supply
areas.Although we are pleased with this performance, we
regret some instances of interrupted supply. An example of
this relates to an interruption at the Soest substation which
impacted over 50,000 households for about 20 minutes.
Aroot cause analysis was performed to learn from this
incident and for future references. Despite the interruptions
that occurred in our grid, we are pleased to have been able
to sustain our level of grid availability onshore grid in 2021
with a comparable availability performance we had in 2020.
We report our onshore and offshore grid availability
separately, as these grids are constructed differently.
Thereis less built-in redundancy in our offshore connections
compared to our onshore grid. This means availability in
theoffshore grid is typically lower compared to onshore.
In2021, we achieved 94.09% offshore grid availability
compared to 94.03% in 2020. Despite this being a slight
improvement of our offshore grid availability, we did not
manage to meet the target for 2021, which we updated
toraise the bar for ourselves in this area.
Although our onshore grid availability in 2021 is among
thehighest reliability levels in the world, we do not take it for
granted. Around the clock, TenneT has many dedicated
people working to make a high security of supply possible.
The focus of this work takes place at our four control
centres (two in Germany and two in the Netherlands) where
we operate the grid, monitor the stability and performance
of the system and coordinate across borders.
As a European TSO, we are part of an interconnected
European electricity grid. This ensures a stable electricity
supply throughout the continent. In 2021, there were two
events that split the European interconnected system in
two, where the European cooperation was essential to
control and minimise the impact of these events. The 2021
system splits were a warning sign that the integrated
European system is being stretched close to its stability
limits by the increased demands of the energy transition.
These usually rare events occurred twice in 2021 – on 8
January and 24 July. The 8 January split caused a
temporary separation of the South-Eastern part of Europe
from the rest of the Continental European grid, while the
event on July 24th temporarily disconnected the Iberian
peninsula and a small part of the French gridfrom the rest
of the Continental European grid.
Fortunately, TSOs across Europe – including TenneT – are
prepared for such events with emergency and restoration
plans. Following a larger disturbance in Continental Europe
on 4 November 2006, new awareness and stringent
countermeasures have been introduced to mitigate the
consequences of system splits. These include the European
Awareness System (EAS), whereby TSOs exchange
real-time information in order to be able toreact immediately
in case of unusual system conditions.
This allows TSOs to rapidly manage such events in
acoordinated manner and limit their consequences.
On8January and 24 July, TSOs resynchronised the
separated areas within very short time frames.
Our performance in 2021
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The learning from these events in 2021 is not only that the
increased pressure on our system can destabilise security
of supply, but also that cross-border collaboration between
TSOs and a European interconnected system is essential
for our security of supply. It also shows the need for new,
strategically located and reliable flexible demand and supply
solutions to balance increased volatility in the grid.
The effects of changing climate and weather patterns also
stressed our grid and the security of supply. The extreme
weather events in the summer of 2021 caused four of our
pylons in the Netherlands to collapse, while not leading to
adisruption of our supply. This is due to the way we operate
our grid as we secure our grid based on the n-1 principle.
This ensures that in the event of one unplanned outage,
oursupply remains secure.
In 2021, we faced additional challenges in our grid due
togrowing congestion. This occurs when a high feed-in
ofrenewable energy sources – for example on very windy
days – cannot be fully accommodated due to the limited
available transmission capacity of the high-voltage grid.
Thisendangers our security of supply as electricity cannot
be transmitted across overloaded powerlines.
In these instances of congestion, TenneT needs to
activateremedial actions, including costly redispatch
measures. Thismeans we ask electricity providers from
e.g. conventional power plants to change their power feed-in
specific locations to ensure that we do not have overloads
and that the system balance is maintained. This upward
anddownward regulation in the network takes place on
almost a daily basis.
As the amount of RES being connected to the grid grows
and conventional power plants such as coal-fired units are
being decommissioned, temporary congestion scenarios
become more common and redispatch costs tend to rise.
To illustrate this, over thepast decade, our redispatch
volumes have increased inparts of our German grid by a
factor of approximately 10between 2011 and 2020, due
tothe increasing role ofrenewables in the energy mixand
the longer distance between generation and the use of
electricity. Managing these challenges, while also securing
supply and driving theenergy transition, is all part of the
balancing act TenneT has to perform.
Securing supply tomorrow
As we look ahead, we must continue to ensure a high
security of supply, despite the increasing complexity of
running a climate neutral energy system. Innovation will
becritical to meet this challenge, not only related to more
effective and efficient use of our assets, but also to boost
our system operations and improve market design.
To achieve this, there are three focus areas that will
beessential for securing supply in the future.
Societal value of the availability of our grid
Transmitting electricity to large industries and
via DSOs to millions of households powers and
empowers society. This is our main task and also
our main societal impact as a company. Designing,
building, maintaining and operating a grid that is
available all the time is the most important impact
TenneT can have for society. To ensure that the
people living in the areas we serve are able to live
their lives and organisations can do their work.
Achieving this impact requires each part of the
energy supply chain to work together, therefore
this achievement is not just the result of our own
actions, but this societal impact we make together
with others in the supply chain, such as electricity
generation companies, other TSOs and distribution
system operators. Regardless, an electricity grid
that is available to supply electricity to its customers
for99.99999% of the time creates value.
Our assessment, based on academic research,
shows that the estimated societal value created by
the availability of our Dutch grid surpasses thegross
domestic product (GDP) of the Netherlands,
which was over EUR 800 billion in 2020. This is
because the supply of electricity does not only
create economic value, but also direct and indirect
benets, such as being able to enjoy leisure time.
For more information on this assessment and our
methodology, please refer to the Additional CSR
data document on our website. We will continue
tofurther develop societal impact indicators during
the next years and inviteothers to help us with this.
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Flexibility
Our three focus areas
Grid
reinforcement
Operational
improvements
Market
facilitation
Grid reinforcement
To cope with the increased complexity and volatility of
theenergy system we must strengthen the grid. Currently,
in several parts of our serving area, including provinces
intheNetherlands, some sections of our grid do not have
thecapacity to connect more renewable energy sources.
For example, in September 2021 the Dutch regulator
ACMwas notified that the grid capacity in the province
ofGelderland and the Flevopolder region reaches its limits.
The rapid growth of wind farms and solar farms in these
areas is leading to congestion in the system. With additional
transformers and adjustments to the regional high-voltage
grid, we aim to create structural solutions, with plans to
invest up to EUR 450 million on measures to reinforce
thegrid in these regions. Also in December 2021, we
announced that we will invest up to EUR 650 million in
theAmsterdam area to reinforce the grid. Going forward,
we expect to identify more of these bottlenecks which
wewill resolve to ensure that our grid is future-proof
andcan support the energy transition. We have created
a'gridcapacity map' in 2021 to identify such bottlenecks
intheNetherlands, which can be found on our corporate
website.These measures however can take considerable
time, particularly in the permitting and licensing phase,
andare faced with increasing scarcity of hardware and
other resources from our suppliers. For more on this,
pleaserefer to our ‘Ensure a critical infrastructure’ chapter.
Market facilitation
To secure supply now and in the future, an integrated
European grid is a key requirement. To this end, we have
been working closely with other European TSOs and
powerexchanges for the past 15 years to connect electricity
markets, both physically as well as commercially. A connected
grid and integrated market has many advantages, such as
amore reliable supply of electricity at a fair price.
Interconnected cross-border grids allow electricity to be
imported and exported, which helps to maintain affordable
prices in a dynamic market and helps TSOs to balance
supply and demand.
Cross-border interconnections play a particularly important
role in the import and export of green electricity. When
thereis less demand than supply of renewable electricity,
the excess supply can be exported. Vice versa, in situations
when there is more demand for renewable energy sources
than can be supplied at any particular time or location,
international interconnectors make imports of electricity
from other areas of the grid possible as an alternative to
balance the grid.
The delivery of the NordLink cable (see ‘Ensure a critical
infrastructure for society’ chapter) is an example of
whatwehave achieved in 2021 to create cross-border
connections that facilitate the exchange of renewable
electricity. This 623 km interconnector between Germany
and Norway was commissioned in May 2021 andhas a
capacity of 1,400 MW.
Next to that TenneT is working together with other
European TSOs to further harmonise and improve the
functioning of the markets and develop new products being
valuable for market participants as well as support further
cross-border energy exchanges. All these developments are
continuously being aligned with ministries, regulators and
market participants.
To further facilitate a smooth functioning of the market
inGermany and the Netherlands we work together
continuously with DSO's and market parties to improve
data exchange processes. This improves security and
efficiency of these processes, but it also to paves the
wayfor new market activities in the field of flexibility.
Operational improvements
As well as building new assets, we must also invest in
newconcepts for operating the grid, making a more
efficientandoptimised use of our system through new
digital solutions. With our Control Room of the Future
project, weaim to fundamentally redesign our grid control
systems to make them fit for the future. Another example
ofhow tomake use of digital innovation to secure future
supply is the InnoSys2030 project.TenneT’s development
ofdigital innovations and partnerships is growing rapidly.
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Ithelps to strengthen our capacity for data analysis and
exchange, improvesour ability to calculate capacity across
Europe andenhances decision support and the stability
andefficiency of the system.For more examples see our
‘Solve societal challenges with stakeholders and through
partnerships' chapter.
Flexibility in demand and supply of electricity
At the centre of these three priorities is flexibility. Feeding
more RES into the electricity system creates a challenge
tokeep the grid balanced and ensure security of supply.
Traditionally, Transmission System Operators have used
fossil-fuelled power plants to provide the flexible power
needed to keep the grid balanced. Now, we are looking
fornew sources of flexibility.
Flexibility is a key requirement of future energy markets.
Thebroader we facilitate the market to unlock flexibility
atthe right location, through innovation and partnerships,
themore stability and security we will build into the grid.
Hence, we are exploring multiple innovations through our
focused Flexibility, Innovation and Digital Portfolio approach.
Through these, we intend to unlock flexibility technologies
by market parties. This will enable us to drive, develop and
integrate partnerships, participations and projects for new
and data-driven business opportunities. For example, we
have engaged in crowd balancing platforms, collaborating
with multiple partners to unlock flexibility from electricity
stored in consumer-owned devices, such as electric
vehicles and heat pumps. Our participation in GOPACS
platform (Grid Operators Platform for Congestion Solutions)
together with the DSOs and the Equigy platform, with fellow
European TSOs – are examples of this engagement.
System resilience
Delivering a high security of supply is only possible when
allsteps to ensure the integrity and stability of our grid
havebeen taken. This requires us to consider many risk
scenarios, including potential security threats ranging
fromcopper theft to cyber-attacks. Extreme weather events
areanother increasingly common threat to our system
resilience, requiring us to take risk mitigation measures
related to the design and construction of our assets, as
wellas providing system back-up of IT systems in the
eventof failure. We treat the possibility ofasevere outage
resulting from extreme weather and all types of security
incidents very seriously. Protection against them is an
essential aspect of our security of supply resilience.
Wecannot rule out these types of events entirely, despite
prevention measures that are continuously assessed,
optimised and tested. In addition, we develop, align
andcarry out contingency plans together with national
authorities to mitigate these risks.
What could prevent us from realising our goals?
As our grid becomes more reliant on renewable energy
being weather-dependent electricity sources, we face more
challenges for how we operate our grid in its current form
and also plan for its expansion in the future. In parallel, there
is uncertainty about the future strategy on the phase out
ofconventional energy production and the future expansion
ofrenewables could lead to adaptions and shortages in
electricity production and reduced leeway for TSOs.
Wemust ensure our grid is future-proof and remains stable
to limit congestion scenarios, cost of redispatch. We have
defined and started multiple strategic initiatives to ensure
our system is up to the task and back-up in the event of
failure are available.
However, our strategic plans are challenged with uncertainty
on a national and/or European level concerning ambitious
climate targets entailing a surge of renewable expansion,
political decision-making and the phase-out of conventional
energy sources. In the short-term, these uncertainties can
hinder investment decisions in the European grid.
Furthermore, the climate targets lead towards an increase
of the grid connection requests. Due to this increasing
demand, for some areas in the Netherlands our capacity
toconnect customers is limited and requests cannot be
met on time. To mitigate this situation TenneT works
intensively with all relevant stakeholders, such as but not
limited to the Dutch State, customers and constructors,
toplan appropriately, to inform what is achievable including
our ability to grow and to set the right priorities to all
stakeholders as well as to assess the investment plans
forthe coming years.
New technologies help us mitigate risks related to security
of supply, particularly digitalisation has a potential to make
optimal use of our grid. For example, data analytics can
help us gain insights on how we can use weather
predications, assess real-time electricity demand, survey
our assets and also help us to keep the grid in balance
byconnecting to an increasing number of producers
andconsumers. However, although technology will play
acrucialrole in realising the energy transition, there are
currently nodecisive breakthroughs that will simultaneously
guarantee security of supply, affordability for society and
competitiveness of industry prices.
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We foresee that the technological answers will be a mix
oftechnologies, use of digital solutions and data, market
design and price models, sector coupling, standardisation,
new types or functionality of cables and lines, transformers
as well as other assets to transmit energy. However, as
innovations are used in the market, the risks connected to
the use of innovations relate to an increased risk of outages
due to new and unforeseen technical failures that has not
been observed before with older but familiar technology .
Some of our older assets require more maintenance work
and downtime and present a growing logistical challenge
and cost. As such, TenneT is actively involved in defining
high quality standards from suppliers and service providers
and builds rigorous test procedures into its project planning
and guarantee periods into its supplier contracts.
These uncertainties do not only concern the application of
new technologies, but also the social environment, the level
of European collaboration to foster cross-border solutions,
the progress with sector coupling, the integrated
decarbonisation and the ongoing politics of the green
industry. This is relatively new territory for players in the
European energy system, it carries great opportunities,
butalso risks that need to be appropriately managed.
As mentioned, extreme weather, vandalism, theft and cyber
security incidents present ongoing threats on our system
resilience across our sector.To ensure we are prepared for
these risks and any repercussions, we continuously work on
understanding them and how best to handle them internally
and in partnership with other parties.
In terms of our cyber-security resilience, an important
moment in 2021 was the successful recertification of ISO
27001 ISMS in Germany. The ISO 27000 standards are
designed to assist companies in managing cyber-security
risks. TenneT is preparing itself for the upcoming EU
legislation, Network Code for Cyber Security, which will
bring new requirements the Netherlands and Germany.
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“ The
Netherlands
has a lot of
smart minds
working
together on
the energy
transition.”
“The Netherlands has a lot of
smart minds working together
on the energy transition.
The energy transition is an enormous challenge
and, as a partner of TenneT, we are at the heart
of the action. Technical services companies like
SPIE play a crucial role, and good cooperation
among all partners in the chain, including with
TenneT, is essential to achieving the goals of the
energy transition. The Netherlands has a lot of
smart minds working together on this, but all their
activities need to be linked together. We need to
tackle large projects in energy and infrastructure
in parallel, working faster by being smarter. If we
continue in the old traditional ways, we will never
complete the renewal of the Dutch infrastructure in
time. However, as all players accelerate their work,
safety must remain our top priority. I don't lose
sleep over many things, but safety is something
that is always on my mind. Our people often work in
special circumstances, at great heights and with high
electrical voltage. My principle is simple: you work
safely, or you don’t work at all. I am guided by a clear
principle: 'I am uncompromising on safety and the
project will be finished on time.”
Lieve Declercq
CEO of SPIE Nederland
SPIE Nederland is a key partner for
TenneT in the design, construction
and implementation of energy assets,
including power lines and substations.
We need to tackle large projects in energy
and infrastructure in parallel, working
faster by being smarter.
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Ensure critical infrastructure for society
Building, maintaining and operating the high-voltage electricity grid that millions of homes
andbusinesses depend on is the most important business activity of TenneT. As Europe
strives to become climate neutral by 2050, the electricity infrastructure at the heart of the
energy transition is undergoing a fundamental redesign, which presents significant challenges
for TenneT in the years ahead.
TenneT has a clear and constant societal task: to provide
society with a secure supply ofelectricity, while driving the
energy transition and facilitating the European cross-border
electricity market. Our extra high-voltage electricity grid
transmits electricity over long distances, across sea and
land, to help power homes and businesses. With the
materials and products we use to build andmaintain
ourgrid, such as our cables, pylons, (sub)stations and
interconnectors, we create the critical infrastructure that
people and businesses depend on every day.
While providing power supply is crucial today, the
development and transformation of our electricity system
will play an even more critical role in the next decades
inthetransition to a clean, climate-neutral world.
TheEuropean energy transition is one of the biggest
challenges of our times with a goal to make Europe the
world’s first climate-neutral continent by 2050 and reduce
emissions by 55% by 2030. Germany aims to be climate-
neutral already by 2045, while the Netherlands aims to be
climate-neutral in2050.
To prepare the infrastructure that will help to reach these
goals, TenneT aims to have realised thousands of kilometers
of newhigh-voltage overhead lines, substations and cables
andhave connected nearly 30 GW of offshore wind
energyby 2030. To achieve this, we plan to increase our
average annual investment volume to at least EUR 6 billion
while increasing the maintenance of our network in the
coming years.
2020 2021
Our progress with respect to key projects related to our investment portfolio
Phase
Wahle-Mecklar
Emden/Ost - Conneforde
Zuid West 380 kV
SuedLink
SuedOstLink
Noord West 380 kV
Westküstenleitung
Hollandse Kust Zuid
DolWin5
DolWin6
NordLink
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We are again in the fortunate
situation that we have
succeeded in reaching our
2021 investment target and
recorded a higher investment
amount than last year.
Target StatusPerformance
3,969 3,905
Trend
2021 2020 2019
Future proof grid
Investments
inEUR million
3,4123,969 3,064
Our performance in 2021
We have maintained strong progress with our investments,
as we continued to stay on track with the majority of our
critical infrastructure projects during 2021, with 3,967million
invested in the Dutch and German high-voltage grids –
a16% increase compared to EUR 3.4 billion in 2020.
Therewere some areas of our portfolio where this was not
the case, such as our DolWin5 offshore project, where the
effects of the pandemic caused delays.Construction of
theplatform at the Singapore shipyard is currently behind
schedule due to restrictions related to the COVID-19
pandemic, including labor and travel restrictions to
Singapore. Against this background, in December 2021,
TenneT asked the BNetzA for approval to postpone the
expected completion date of the grid connection system
from October 1, 2024 to October 1, 2025. Despite the
challenging circumstances,2021 was still another record
year of investment for TenneT.We are proud that we have
been able to meet our investment target, thanks to the
efforts of many colleagues and contractors helping us to
realise these projects.
The scale of this challenge means that we must step up
toexpand our grid and grow our organisation more rapidly.
At the same time, we need to consider how we can grow
ina responsible way. This not only includes building assets
to reinforce our grid to make it future-proof, but also means
exploring other solutions, such as making smarter use of our
existing assets. By using new technology, engaging
inpartnerships andusing agile working methods and other
innovative approaches, we can build a greener energy future
through other means than grid expansion alone.
We must consider how to develop our critical infrastructure
in a sustainable manner. That means acting responsible
when it comes to the materials we use to build and maintain
our assets, especially if they are scarce, such as virgin
copper. In addition, the number of new employees we can
onboard and integrate into our organisation within a single
year is finite. Furthermore, there is limited space to build our
assets in the natural landscape.
Realising our grid investments is characterised by three
different phases. The Initiation phase starts with identifying
capacity constraints in the electricity grid. At this stage, it is
decided to either accept the capacity constraint or to solve it
with new or upgraded infrastructure. Thereafter, the planning
and licensing phase begins, where other aspects are
considered, such as the spatial planning of the project. After
a final investment decision has been made, permits are
requested and final design details are formalised. Several
tenders are issued or framework contracts are used to
award a contract for the engineering, construction and
commissioning phase of the project. When the project is
administratively closed, it is formally completed. The majority
of the project time currently relates to the first two phases,
particularly planning & licensing, which may take upto eight
years. The actual construction of assets takes significantly
less time, usually two to four years. In order to reach the
2030 and 2050 CO
2
reduction targets primarily the planning
and licensing phase needs to shorten significantly.
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Offshore
Offshore wind plays a crucial role in the energy transition
asthe European Commission aims to connect 300 GW
by2050.The North Sea will play a crucial role, acting as
awind energy powerhouse for Europe. Germany and
TheNetherlands thus have set ambitious offshore energy
goals: by 2030 alone, they want to achieve a capacity of
30GW and approximately 11.5 GW respectively. To ensure
that we can deliver the infrastructure that supports these
goals, we are striving to connect increasing volumes of
offshore wind energy to the onshore grid in the most
environmentally friendly ways.To guarantee optimal
efficiency, we use standardised building blocks of 2 GW
HVDC connections.
In 2021, we made important progress in several areas
ofour offshore portfolio, including the developments with
respect to our 2 GW programme, the launch of the
Windstrom Booster concept, the opening of NordLink and
in our offshore grid connections for Hollandse Kust (Zuid)
and Hollandse Kust (Noord). These examples underpin the
advantages of being a cross-border TSO as this helps us
toshare knowledge and best practices in offshore activities.
We will further elaborate on this in the sections below.
Stakeholder engagement
In order to construct and maintain the critical
infrastructure required to drive the energy transition,
it is crucial to engage with local communities,
NGOs and politicians at the earliest stage of a
project to address their concerns and gain their
understanding. As we expand our network, we must
do so responsibly, by building a dialogue and gaining
acceptance with local communities.
As a result, our work involves a delicate balance: what
is desired on a national level is not always welcomed
by local communities. To meet this challenge, we aim
to do this in a responsible, engaged and connected
way. We act responsibly in howwe full ourrole
in society, engaged in how we build acceptance
for ouractions and connected in ourdialogue with
stakeholders. When we start anewproject, we
engage with the stakeholders affected, listen to their
concerns and needs, and provide information about
the project to evaluate and discuss.
Although we take the opinions of stakeholders
seriously, receiving new opinions after we have
already followed a due process to include
opinions in an earlier stage might cause additional
delays.Webenet from clear outcomes of our
stakeholder engagement which enable us to plan
and move ahead with certainty. The planning and
licencing phases of our projects take up by far the
most time in the realisation of our assets and with
that, can slow the progress we need to drive the
energy transition and achieve climate goals.
An example of the challenges we face in this
regard is the offshore project ‘Ten Noorden van de
Waddeneilanden’, which involves laying underground
cables across the island of Schiermonnikoog – as
part of a project to connect to a wind farm north of
the island at Eemshaven. The planning of the project
required extensive stakeholder engagement, as the
proposal to bury cables across natural landscapes
ofthe island met strong opposition from local citizens
and environmental organisations. A decision on the
nal routing of the cable is therefore delayed and
expected in 2022 at the earliest.
In most projects, we have observed a strong
preference for underground cabling compared to
overhead lines, despite this being generally more
costly and less reliable. Together with project
stakeholders, we aim to nd the best solutions for
each situation and consider the viewpoints of all
involved. That is why we organise meetings and
workshops during the early stages of a project. In the
case of the project on Schiermonnikoog, a number
ofmeetings were held with several stakeholders
such as landowners and other local communities,
in-person and also digitally. We informed them about
the plans and status of the project and provided them
with the opportunity to ask questions.
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2 GW programme and the Windstrom-Booster
To be able to connect larger offshore wind farms and thus
bring more energy onshore, TenneT has adopted a new
offshore grid concept for future grid connections. TenneT
expects to build at least six offshore grid connections with
atransmission capacity of 2 GW each in Germany and
theNetherlands by 2030 – three in each country.
The new concept is based on a new 525 kV HVDC cabling
system, developed in co-operation with our cable suppliers
with whom we are closely collaboratingto ensure this
ground-breaking technology is available in time.
The 2 GW programme also uses a standardised grid
connection design and a standard contract model,
allowingus to realise these projects faster and at lower
cost. The 2GW standard will more than double the capacity
in comparison to the previous 900 MW HVDC standard
used in Germany and almost triple the 700 MW AC
standard applied in the Netherlands.
TenneT has already started the tender for the offshore grid
connection and HVDC system in the Dutch IJmuiden Ver
wind area. It is expected that this contract will be awarded
by the end of 2022. The engineering for the land station
was tendered recently and the cable contract will follow
during 2022. The first 2 GW IJmuiden Ver connection is
planned to be operational in 2028.
Building on the standards from this 2 GW programme,
ourinsights from the North Sea Wind Power Hub
consortium and supplemented by additional technological
developments, we presented a new concept: our ‘6 GW
Windstrom-Booster’ concept. This concept aims to connect
three offshore grid connection systems in such a way that
6GW of power is bundled together, with an accelerated
offshore planning, less spatial use and with the potential
toefficiently link onshore customers as well as offshore
interconnections. 2022 the further implementation will be
elaborated in cooperation with the government and other
offshore TSO’s.
NordLink opening
A key milestone in our 2021 critical infrastructure
programme was the official opening in May of NordLink –
the first interconnector between Germany and Norway.
Thehigh-voltage subsea cable took five years to complete,
at a cost of EUR 1.8 billion. NordLink is a landmark
projectas the 623 km DC link will enable the exchange
of1,400 MW of renewable electricity– wind power from
Germany and hydropower from Norway – thus contributing
to the energy transition in Germany and Europe. This
capacity would be enough to power the equivalent of
around 3.6 million German households with green electricity.
Hollandse Kust (Zuid) and Hollandse Kust (Noord)
TenneT is building two transformer platforms, Hollandse
Kust Zuid Alpha and Beta, for the offshore grid connection
of the wind farm Hollandse Kust Zuid. In June, the second
jacket (Beta) of TenneT’s offshore connection system was
installed, 22 kilometres off the coast of The Hague. The
almost 3,000-tonne jacket, anchored to the seabed by six
approximately 60-metre piles, is the foundation for one of
two transformer stations for the Hollandse Kust (Zuid)
windfarm, each with a capacity of 700 MW. The connection
for the wind farms will be ready for use in 2022, when
offshore wind energy will be fed into TenneT’s onshore
Randstad 380 kV Zuid ring for further transmission to
electricity consumers.
In the final quarter of 2021, the jacket of Hollande Kust
(Noord) was installed, an offshore transformer grid
connection system, 18 kilometres from the coast of Egmond.
The planning for this project is to be completed in 2023.
In January 2022, due to the weather events related to storm
Corrie, a adrift cargo vessel collided with the jacket of
Hollandse Kust Zuid Beta. Fortunately there were no people
working there at that moment. We are currently investigating
the effects of this collision, to get a clear picture of the exact
damage to the jacket so that we can make a plan
fornecessary repairs.
Onshore
As part of our onshore portfolio, we realise projects to
helpsecure supply and drive the energy transition. Many
ofthese projects concern building new connections and
substations as well as are reinforcement of the grid in order
to connect more renewable energy sources. All of these
lines help us transmit the increasing amount of green
electricity over the long distances from where it is generated
to where it is consumed.
TenneT onshore grid expansion projects met a challenge
during 2021 with a new law in Germany that affects our
long-distance DC cable corridors. These are strategically
important as they carry wind-generated electricity from
theNorth Sea into the heavily populated and industrialised
southern part of Germany. A new clause in the Energy
Industry Act (EnWG) stipulates that the TSO responsible
forthe area in which the DC cable ends, is now responsible
for the whole project. The aim of the legislation is to create
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abetter balance of responsibility for strategically important
DC interconnectors between the four Germany TSOs.As
aresult, we handed over the responsibility of the southern
part of the NorthwestLink project (B-Korridor) to Amprion.
SuedLink and SuedOstLink
Despite the uncertainties of the legal changes, the
strategically important SuedLink and SuedOstLink DC
projects reached an important phase in 2021 as for
bothprojects the so called corridors are approved by
theGerman regulator BNetzA.SuedLink is a 700 km,
EUR10billion DC connection, carrying wind-generated
electricity from Germany’s north coast to energy-intensive
industry in the southern part of the country. The
SuedOstLink will also carry wind-generated electricity to
southern Germany, running from Saxony-Anhalt to Bavaria.
Both projects are facing some delays in the current
licensingphase due to various issues, such as changes
inscope, additional routing alternatives and shortages in
theservice provider markets. The plan approvals for first
sections are expected for 2023 which means that the
preparations for the construction phase are now up and
running. The cables and converter stations for both projects
have been procured and the production of the cables has
been planned for early 2022.
Wahle-Mecklar
The increasing amount of renewable energy fed into the
gridin Schleswig-Holstein has made it necessary to expand
the existing grid structure. The planned Wahle-Mecklar extra
high voltage line aims to connect the transformer substation
in Wahle near Braunschweig in Lower Saxony with Mecklar
near Ludwigsau transformer substation in Hesse at a
voltage of 380 kV. A line with a length of around 230 km
willbe realised and includes a 380 kV overhead line with
three underground cabling sections as well as five
substations (UW). The aim is to realise this project by 2024.
In 2021,theconstruction works for the last section was put
out to tender and partly awarded and the construction
continued in three sections. The planning approval decision
for the remaining fourth section has already been received.
Furthermore, construction activities were completed at one
substation, and another station substation will be finished
in2022.
Westküstenleitung
The Westküstenleitung in Schleswig-Holsteinrelates to
a380 kV line to be realised between Brunsbüttel and
thefederal border with Denmark and has a total length of
around 140 km. Next to this, also five substations are part
of the realisation of this project. The third section of this line
has been commissioned in September 2021 and with that
the first three out of five sections have already been
commissioned. The entire project is planned to be
realisedin 2023.
Zuid-West 380 kV West
We started the construction of a new 380 kV connection
between Borssele and Rilland. This power highway is
essential for transmitting electricity from existing and future
wind farms in the North Sea to the southwest of the
Netherlands. In addition, the new connection is important
for the exchange of electricity with Belgium. The Borssele
toRilland section is one half of a longer corridor that will
extend to Tilburg.
Noord-West 380 kV
This project relates to the construction of the new 380 kV
overhead connection between Eemshaven and Vierverlaten
(Groningen) and a new 380 kV substation in Vierverlaten.
The project is well on track to realise the scheduled ISD
in2023. After a long and intense planning and permitting
phase, the construction is developing in accordance with
the best case project schedule.
Maintain the grid to meet reliability targets
In addition to investment in new infrastructure, we are
increasing our investments in maintenance. Ensuring that
our grid is fit to operate at its maximum capacity is key to
our ongoing commitment to secure supply today and in
thefuture and to our maintenance strategy. However,
asourgrid becomes larger and more complex, and
considering that some of our older assets were installed
inthe 1950s and 60s and even before, our maintenance
workpresents a growing logistical challenge and at
increasing costs. The focused application of our
maintenance efforts is helping to maintain the availability
ofour grid and to do more with scarce resources.
We are developing smarter ways to assess the condition
and performance of our assets, which allows us to forecast
more accurately when maintenance and replacement work
is needed. We also use data analytics to predict failures,
which helps us manage the right timing for planned outages
to perform maintenance work. By maximising the accuracy
of knowing when and where maintenance is needed, we
can minimise our outage windows and match it with the
appropriate people and available equipment. This reduces
the likelihood of unplanned failures in the system, which
cause a reduction in the available windows for planned
maintenance.
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Supply chain management
Given the volatile supplier market and our ambitious
investment portfolio we are looking to improve our
relationships with our contractors. Joint growth
is required as both TenneT and our contractors
need to grow to meet the challenges of tomorrow.
Contractors are one of our key stakeholders,
bringing valuable expertise and capacity to make
the energy transition happen. Our unit Supply
Chain Management uses the so-called integrated
Supply Chain Management programme to mitigate
the risks of increasing scarcity of materials and
services, the price increases of raw materials
and the unpredictability of global logistics. The
goal of this programme is to build partnerships
with our most important suppliers based on trust,
transparency, and mutual respect. Understanding
each other’s interests, wanting to learn from each
other, to improve operations and to jointly work on
improvement projects, all on the basis of equality.
This should result in increasing the reliability of our
supply chains, efcient co-operation and a good
safety performance. This philosophy is now piloted
in the EU-303 framework contract with the scope of
building and maintaining substations onshore NL,
with nine of our international supply chain partners.
Further EU-30x and other framework contracts will
be developed in the course of 2022.
As we rely on our suppliers to provide essential
services, components and materials for our work,
such as pylons, transformers, HVDC technology
and power lines, we want to ensure that none of
them are, directly or indirectly, involved in conduct
that does not meet our policies and quality
standards. This can relate to product specications,
environmental performance or human rights. Our
policy is to visit suppliers and ask them detailed
questions on these issues. If improvements are
necessary, we discuss with them how these can
be made. In 2021, we performed24 supplier visits.
It is our policy to not accept suppliers who fail to
meet our standards. In 2021,20 suppliers met our
standards, or were given the opportunity after taking
corrective actions. 3suppliers were not approved
and 1 supplier is awaiting the result of this visit. In
2021, we made progress to embed human rights
in our supply chain management and building a
broader coalition to work on human rights and
netune our ambitions.
We are also working with our contractors to make
progress towards our climate, circularity and nature
ambitions. An example is the standardisation of
a CSR tender toolbox, which we started and aim
to nalise in 2022. We use an environmental cost
indicator (ECI) for evaluation purposes. This is based
on the methodology of a Life Cycle Assessment
(LCA) which allows us to calculate the environmental
impactdirectly into each project’s cost evaluation.
This includes the entire lifecycle assessment,
including factors such as materials used and
transport. The rst pilot using this method was
conducted in 2019-2020 related to our Hollandse
Kust Noord grid connection system. Another large
scale offshore tender IJmuiden Ver has also been
published implementing this methodology.The
offshore projects within our 2 GW programme
will use this process as well. In addition, in 2023
a new framework agreement will be set up for
various supply chain categories. Therefore, certain
categories within TenneT’s supply chain will become
more sustainable and fairer, as it also focuses on
human rights and working conditions. Further CSR
tender tools include our ‘raw material passport’,
gaining insights into aspects such as raw materials,
specic human rights requirements and nature
inclusive design.
TenneT employs a systematic approach to i.e. optimising
maintenance efficiency, using integrated activity planning.
The aim is to get the most out of our resources and people
and to find the smartest balance between building and
maintaining the grid.
Integrated activity planning involves a wide range of
departments at TenneT, ensuring that all key stakeholders
with an impact on outage planning are involved. Through
close cross-functional team involvement, detailed plans
aremade for outage windows where essential maintenance
needs to be performed.
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The Supply Chain Management team is involved to gain
knowledge about the market availability of critical materials.
technologies and skilled resources. The results are collated
and a priority is assigned to each task. This enables us to
plan and execute our maintenance in an optimal way, both
internally and also withour suppliers and contractors.
Next to integrated activity planning there are other initiatives
on an operational level that support optimal execution of
ouractivities, such as the Delivery Booster. This initiative is
focused on boosting the efficiency of resource allocation
and people for each maintenance project, by taking a
holistic view across the year and taking the smartest
approach based on availability of people, resources,
projectpriority and location. Our analytical approach to
maintenance is proving to have a positive effect, as 2020
and 2021 were excellent years for overall availability of
ourinfrastructure.
Substations replacement
An important part of our work to modernise our onshore
grid is to replace our ageing substations. To that end,
weare engaged in a programme to replace around
140high-voltage substations by 2031 in the Netherlands.
Inaddition, a further 210 high-voltage substations will be
upgraded or expanded. The use of EU-303 framework
contracts with our suppliers aims to enhance the speed
andefficiency of this work, allowing for faster procurement,
standardisation, innovation and joint growth.After an
approved design, we started in 2021 realising 4 of the 6
Proof of Concept stations. Including these lessons learned,
we have also started the preparations for 6 of the 12
testphase stations where we will apply this approach.
What could prevent us from realising our goals?
However, there are obstacles that threaten our progress.
Extreme weather events are an increasingly damaging
factor, especially visible during 2021 with severe flooding
and storms that hit our home markets in Germany and
theNetherlands. Heavy winds caused damage to our
infrastructure with 4 pylons collapsed in the province
ofGelderland. Although we managed to avert a serious
outage, the event forcefully illustrated the potential impact
ofextreme weather on our assets. It illustrates the need
foran increased focus on system resilience, which we
arepursuing.
Acute weather conditions are mitigated during the design,
construction and maintenance of our assets, e.g. in the
choice of location and the choice of materials we use.
Wetherefore monitor developments in weather patterns
togain more experience and insights related to the
scenarios and effects of extreme events. Examples of
mitigation work include our Krimpen aan de IJssel
substation and one of our pylons in a flood area. Both have
been elevated to reduce risk. Furthermore, TenneT insures
all substations and buildings during construction and
operation against risks from natural catastrophes.
Another factor that continues to delay our progress is
licensing and permitting. Limited space is available to build
and expand our grid in the natural landscape. In the current
political and regulatory climate, the majority of the duration
of a critical infrastructure project can be spent on planning
and licensing, which reduces time left for the actual
construction. It often takes eight years to achieve the
necessary permitting for a project that takes two years to
construct. If we can only move at this speed, the projects
needed to achieve the targets of 2030, even 2040, are
already running against a tight deadline.
We need to move to a reduction of the permitting time
withthe political support and consensus that this requires.
Therefore, we invite our stakeholders to participate and
consider their viewpoints involved. Whereas, economic
developments could influence the acceptance of costs
associated with the energy transition. In turn, together
withpolicy making authorities we need to build public
acceptance for our critical infrastructure work by leading
thedebate on the energy transition and the steps needed
toachieve it.
The increased competition for talent and our ongoing
needto hire more people every year, continues to be a
keychallenge. Our headcount grew over the past year,
andwitha need to continue recruiting, we are reaching
thelimit of the number of new people we can integrate into
the company each year. Also, when we hire people to work
onour growing portfolio of critical infrastructure, it can take
two to three years to train them for the needed specialist
skills and to deploy the full impact of their work. Rather
thansimply getting larger with linear growth, we need to
getsmarter, finding new ways of working, new partnerships
with our suppliers and tools, that help us deal with the
challenges in front of us.
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Similar to the scarcity of talent, we face more competition
toreach the essential products, materials and suppliers
from outside TenneT that we need to perform our work.
Precise management and demand planning across our
supply chain, as well as close relationships with key
suppliers, willbe increasingly critical to delivering our
projects on time.
In order to achieve our goals and realise the energy
transition, we need governments to help us. We require
decisive green industry policy and a European collaboration
and system integration.
In addition, our progress depends on closer cooperation
between governments, other TSOs, DSOs, large
customers, and key suppliers. Only jointly we can develop
innovative ways to provide reliable, clean, and affordable
electricity for a sustainable future. It also requires
appropriate European and national legislation and
regulations and an investment framework that enables
ustomeet the needs and objectives of society, economy
andpolitics.
Stakeholder’s acceptance for our infrastructure work is
another challenge we face, especially in the communities
where our work is taking place. The expansion of our
high-voltage electricity grid and investments in sustainable
energy solutions may significantly alter landscapes and
affect a large number of people and interests. The debate
on potential health risks related to our overhead
transmission lines and electro-magnetic fields is still
ongoing. TenneT aims to comply with rules and regulations
and take sufficient caution in the construction and operation
of our assets. We are also currently working together with
the respective authorities and other involved stakeholders
inthe process of updating our policy with respect to electro-
magnetic fields.
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“ Tackling
climate change
is a national
and global
challenge.”
“Tackling climate change is a
national and global challenge.
We will not succeed without
unprecedented levels of
collaboration and cooperation
between countries, companies
and consumers.
Transforming our energy system to be CO
2
-neutral
is key to this ambition and industry must play a key
role, both as an enabler and as a consumer. As
an enabler, we must facilitate the development of
renewable energy technologies, such as sun, wind,
smart grids, electricity storage and green hydrogen,
making them ever-more cost efficient.
As consumers, we must create processes and
products that customers want, with a view to
achieving climate-neutrality by the middle of this
century. The level of climate ambition set out in
the European and German 2030 targets does not
allow us to move at a moderate speed in those
sectors which are crucial to the energy transition.
We will have to act much faster on renewable
energy, grids and other infrastructure which help
consumers reduce their CO
2
emissions. This unique
transformation of the energy system offers many
opportunities, but also brings risks in the short and
mid-term. Minimising these risks is a challenge for
industry and politics.”
Holger Lösch
Deputy Director General of
the Federation of German
Industries (BDI)
BDI works together with TenneT to
ensure German industry remain export-
driven and innovative and promotes
aclimate-neutral industrialised future.
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Technical data:
Circuit length (kilometers)
2020: 16
2019: 15
2020: 468
2019: 462
2020: 14
2019: 13
2020: 23,866
2019: 23,232
2020: 27,000
2019: 26,000
17
substations
475
completed offshore
connections
14
pylons
approximately
27,500
24,518
interconnectors
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Create a sustainable workplace
We regard our 6,620dedicated internal and external employees as our most valuable
assets.Our talented teams are at the heart of our efforts to meet the challenges ahead
ofus,as we accelerate on our path to contribute to the European energy transition targets
of2030 and 2050.
However, the scale of work required to achieve these
targets and ultimately build a climate-neutral Europe,
requires the deployment of a large amount of new talent.
The scale and urgency of this need will grow particularly
fastin the second half of this decade.
Already, our growth story has been remarkable. Since 2008,
we have grown from approximately 600 to 5,168
internalemployees, helping us realise annual investments
that have increased fromapproximately EUR 275 million
in2008 to EUR 3,969million in 2021. And, with ambitious
targets ahead of us, this growth will continue.
We must be responsible in the way we grow, especially
regarding our people. We can’t simply keep adding more
people to our organisation, as more people doing the
samewill not transform TenneT’s ways of working to the
next level. Our growth needs to be realised in a responsible
manner and at a pace that achieves the output we want
todeliver in the best possible way.
Not only does the demand for talent make it increasingly hard
to find the people we need – especially in specialist technical
roles – but it is also becoming more challenging to properly
onboard and integrate new people into the organisation.
We recorded a higher absentee rate
than in 2020, mainly due to the impact
of the pandemic. Considering these
unusual circumstances, we understand
the reason behind a higher absentee
rate as a result of this.
StatusPerformance
NL 3.1%
GE 2.6%
Trend
Healthy workforce
Absentee rate
Netherlands / Germany
2021 NL 3.1, GE 2.6
2020 NL 2.7
2
, GE 2.5
2019 NL 3.0, GE 3.0
Regrettably, there were threefatal
incidents in 2021. This also impacted
our overall performance and we did
notmeet our target this year.
Target StatusPerformance
5.8 4.5
Trend
Safe workforce
TRIR
(including contractors)
Our efforts to attract a diverse workforce
have resulted in reaching our target for a
diverse workforce.
in 2023
Target StatusPerformance
31% 30%
Trend
Diverse workforce
Diversity (% female
inow of total inow)
Our performance in 2021
1 The 2020 TRIR is presented based on the previous definition. When applying the updated definition the 2020 TRIR is 5.4.
2 The 2020 absentee rate for the Netherlands is presented based on the previous definition. When applying the updated definition the 2020 absentee rate is 2.7.
2021 2020
4.1
1
2019
4.85.8
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Organise for our people to perform at their
bestandto work as one company
The TenneT transformation that was initiated a few years
ago helps to enable us to drive the energy transition in a
better way and become a more effective, innovative and
exciting place to work. Responsible growth is important in
this process, as it is about enabling TenneT to achieve its
business and societal objectives in a way that is future
proof.In the years following the transformation, we have
worked hard to achieve this and significant efforts have
been undertaken to create further integration of our
operations in both Germany and the Netherlands. The
effects of this are visible on many levels in our organisation
with integrated teams and leadership.
We are convinced that now is the time to use our ingenuity
and entrepreneurial spirit to increase our delivery capacity
and capability. We aim to reduce bureaucracy and
administrative burdens, streamline our business, attract
theright talent and install better performance management
processes. We want to build leadership that empowers,
inspires, and creates opportunities for growth and learning.
This will allow us to attract more and diverse talent and
become the preferred customer of our supply partners.
And as we progress, we aim to ensure more efficient
structures for onboarding new talent at a sustainable rate.
This will prepare the foundation we need in the years ahead.
In addition, we are evaluating how we will manage new
ways of working post-COVID-19. The current ‘new normal’
way of working provides an opportunity to assess the
approaches that will deliver the most engagement and
satisfaction for our employees and the most value for
TenneT. This includes both plans for remote work and smart
ways of collaborating virtually. These topics and the social
implications on our employees and organisation are
regularly discussed with the respective works councils
andTenneT leadership.
In 2021, our cultural transformation continued to ensure that
our people are engaged in our strategy, collaborate in the
most productive way, and that our leadership teams are
equipped to support in this process.
Employee engagement index
As we transform TenneT and create a future-oriented and
sustainable workplace, it is important for us to track our
progress through regular employee surveys. Our currently
annual employee survey measures our employees’
emotional and behavioural attachment to TenneT, the extent
to which their work environment supports their productivity
and performance and their overall wellbeing at work.
Wepay close attention to this survey as we realise that in a
fast-growing organisation, cultural change and engagement
are not easy to come by. The latest survey was performed
at the end of 2021 and will set the new baseline for the next
two years. The result is a slight decrease as we recorded an
80% employee engagement score in 2021, compared to
82% in 2020. The insights obtained from this survey will
help us in the next months to progress in areas where there
is room for improvement.
Future-proof our organisation by recruiting
the best talent
Despite the challenges to recruit a significant number
ofpeople in a highly competitive labour market and the
difficulty of onboarding and integrating large numbers
ofpeople during COVID-19, we were able to welcome
1,316new internal employees to TenneT in 2021.
Nearlyallneeded to be onboarded virtually, posing a
significant challenge that we mastered well considering
thecircumstances. We expect to continue this pace of
recruitment, while keeping in mind the importance of
safeand effective onboarding. We have set a maximum
ofaround 700 additional FTEs for 2022 and expect a
similarnumber of employees to join us annually for
theupcoming years.
In certain roles finding talent can be especially difficult.
Forsome specific technical functions, talent is extremely
scarce. In other roles, such as technicians working in the
field, it can take up two to three yearsto train someone to
the required level, not to mention the recruitment time itself.
The challenge of recruitment makes it even more
essentialto bring out the best in our current workforce,
withadditional training for their current role and to help
themdevelop to new positions. This also helps to retain
theright people.
To access talent we continue relations with universities
andother educational institutes and establish new ones.
InGermany, we partnered up with the University of Bayreuth
in October 2021 to facilitate knowledge exchange and joint
research projects. In the Netherlands we have a programme
called Power Minor. This is a unique partnership between
TenneT and the Hogeschool van Arnhem en Nijmegen,
TheHague University of Applied Sciences and the
Hogeschool van Amsterdam. It takes students behind
thescenes of electricity production, transmission and
distribution, with guest lectures from experts in the energy
sector and helps to make the link between engineering
theory and its application in a career at TenneT. In 2021,
approximately 30 students participated in this program.
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We also expand the geographic reach of our search,
usingour International Trainee Programme, and targeting
candidates to train for our skilled field operations roles,
suchas our High-Voltage Trainee programme.
Build leadership that empowers
Central to the success of TenneT is embedding and
broadening our leadership capabilities to enable our leaders
to be in the driver seat of our transformation, building new
ways of working that are open, curious, courageous, and
focused on learning and growing. To this end, we have
commenced our Lead Your Team programme. With an
emphasis on people and change management, this
programme is based on the competencies our leaders
andall employees will need to meet the challenges
ahead.A mandatory requirement for all leaders of the
newTenneT departments, Lead Your Team is designed
tobe a shared journey, helping to embed our principles
ofownership, courage and connection, and collaborating
with leaders towards anew culture with new behaviours
and ways of working.
In 2021, five additional learning blocks were included in
theprogramme: Health & Vitality, Inclusion & Diversity,
Leading in Complex Environments, Feedback and Magic
Mirrors. Safety is fully integrated into our leaders training,
asall skills learned within the learning blocks of Lead
YourTeam can be put into practice in the Safety
LeadershipProgramme.
As part of a learning organisation, we run several
campaigns that immerse our people in ourculture and
strategy and build a full understanding ofour purpose,
promise and principles. To further embed our company
strategy within all layers of our organisation, we also
organised a strategy event where we engaged
employeesineach pillar of TenneT’s strategy.
Safety at TenneT
TenneT has an important role to play with respect
to the energy transition. The ambitions of the
governments and society we serve are very high, and
TenneT and others in the energy sector need to deliver
in an increasing rapid pace. The transition towards a
brighter energy future comes with new demands, more
complicated services and projects and an accelerating
growth of our organisation and involved contractors.
Inthis context, safety needs our energy, now more than
ever before. To do this, we are launching a new safety
strategy with concrete actions for the upcoming years.
The strategy does not only focus on occupational safety,
but also on psycho-social, external and electrical safety.
Our safety strategy 2026 consists of four pillars: solid
basis, safety culture, contractor management and
continuous improvement. For each of these pillars,
focus areas with corresponding actions have been
dened. These actionsinclude the enhancement of
apro-active safety culture and the implementation
of an occupational health and safety management
system. Furthermore, attention will be paid to
contractor management with focus on creating
partnerships and improving safety performance within
supply chains. Another pillar aims at increasing the
learning potential from positive and negative events
inorder to ensure continuous improvement.
To push our safety culture, we introduced our Safety
Leadership Program, with the motto ‘Safety needs
ourEnergy’, to enhance a pro-active safety culture
within TenneT. We see this as an essential step.
Itprovides a behavioural framework in order to develop
a positive and stimulating environment in which allour
employees and (sub)contractors can work safely.
This is supported with a program to make it an integral
partof our leadership, behaviour and processes.
We continue to measure our own safety culture
using the Safety Culture Ladder (SCL). This is a
NEN standard for assessing safety culture within
organisations and indicates the maturity of a
company in the eld of safety awareness, attitude
andbehaviour. TenneT has been recertied at level 3
(out of 5) in 2021. We aim for level 4 within the next
years. Some pilot projects, for example, Noord-West
380 kV from the Large Projects Netherlands unit,
are already taking actions in this regard. We aim to
achieve 100%coverage ofour order volume which
is executedby our contractors executing high and
medium safety riskactivities. We are proud to state
that per year-end 2021 almost 92% of our order
volume relates to contractors that were certied
orwere in the process of getting certied.
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Bring out the best in our people in an inclusive
andsafe environment
Safety
We measure our safety performance by means of
theTotalRecordable Incident Rate (TRIR) KPI, which
representsthe number of accidents per million hours
worked. All incidents, near misses and unsafe situations are
recorded via a central reporting and documentation system.
Incidents that require medical treatment, affect the ability to
work orresult in at least one day of absence, as well as fatal
accidents are included in the TRIR. Regarding these types
of incidents, we recorded a TRIR (related to our internal
andexternal employees) of 5,79 in 2021, which was
unfortunately above our target value of 4.5 and also
abovethe 4.1 recorded in 2020.
The fact that in 2021 three people working on our projects
suffered fatal injuries is unacceptable and deeply regrettable.
The first fatal injury occurred on 7 April 2021, where one
ofour contractors died as a result of an accident during
theinstallation of a reinforcement cage while performing
foundation work on the Wahle-Mecklar overhead line project
at a site located near the municipality of Woltwiesche,
Germany. Another fatality occurred on 13 September 2021,
one of our contractors was victim of a fatal accident during
the clearing of a construction site for the Emden/ Ost-
Conneforde grid expansion project in the municipality of
Großefehn, Germany. And finally, on 2 December 2021,
oneof our contractors was fatally injured in an electrical
accident while performing works on a transformer house
atthe Borken substation in Hesse, Germany.
Following each incident, we responded by strengthening
our safety culture for all employees and (sub)contractors
and conducted an incident investigation together with the
involved companies. Directly after the incidents in
September and December, we held a ‘Safety Stand Down’
at all TenneT locations, including the home-offices. During
this planned work stoppage and in open dialogue,
managers and employees discussed everyone’s safety,
working together to assess what could be improved.
We are aware that focus and effort on contractor
management is key. Contractors bring in valuable expertise
and capacity needed to make the energy transition happen.
This requires partnerships based on trust, transparency and
mutual respect to achieve efficient operations and a good
safety performance. Aligned with our vision ‘Safety needs
our Energy’, we are building a pro-active safety culture. This
philosophy is now piloted in the EU-303 framework contract,
with the scope of building and maintaining substations
onshore NL, with nine of our international partners.
Dealing with the COVID-19 pandemic also posed
challenges in 2021. TenneT’s prevention team and internal
working groups performed risk assessments defined
measures, such as hygiene concepts to protect the
employees and ensure business continuity. This has
successfully prevented the spread of infections among
theworkforce.
Inclusion & Diversity
Inclusion and diversity (I&D) is critical for TenneT to attract,
retain and develop talent and ensure future success. TenneT
aims to reflect the society it serves, by being inclusive as an
employer, promoting diversity and making our people feel
safe and supported at work. In our sector, where we face
the technological and engineering challenges of the energy
transition, diverse talents and perspectives help us find the
solutions and responsible growth we need.
We believe that an inclusive workplace culture is the
prerequisite for diversity. We also strongly believe and
experience that inclusion and diversity leads to more
innovation and creativity as well as sustainable success.
Employees feeling accepted, heard, worthy and safe are
emotionally more engaged.
Moreover, we are becoming a more diverse organisation
aswe extend our recruitment efforts beyond the
Netherlands and Germany. We have a target to hire at
least10% non-Dutch and non-German staff. As we need
torecruit hundreds of new employees every year, we have
tohire from a more diverse pool to find the talent we need.
Recruiting professionals with non-Dutch and non-German
passports is challenging as national tax laws inside and
outside Europe are not conducive to hire international
employees, unless they are willing to settle in the
Netherlands or Germany.
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5,168
Internal
employees
1%
17%
32%
24%
20%
6%
Nationalities
63
External
employees
1,452
Diversity at TenneT
25% 75%
9%
Non German / non Dutch
employees newly hired
As of this 2021, inclusion and diversity is part of the
leadership development program in the Lead Your Team
program. This learning block shows that for TenneT inclusive
leadership is the standard unleashing the potential of
contrasting perspectives and backgrounds due to different
gender, ethnicity, personality, education and age mix.
In addition, we also took steps to embed an I&D focus into
every step of the employee journey. This goes all the way
from how we attract candidates and how we remove
unconscious bias from our recruitment process, to how we
remove bias from job selection promotion decisions and
take learnings from exit interviews. We have requested the
Dutch Central Bureau of Statistics to research the cultural
diversity of our Dutch workforce via the ‘Barometer Cultural
Diversity’. In decisions with consequences for rewards and
benefits, we strive for equal pay for equal work. This is why
in 2021 TenneT has conducted its first investigation into a
gender salary gap. The first results of this assessment
indicate that apotential gender salary gap might existin the
Netherlands and in Germany. This gender salary gap could
have been created over the years by legal and cultural
differences in both countries. In 2022, we will continue to
monitor this gender salary gap and gain more insight in
which areas it is more likely to occur.
Diversity charter
In 2021 our CEO Manon van Beek and COO Tim
Meyerjürgens signed a new diversity charter on behalf of
TenneT in the Netherlands and in Germany. This is a
manifesto in which organisations declare their commitment
to more diversity in the workplace. The aim is to overcome
differences between employees and to recognise and utilise
the talents of all individuals. The diversity charter also gives
us a platform where we can exchange ideas and learnings
with other companies. Thus, we are committed to
continuously working on I&D and also to transparently
report on our I&D progress through Key Performance
Indicators (KPIs), such as percentage new hires with
non-Dutch and non-German nationality, percentage female
new hires and percentage women in leadership positions.
Our KPIs related to I&D have been updated in 2021 to
better align internal and external reporting.
For example, we promote diversity through our partnership
with TENT Partnership for Refugees (in Germany), and
Refugee Talent Hub and Talent for Transition (in the
Netherlands). Talent for Transition launched ‘Diverse Energy
Talent’, which supports diverse energy talents in a
traineeship in the energy industry. We employed three
trainees from ‘Diverse Energy Talent’ in 2021. In addition,
we employed seven newcomers via Refugee Talent Hub on
work experience positions. Of the newcomers starting on
such position in 2019, two have found permanent
employment at TenneT in 2021.
Additionally, we have made the first steps working together
with Stedin and Alliander on I&D. This was kicked-off during
events in Arnhem, Bayreuth and Lehrte on Coming Out Day.
What could prevent us from reaching our goals?
The need for projects that build, maintain and replace the
grid is expected to intensify. A conflicting situation could
arise where (sub)contractors intendedly or unintendedly
have to balance safety requirements versus on-time project
delivery. Not inhering to TenneT’s safety protocols could
increase the risk of unfortunate injuries or preventable
fatalities.TenneT has zero tolerance for harm to people from
exposure to health and safety threats. Hence education is
intensified to educate all stakeholders, making no difference
between internal and contractors, about the importance
and adherence to all safety regulations whether working at
aconstruction site or at the office. At construction sites the
safety regulation of TenneT supersedes the one of the (sub)
contractor and if an unsafe situation is about to happen, we
speak up and stop.
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The COVID-19 pandemic is unfortunately a risk factor still to
consider. While TenneT always aims to provide a safe work
environment, mental health related problems, such as a
burnout, are emerging as a potential risk. Working from
home for the last two years significantly reduced social
interactions or potentially introduced a more complicated
work/life balance.TenneT continuous to provide numerous
social engagements online, education and offers specialised
help for employees experiencing problems. When national
regulations allow for it, in conjunction with TenneT’s own
policy, more physical options will be available for social
interactions while still maintaining the safety for all employees.
To realise our projects, a further growth of the organisation
is required by hiring and retaining new talent. This could
lead towards two potential limiting factors.Firstly, general
scarcity in the market and limited availability of specialised
skills could lead to a highly competitive market. A significant
shift is noticeable in which traditional energy related
competences are replaced by new competences that most
organisations, unrelated to energy, also require because
ofinstance the increasing digitalisation. Considering
thecompetitive market, applicants do not only consider
theprimary benefits, but give more weight to internal
succession and ambition chances, company image and
theimplementation of the new way of working (e.g. partially
working from home).Secondly, it is a delicate balance
ofgrowing responsible. Growing too fast could result into
operational inefficiencies, overcapacity of the onboarding
process or potential loss of the TenneT culture.TenneT
continuously aims to improve its image as an attractive
employer, now and in the future, by listening to applicant
feedback and to act on changing market conditions.
Furthermore, active participation in career events and
reaching out to students at universities creates awareness,
stronger commitment and helps to attract new competences
other organisations are in competition withLastly, the
‘International Trainee Programme’ and the ‘HighVoltage
Trainee Programme’ are successfully continued.
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“ Ensuring
health and
safety for
ourpeople
isvital.”
“We are proud to work closely
with TSOs such as TenneT – they
are making the Energiewende
possible. Our people are at the
centre of our everything we do.
Ensuring their health and safety
is vital. We have worked closely
with TenneT on improving safety
for many years. In November we
became the first overhead line fitter
company in Germany to achieve
Safety Culture Ladder Level 4.
At our Omexom Institute in Korbußen, all our
overhead line fitters and subcontractors’ complete
extensive annual safety trainings. These are
developed in partnership with the Chamber of
Industry and Commerce. TenneT’s junior project
managers and construction inspectors also have
regular trainings at our institute. This is part of
our commitment to ensure everyone goes home
safely every day. We are guided by VINCI Energies’
‘SAFETY Excellence’ initiative, launched in 2017.
Thiscombined with our progressive safety culture,
means we openly share lessons learned and
encourage everyone to lead by example.
Occupational accidents and illnesses are not a twist
of fate, they are preventable.
We are committed to ensure the health and safety
ofeveryone at VINCI Energies and our partners.
Thisis a core value for us.”
Frank
Westphal
Managing Director at VINCI
Energies Deutschland Industry
& Infrastructure GmbH.
VINCI is a world leader in energy and
construction and partners with TenneT
in planning services, erecting overhead
lines, building transformer stations and
maintaining North Sea offshore plants.
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Create value to transition to a climate neutral economy
As a European TSO, we contribute to a greener energy future by driving the energy transition
and ensuring our high-voltage grids are future proof. This allows us to operate an electricity
system relying on renewable energy sources which is the core ofour purpose: to connect
everyone to a brighter energy future.
We want to achieve this by delivering a grid that contributes
to a climate neutral economy. We have chosen to report
onour progress in this area by disclosing the equivalent
number of households that in theory would have been able
to receive 100% renewable electricity. This is one of our
keymetrics to measure our societal impact. For more
information on our impact in this area, please see the
box-out in this chapter. Next to our ambition to drive the
transition towards a greener future, we also aim to lead as
agreen and responsible grid operator in how we conduct
our own business. This is an integral part of our strategy
and includes climate, circularity, and nature friendly
ambitions, which we aim to achieve by 2025.
For us, a greener energy future does not mean just building
more assets on land and sea. The sharp increase in
demand for renewable electricity, the required pace and
conditions of a grid that facilitates these developments,
challenge us to consider how to realise growth in a
responsible way. On the one hand, we need to deliver a
decarbonised energy system to drive the energy transition,
with the assets that enable a clean energy future. On the
other hand, we need to build, maintain and operate our
assets in a responsible way, taking into account our impact
on nature, climate and social aspects. We aim to make
responsible choices to ensure that we drive the energy
transition as well as lead as a green grid operator.
1
To be fully climate neutral (SF
6
emissions, grid losses, energy use offices, stations and mobility of our employees) in 2025.
2
In 2025 25% less impact of virgin copper use.
3
In 2025 25% less impact of non-recyclable waste.
• (Net) impact on nature
• Environmental incidents
We consider every incident to
be one too many. However,
we are pleased with the
positive nature measures and
a reduction of almost 66% of
oil leakages.
Target StatusPerformance Trend
Nature
Zero impact
on nature
in 2025
This year, we have made
progress on gaining more
insights on the use of virgin
copper and the percentage of
non-recyclable waste.
• Reduction of virgin copper use
• Reduction of non-recyclable
waste
Target StatusPerformance Trend
Circularity
25%
reduction
in 2025
2,3
We have made steps to
become more climate-neutral
in 2021, by increasing our
percentage greened of
our carbon footprint from
62.0%to 69.0% compared
tolast year.
CO
2
footprint of our grid losses,
substations, offices and mobility
(net emission in tonnes of CO
2
)
Target Status Trend
Climate
Performance
Climate
neutral
in2025
1
Our performance in 2021
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Climate
As a responsible grid operator, we aim to reduce our own
carbon footprint. This is why we have clear targets for 2025
and next to this, we have developed additional targets for
2030. Our reported carbon footprint mainly relates to
emissions from our own operations, where grid losses are
the largest source of emissions. We also report on
emissions that are outside our own operations, such as
elsewhere in our value chain. In 2021, 69.03% of our
carbon footprint has been ‘greened’, which exhibits our
progress in achieving our goal to be carbon neutral by
2025.In addition to this, wetook a major step forward in
our climate ambitions by formulating so-called ‘Science-
Based Targets’ for 2030.These targets are in alignment
with- and an extension of our current 2025 climate targets.
The Science-Based Targets initiative (SBTi) helps
companies to align theirCO
2
emission reduction goalswith
the Paris Agreement. In 2021,we committed ourselves to
reducing direct emissions (scope 1 and 2) by 95% by 2030,
from base year 2019. We also committed ourselves to
reducing our indirect emissions (scope 3) from purchased
goods and services and our capital goods by 30%. This
means we are taking responsibility for scope 3 carbon
emissions that arise in our supply chain, as a result of what
we purchase and contract, starting from 2021. This relies
on supplier engagement and a collective outlook on how we
can collaborate with our value chain to reduce our collective
emissions. We have identified three particular ‘hotspots’ for
attention: purchased capital goods (such as cables and
transformers); the services we procure to do our own work
(including construction and civil works) and the energy used
in our value chain (including fuel used by contractors and
raw-material suppliers).
In 2021 we have already started to reduce our scope 3
emissions with other partners in the supply chain. As part
ofa Netbeheer Nederland partnership and the Groene
Netten coalition, we set up an internal carbon price (ICP)
mechanism along with other infrastructure parties. We
started at 50 euros/tonne for the year 2021 and analysed
the impact of our investment decisions and procurement.
The impact analysis indicated that taking penalties into
account related to SF
6
are a potential area where there
ICPinstrument could be effective.
Grid losses
As approximately 95% of TenneT’s CO
2
footprint is due
togridlosses, this is a priority area for our CO
2
reduction
efforts. Grid losses inevitably occur during power
transmission and are equal to the difference between
electricity fed into the grid and the withdrawal. As the length
of our high-voltage connections increases, the amount of
grid losses grows. There is a trade-off here, as we need
todevelop and build more and longer high-voltage
connections, such as Westküstenleitung or Zuid-West
380kV, which function as green electricity ‘highways’ that
support the energy transition, but this could have an
adverse impact on the amount of grid losses. This effect is
based on several variables, such as the technology at hand.
Societal impact we enable by driving the energy transition
The largest impact that TenneT has in terms
ofclimate action is to enable the switch from a
fossil fuel-driven economy to a climate neutral
economy by connectingrenewable energy sources
and transmitting the produced electricity. We
dene our key impact metric in this area as the
equivalent number of households that in theory
would have been able to receive 100% green
electricity.Wehavechosen this metric since it is
ametric that is understood by many. It is important
to realise the majority of the electricity consumption
comes fromindustry.
We estimate that by the end of 2021 we have
enabled the theoretical equivalent of9.2million
households to receive green electricity. The total
volume includes renewable electricity generated
forindustrial sectors and export.
These climate gures are not just achieved by
our own operations, but also by our partners in
the valuechain, such as electricity generation
companies and distribution system operators
(DSOs). By working together, we avoided 10.7 million
tons of CO
2
equivalents in 2021. More information
onthese impact metrics (such as the methodology)
is included in our additional CSR data document.
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Also, while grid losses might increase, the impact of these
grid losses on our gross carbon footprint could be limited
due to a higher amount of renewable energy sources in the
grid mix.In 2021, our grid losses increased to 5,604 GWh
in 2021, compared to 5,530 GWh in 2020.
To reduce ourgross carbon footprint, we ‘green’ our
electricity consumption with the use of guarantees of origin.
In 2021, we compensated for 100% of the grid losses in
theNetherlands. In Germany, to continue with our efforts
togreen our grid losses, we have extended a pilot project
from 2020 into a benchmark: each year certificates of origin
are to be bought in the amount corresponding to at least
55% of the prognosed German grid losses.In 2021, we
purchased certificates of origin equal to55% of our
Germangrid losses. The purchase and cancellation of those
certificates is done in the Netherlands, since its currently
notlegally possible to do both in Germany. By doing this
wegreen our grid losses on an overall company level.
Byhaving a dialogue with our regulator in Germany, we aim
to reduce our carbon footprint related to our grid losses in
Germany directly in the future.
Mobility
Our approach to reduce our carbon footprint is to decrease
emissions where possible, to ‘green’ our emissions where
this is not possible and to compensate for our carbon
footprint as the final option. To reduce our carbon footprint
we have adopted a new action plan to lower the
environmental impact of our mobility, encouraging our
employees to travel less and if they do, touse green
transportation. Due to the COVID-19 pandemic our
employees have travelled less and many have worked
fromhome, which resulted in mobility emission savings.
Foremployees working on our projects in the field, we
aremaking our vehicle fleet more sustainable with electric
vehicles and plug-in hybrids. We have introduced a new
mobility policy to incentivise our employees to lease electric
cars in both the Netherlands and Germany, encouraging
them to reduce their emissions. In Germany, we are
developing a bike-lease scheme and, if successful, we
willadd it to the existing bike policy in the Netherlands.
Promoting sustainable travel is part of a wider commitment
through the “Anders Reizen” initiative to halve the CO
2
emissions of all TenneT’s business travel by 2030.
Offices and substations
The use of our offices and substations has an impact on
ourcarbon footprint. To mitigate this carbon impact, we
have purchased green gas for our German offices as of
January 2021. With this, we have been able to green the
gas use of our offices in both the Netherlands and Germany,
next to the electricity use which we already greened. For
thereplacement of our substations we strive to decrease
the carbon footprint by reducing climate impact in design,
for example by using solar panels, insulation measures and
LED lighting where possible. We have installed solar panels
on our land stations at Hollandse Kust Noord and will use
the generated electricity for own consumption.
SF
6
gas
Sulphur hexafluoride (SF
6
) is a gas used by TSOs in high-
voltage (sub)stations and distribution systems. Thisgas
isused as a highly effective insulator and extinguisher
inswitching installations, allowing these installations to
bemore compact which is often necessary in built-up
environments. SF
6
is also a greenhouse gas, over23,500
times more polluting than CO
2
. Although SF
6
accounts for
approximately 1% of our climate footprint, any leakage is
damaging to the environment, which is why we try hard to
minimise and avoid leakages across our grids. We have also
accelerated our efforts to explore alternative solutions in
some of our projects. For example, substation Maasbracht
will include alternative SF
6
solutions for some assets that are
being developed in close consultation with the market.
716,063
Net carbon
footprint
tonnes CO
2
e
2,312,139
Gross carbon
footprint
tonnes CO
2
e
Carbon footprint
Indi
rect
Upstream
0.38%
Scope 3
1.02%
0.18%
0.08%
94.35%
3.80%
0.19%
0.38%
SF
6
leakage
Lease vehicles
Gas consumption
Grid losses
Electricity use stations
Electricity use offices
Travel and transport
Di
rect
Own operations
1.27%
Scope 1
Indi
rect
Upst
ream
98.34%
Scope 2
69.0%
Percentage
greened of our
carbon footprint
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As such, we are also working with some of our suppliers
todevelop SF
6
free Hybrid-Gas Insulated Switchgear
(H-GIS) solutions for our extra high voltage connections. We
stimulate this research as the market needs to be stimulated
to find an alternative for SF
6
.
This year, we have announced additional targets for
reducing SF
6
, starting from the year 2022. These include the
stipulation that new assets will be two-thirds SF
6
-free by
2030, while we maintain our leakage rate for all installed
assets at less than- or equal to 0.28% per annum. We are
also developing a roadmap with intermediate targets for
2030 at different voltage levels. In 2021, we were able to
meet our target (0.28%) this year, with a leakage rate of
0.22%, which was lower than the SF
6
leakage rate in
2020(0.24%).
Linking finance to our climate performance
To make progress against our climate ambitions even
morevisible, we have linked our financing costs to our
climate performance. Secure access to finance is essential
to ensure that we maintain the pace of our investment
portfolio. An example of this is our EUR 3.3 billion
sustainable Revolving Credit Facility (RCF), which is linked
to sustainability performance indicators and targets.
Inpractice this means that, depending on the realisation
ofour climate-related KPIs, a discount is applied to the
interest margin on the RCF. This is related to the green
percentage of energy use of our stations (100% in 2021
vs100% in 2020) and our offices (100% in 2021 vs 81%
in2020). It is also linked to SF
6
(refer to SF
6
section above)
andto the net carbon impact of mobility per employee
against the total number of employees (1.2 in 2021
compared to 2.1 in 2020).We compensated for a part of
our leaked SF
6
to reduce our CO
2
footprint through carbon
offset certificates. We chose for a project that helps to
phase-out fossil fuels in Colombia by opting for energy
created from renewable biomass.
Nature
As we build, maintain, and operate our assets in the
naturallandscape, we have an unavoidable impact on
nature. However, we put in significant effort to reduce
ournegative impacts and create positive impacts as well,
aiming to reduce our net impact to zero. To aid this process,
we developed a new code of conduct in 2021 which sets
out rules and guidelines on how our maintenance and
construction works must be carried out in accordance with
the Nature Protection laws, to ensure species of flora and
fauna are protected. We track the number of environmental
incidents and the litres of oil leaked from our cables.
Wemonitor and track our environmental incidents,
whichincludes incidents except for SF
6
related incidents as
we gain more meaningful insights from that perspective by
the total volume of leaked SF
6
.Unfortunately, in 2021 there
were instances where we had a negative impact on the
natural environment in areas where our assets are located.
During the year, we recorded81environmental incidents
and 1,798of litres of oil that leaked from our cable systems.
An example of an environmental incident is related to the
firethat occurred near our Louwsmeer station in the
Netherlands, where also oil leaked and where we needed
toremediate the soil. This is why we developed a metric
related to the repair time of these cable systems, which
weaim to start reporting on from 2022 onwards.We regret
thatthese incidents occur. We strive to follow up on these
incidents appropriately and aim to learn from the root
causes to avoid them happening again. This will provide
uswith more information that can help us to take
appropriate actions.
We are developing a roadmap for nature to support us in
identifying opportunities where positive nature measures
can be implemented. The roadmap makes it easier for us
toidentify high impact positive measures and thereby scale
up our positive impacts to reach our nature ambition.
Furthermore, in our ambition to mitigate our negative
impacts and where possible also create positive impacts,
we request in our investment plans to include biodiversity
a‘Commitment to Nature’ paragraph. This includes a
description of the anticipated impact on nature, mitigating
actions to minimise impact and measures to create a
positive impact on nature.We are pleased that in
2021more investment documents for our projects
contained a paragraph on their ‘Commitment to Nature’.
In2021,87.5% of our G2 documents included a
‘Commitment to Nature’ paragraph.
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Highlights on our high voltage stations
In 2021 we stopped using weed-killing pesticides (such as
RoundUp) on our high voltage stations and replaced them
with new and experimental solutions, such as lawn tiles that
allow vegetation to grow through them or succulents (for
example in our Hengelo-Oele station). The use of succulents
inhibits the growth of weeds, but also lowers the site
temperature and stimulates biodiversity.
Another biodiversity-boosting measure is the use of sinus
mowing for the grasslands at our sites. This method of
phased mowing was developed with the DutchButterfly
Conservation and aims to increase the biodiversity of
insects and pollinators. With sinus mowing the vegetation
ismowed in a pattern that follows the sinus wave leaving
apart of the vegetation (ca. 40%) intact. We are now using
this method at36stations covering a total surface space
of43 hectares.
Highlights on our cable and line connections
Birds are an important concern for biodiversity around
ourassets which is why we have several bird-proofing
measures along the entire length of new and upgrades
lines.As our land stations near the coast can be a fenced
and predator-free safe haven for birds, we have developed
a coastal breeding birds' protocol. We are also assisting
Staatsbosbeheer and SOVON Dutch Centre for Field
Ornithology with their research on rare species that breed
inour high-voltage pylons. Furthermore, Specialists from
SOVON identified the most risky high voltage connections
for bird collisions which helps us gain insight.
We aim to boost habitat development around our cable and
line connections. For example, we are adapting some cable
corridors to accommodate low-growing heather in Boxmeer
which fosters the habitat of a rare butterflyspeciescalled
Ilex Hairstreak. Along the A7 motorway between Bolsward
Nature measures
Offshore platforms Line and cable connectionsHigh-voltage substations
Offshore
wind farm
Wind farm
Offshore
platform
TenneT
offshore grid
TenneT
onshore grid
High
voltage
substation
High
voltage
grid
Converter
station
Sea cable
Cable
connections
• Nature inclusive design
such as fish hotels (1)
Sea cables
• Eco scour protection (2) • Honey highway (5)
• Vegetation management
such as
flowerlines (6)
• Bird protection measures
to avoid collisions such as
‘Varkenskrullen’
• Ringing of birds (research
purpose)
• Coastal breeding zone
protocol
• Sinus mowing (3)
• From Gravel to Green; the
use of Sedum plants (4)
• Green Corridors
• Stopped using pesticides
• Green roofs on our
substations
• Bee- and insect hotels
2
1
3
4
5
6
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and Heerenveen, where TenneT is laying a cable connection
of approximately 30 km long, we have sowed flowers on
several strips to create a ‘honey highway’. In Germany,
along the Stade-Landesbergen trajectoryecological
vegetation management helps to create new habitats and
foster biodiversity. In the planning phase of the new line,
weintroduced this concept to the landowners of forests
affected and persuaded several of them to participate.
In addition, and in close cooperation with local governments
and private stakeholders, Stade-Landesbergen created a
landscape plan for the new Mehringen substation. This
creates a green corridor around the station that will also be
enriched with other nature measures. Consequently, the
substation will be more integrated in the landscape and
create a green zone between villages and the station.
Highlights offshore
Offshore, we aim for nature inclusive design when
constructing our assets. For example, we have installedfish
hotels at the foundation ofHollandse Kust Noord. We have
also implemented Eco scour protection as a pilot in our
Hollandse Kust Zuid project. We have replaced the layer
that is usually made of granite with calcareous rocks, which
provides a safe breeding space for fish.
Circularity
We need copper, steel, aluminium, and many other raw
materials to expand our grid. Although we cannot do
without these materials, we aim to reduce our impact
through circularity, re-using raw materials and components
as much as possible, and minimising waste. We focus on
copper, as it is becoming increasingly scarce, and we
havea high dependency on it in our operations.
We have raised our circularity requirements in some of
ourtenders. For example, our suppliers must provide
evidence of which percentage of their materials are
recycled. Circularity requirements like these will also be
partof our sustainable tendering toolkit.
In 2021, we continued to work on gaining more insights into
the use of virgin copper and our non-recyclable waste. Last
year, we learned more about the main categories of assets
where we make use of virgin copper (such as cables and
transformer stations) and on the different data sources to
collect data on copper purchases. This helped us to
assessa range related to the percentage of purchased
virgin copper in 2020. This year we have been able to refine
this assessment and we were able to gain more insights by
collecting more information, such as raw material passports
from suppliers for more categories. Our assessment now
includes insights of transformers and cables.
Our analysis includes assumptions and extrapolations,
andis partially based on data points from our base year
assessment. We estimate that in 2020 around 37.5% of
ourpurchased copper was recycled and in 2021 this was
slightly less, around 34%. We believe that based on the
results of both years’ assessment, that, when the full
analysis is completed, it will indicate that the percentage of
recycled copper will range from 25-40% of our total copper
purchases. In the next years we will aim to further improve
our analysis and use these insights to discuss with our
suppliers how we can increase the use of recycled copper
in our assets. An important step was taken in 2021, when
the requirement to deliver recycled copper in our assets
was included in one of our 2 GW tenders.
For waste we have performed a similar analysis, where
wewere able to gain insights into more parts of our waste
in more parts of our organisation. This year’s assessment
includes insights for our offices, onshore- and offshore
operations, and onshore projects. Our next step is to
include data of our offshore projects and to get a complete
picture of our onshore projects. This year’s analysis includes
actual waste reports and, for some of our onshore projects,
it also includes assumptions and extrapolations based on
proxy data.The results of this year’s assessment show that
in both years our non-recyclable waste is around 11%.
Webelieve that, when we have completed the full analysis,
this aligns with our understanding that 10-25% of our waste
is non-recyclable.
These steps help us in our journey to embed circularity in
our organisation to a greater extent. To meet our goals to
reduce 25% of our non-recyclable waste and virgin-copper
purchases by 2025 will be challenging, however we are
determined to meet our goal.
An example of how we progressed with our efforts to
reduce non-recyclable waste is our Noord-West 380 KV
project. Based on meetings with contractors to discuss
thecauses of non-recyclable waste, an important source
was identified – the heavy-duty fabric used to create
temporary roads at construction sites. After usage, these
fabrics can be difficult to reuse or recycle. However, with
BAM and the University of Delft, we investigated new
applications for this waste stream, which can help further
reduce our non-recyclable waste from this type of project.
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Furthermore, we aim to boost the recycling of key materials
so they can be re-used for our assets, in particular copper
and oil. For example, we are exploring circular solutions
withour transformers, allowing us to re-use certain parts
oftransformers when they are decommissioned, including
the re-use of transformer oil.
What could prevent us from reaching our goals?
TenneT delicately balances projects resulting into
achievements of the energy transition while still being able
to fulfil the core tasks of maintaining the grid. This balance
becomes even more complex if one considers important
influences like protecting the natural environment or
reducing the carbon footprint.European and national
ambition is intensifying not only in the number of projects
required but likely in the time to deliver as well. This infers
that due to the increasing number of projects, combined
with our core task of maintaining the grid, project delay
could become a possibility.
To actively participate as TenneT in the energy transition,
investing in upcoming technological developments and
innovations is an important prerequisite to be able to deliver
on the energy transition targets. These investments could
vary from physical changes, for instance applying a
substitute for the SF
6
gas, to process and data driven
applications like artificial intelligence to improve grid
inefficiencies.These technologies, physical or non-physical,
are costly and complex to develop, significant amount of
time is required to test safety and reliability requirements
and scarcity of the competences and equipment limits the
development. In this context, it is important to be aware
thatsuppliers are scarce and in high demand, presenting
anadditional challenge.As a TSO it is not possible to
develop all new technology required in-house and therefore
a relationship with innovation partners is crucial.TenneT is
actively participating and working together with stable
partners on new innovations benefitting the grid as well as
the energy transition. Since the image as leading TSO with
the green ambition and financial stability, the risk of a fierce
competition with competitors concerning partner resources
is not considered likely to happen.
When considering risks to the ambition as a green and
responsible grid operator, one should consider the global
economic and political context. These include a potential
economic slowdown, regulatory changes, geopolitical
conflicts, financial market turmoil and rapid advances in
technology. While these would affect the costs on macro-
economic level, on micro-economic level it is as important
to consider to what extend society is willing to pay the cost
of the energy transition. Ultimately, this could impact the
regulatory framework, financing options and the availability
and prices of products and services for both the consumers
as organisations.
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“Infrastructure providers such
as TenneT are taking on a great
responsibility, by seeking the
balance between demand of
society versus economic and
technical necessities.
The energy transition is a major task for our entire
society. The steel industry has the capability and also
wants to be part of the solution. Hydrogen-based
technologies for CO
2
– neutral steel production
are already fully developed today. With “SALCOS
– Salzgitter Low CO
2
-Steelmaking”, we have a
path towards a virtually CO
2
-free steel production.
However, we still need appropriate economic
and political conditions to develop a demand
for “green steel”. Additionally, we need capacity
and infrastructure to enable the generation and
distribution of green hydrogen. We will only
reach theobjectives of the energy transition, if all
players from the economic, political, business,
and civil society work closely together and find
solutions for their occasionally conflicting interests.
Iamimpressed how this interplay between society,
politics and business has developed so far.
Theexcellent cooperation of TenneT and Salzgitter
AG is exemplary for joint projects in this context.”
Gunnar Groebler
CEO of the Salzgitter AG
As one of Europe’s largest steel producers,
the Salzgitter AG has a roadmap to
achieve low-CO
2
steel-making, but
its decarbonisation ambitions rely on
collaboration across industry and politics:
TenneT has an important role in facilitating
the process.
“ Close
cooperation
between
society, politics
and business
isessential for
success.”
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Secure sustainable financial performance
and investor ratings
The energy transition is accelerating and the electricity infrastructure at its heart needs
tobeprepared. The European Union raised its climate ambitions and presented a new
legislative package of proposed measures – “Fit for 55” – aimed at reducing greenhouse gas
emissions by 55% in 2030. This raises the bar from the 49% reduction previously announced.
Among the Member States, Germany raised its target to even 65% from 55% and plans and
ambitions in the Netherlands now far exceed the earlier ambitions of the Dutch Climate
Agreement. In the context of these ambitious targets, it is up to us to make the right
investments for sustainable long-term growth.
In order to reach these climate goals, our electricity
infrastructure is undergoing a fundamental redesign,
requiring substantial investment. To safeguard our financial
health, we need to maintain a solid balance between equity
and debt.
To maintain broad and sustainable access to – green –
financing, we will continue our efforts to report transparently
on our sustainable performance. In 2021, we have
determined our eligibility in line with the EU Taxonomy.
Formore information on this, please read the box out
onthis topic on the next page.
The ROIC group is slightly
above target due to higher
EBIT compared to target.
Target Status
Performance
4.2%
4.0%
Trend
FFO to net debt has
developed according to
expectation. The FFO
remained stable, while the
netdebt position increased.
Target Status
Performance
10.5%
8.5%
Trend
Satisfied capital
providers
ROIC group (%)
Adjusted underlying EBIT
group is in line with the target
and 2020.
Target Status
Performance
801
778
Trend
Healthy financial
operations
Adjusted underlying
EBIT group
1)
(EUR milion)
Safeguarded
capital structure
2)
Adjusted FFO/
Net debt group
Our performance in 2021
1
Reference is made to next page.
2
Reference is made to Note 17 of the financial statements.
2021 2020
796
2019
753801
2021 2020
5.1
2019
5.14.2
2021 2020
11.3
2019
12.910.5
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Underlying EBIT decreased from EUR 910 million in 2020 to
EUR 834 million in 2021, which can be explained by higher
revenues, higher grid expenses, higher personnel expenses
and higher depreciation due to increasing assets. In 2021
we faced higher grid expenses, largely caused by increased
electricity prices at the end of the year. Since a huge part of
those higher grid expenses will be settled in future tariffs,
this also results in an increase in underlying revenue. Under
IFRS future settlements are not included in revenues and
therefore the IFRS revenues and IFRS EBIT are significantly
lower in 2021.
For 2022, we expect an EBIT which is in line with the 2021
EBIT. It is expected that the investments will further grow to
EUR 4.2 billion, which requires additional financing. The
resulting increase in debt is expected to result in a decrease
of the ROIC and a decrease in the FFO / Net debt in 2022.
Deliver a return on capital in line with the
expectations of our capital providers
Special items Capex reimbursement are mainly related
toreimbursement adjustments of prior years. Special
itemsother mainly relate to additional provisions of
doubtfuldebtors. Special items non-regulated related to
thefair value adjustments of our minority interests in
investment funds.
EUR million
-33
-1
+9 -8
2021 2020
Underlying EBIT group
Special items capex reimbursement
Special items opex performance
Special items energy & capacity
Special items non-regulated
Adjusted underlying EBIT group
Underlying EBIT group*
14
-31
-97
796
910
834
801
Eligibility of TenneT's activities with the EU Taxonomy
Our primary tasks are to provide electricity
transmission services, system services and
facilitating the energy market. Those economic
activities are linked to NACE code D35.12 and are
concluded to substantially contribute to climate
change mitigation, since TenneT is transmitting
and distributing renewable energy in line with
Directive (EU) 2018/2001, including necessary
reinforcement or extension of the grid. In line with
the technical screening criterium 4.9 “Transmission
and distribution of electricity” on climate mitigation,
we have calculated the percentages of investments,
revenues and operating expenditures that are eligible.
Most of our activities (the regulated business of the
TSOs in the Netherlands and Germany) are eligible,
since our grid is part of the interconnected European
system. We have excluded our non-regulated
activities and the infrastructure which is dedicated
to a direct connection between our substation or
network and a power production plantthat is more
greenhouse gas intensive than 100gCO
2
e/kWh
measured on a life cycle basis.
Total group eligible turnover: 97%
Total group eligible CAPEX: 100%
Total group eligible OPEX: 99%
*
Refer to note 2 of the financial statements.
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Raising the necessary external financing
The infrastructure we need for a secure and reliable
electricity grid – today and in the future – requires constant
vigilance, efficient operations, and sustainable investments.
Our task is clear and critical: to ensure a continuous
availability of electricity for almost 43 million end-users
connected to our grids across the Netherlands and
Germany, 24 hours a day, 365 days a year. Broad and
sustainable access to financing is a pre-requisite for
implementing our strategy and realising our investment
portfolio that meets political and societal sustainability
requirements. We need to ensure that this is financed
withthe right mix of equity and debt, always balancing
affordability, the demand for security of supply and
sustainability.
We made some strides in 2021:
The budget for the Netherlands, presented on the third
Tuesday of September (“Prinsjesdag”), details the equity
contributions the Dutch State intends to make to TenneT
forinvestments in the Dutch electricity grid: EUR 4.25 billion
over the 2023-2030 period. The equity contributions are
conditional and will only be made available when TenneT
needs them to maintain its credit ratings.
Regarding our remaining equity requirements for our
German activities, we are exploring several alternatives,
including the participation of reputable Western private
investors. TenneT is confident it will be able to raise the
necessary funds in a timely manner and does not expect
these equity requirements to arise before 2024.
In May, TenneT successfully issued its first and largest ever
green triple tranche Euro bond, raising EUR 1.8 billion.
Investors from 20 European countries placed orders worth
EUR 4.0 billion, underlining TenneT’s international appeal and
strong financial profile. In November, TenneT issued an additional
green Eurobond, raising another EUR 1.0 billion. Proceeds
from these bonds will be used to invest in eligible green
power transmission projects in the Netherlands and Germany.
The focus is on connecting large-scale offshore wind farms
to the onshore electricity grid and enhancing theonshore
transmission capacity for renewable energy.
In September, we signed a new loan agreement
ofEUR250million with the EIB to finance a project
involvingthe construction of a 41 km electricity
transmission≈corridor from Eemshaven to Vierverlaten,
inthe north of the Netherlands.
Green debt, in bln €
Green Bonds
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2015
2016
2017
2018
2019
2020
2021
14
Together with the other three German TSOs, TenneT is
responsible for the management of Erneuerbare Energien
Gesetz (EEG) in Germany. In 2020, TenneT had to raise
additional financing to cover significant unforeseen
variations in renewable energy volumes and wholesale
electricity prices. In 2021, TenneT received EUR 3.5 billion
from the German government under the Climate
Programme 2030 (“Klimaschutzprogramm 2030”) to finance
payments made to renewable energy producers as part of
anation-wide support to reduce the so-called renewable
energies levy (“EEG levy”).
Our financial strategy is focused on maintaining our credit
rating at a minimum of A-/A3 and generating returns on
investment in accordance with our risk profile. In 2021,
ourA- credit rating from Standard & Poor’s and our A3
rating from Moody’s were reaffirmed again – underpinning
our ability to secure financing for the future. Also, our
Environmental, Social and Governance (ESG) evaluations
were reaffirmed by external rating agencies. For example,
Standard & Poor’s again classified us as “strong” with a
score of 84/100 and Sustainalytics indicated that TenneT
isat low risk of experiencing material financial impacts from
ESG factors.
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Contribute to achieve a reliable and predictable
regulatory framework which supports our
financialstrategy
The nature of our business and the scale of the energy
challenge require us to think decades ahead to determine
how and where to invest. The technical and regulatory
lifetime of our investments can range from 20 to 50 years.
Our investments need to be supported by a regulatory
framework with a long-term focus and a high degree of
reliability and predictability. While regulatory periods are
typically only established for a period of three to five years,
the underlying methodologies in principle provide a stable
long-term regulatory framework in both the Netherlands and
Germany. This relates amongst others to the recognition of
investments in the Regulated Asset Base (RAB), methods
used to determine the cost of capital, and the fact that
TSOs for instance are not exposed to volume risk.
In 2021, the Autoriteit Consument & Markt (Authority
forConsumers and Markets (ACM)), set the Dutch tariff
methodfor TenneT for the new regulatory period 2022-
2026. Going forward, the ACM changed the methodology
for establishing the risk-free rate of the Weighted Average
Cost of Capital (WACC). Although the ACM decided to
maintain the current real WACC system, due to financing
issues grid operators face in relation to the energy
transition, it lowered its inflation estimate from 1.8%
to 0.9%. This means a 0.9% lower asset inflation and
anadditional adjusted real WACC of 0.9%-points.
Theadjusted real WACC for new assets will be 1.9%
over2022-2026.
The ACM increased the beta factor which is a measure
forthe systematic risk of assets of TenneT’s Dutch offshore
investments to reflect the risk of the size of the investment
portfolio in relation to the existing regulated asset base.
Thisincreases the WACC for TenneT TSO NL's offshore
investments by 0.5%, resulting in the adjusted real WACC
for new assets offshore of 2.4% in the years 2022-2026.
The ACM conducted a European Benchmark study (TCB18)
resulting in an 89.1% efficiency score. The ACM also
decided to honour the grace period of 15 years that started
in 2010. This means TenneT's efficiency score will decline
from 97.28% in 2022 to 89.1% in 2025, amounting to an
average efficiency percentage of 92.37%. TenneT appealed,
among others, the ACM's efficiency decision in 2021, due
to several flaws contained in the benchmark according to
our assessment.
Our societal financial impact on households in our serving area
As we are serving society with trusted resources,
safeguarding our nancial health is of paramount
importance. Our revenue consists of the regulated
income we receive for costs we incur to full our
task of securing supply today and tomorrow.
Designing, building, maintaining, and operating a
future-proof grid comes at a cost which – among
other customers - households contribute to via
the payment of grid fees. Our nancial health,
a solid nancial performance as well as a solid
investor rating are directly impacted by our
cost reimbursements set by the regulator. We
have calculated our societal nancial impact on
households in our serving area.
We have assessed our impact on the electricity
invoice (retail of electricity; taxes, charges and
levies; grid fees) of an average household in the
Netherlands and in Germany. In Germany, our
share is around 5.6%, in the Netherlands, our
share is approximately 9.0%. The main reason why
this differs relates to a tax discount households
receive in the Netherlands, which have a lowering
effect on the total electricity invoice. As both the
electricity retail price and our part of the grid fees are
approximately the same in both countries, the result
is that TenneT’s grid fees therefore represent a higher
share of the electricity invoice in the Netherlands
compared to the German electricity invoice of an
average household. We expect that our share both in
the Netherlands and in Germany might increase over
the coming years, as our costs for driving the energy
transition may rise, amid increasingly ambitious
German, Dutch and European climate goals.
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In Germany, the Ministry of Economic Affairs and Energy
changed the current investment measure application (IMA)
regime into the so-called ‘capital cost pass-through system’
(“Kapitalkostenabgleich;” KKA). This is a pass-through of
rising investment costs while reducing the revenues by
thevalue of declining net book values. The changes will
become effective as of 2024. Essentially, revenues for
investments are to be aligned with the annual capital costs
(“pass through”). This will eliminate time lags, clawbacks,
and plateau effects of the previous system. The revised
Incentive Regulation Ordinance (ARegV) provides for the
change of method. Transitional regulations are intended
toprevent disadvantages.
The 2021 amendment of the ARegV also introduced
incentives on redispatch. The incentive mechanism is
designed as a limited bonus/malus scheme. From 2022
onwards, a reference value is set for all redispatch costs
ofall four German TSOs. If the actual costs are higher than
the reference value, then TSOs must bear a 6% share of
thedifference between those costs and the reference value
(malus) up to EUR 30 million (cap) per annum.
Vice versa, ifactual costs are below the reference value, the
TSOs are allowed to keep a 6% share of the difference as a
bonus. For the years 2022 and 2023, the scheme is applied
with an uncapped bonus. From 2024, the mechanism will
be applied symmetrically with equal bonus and malus.
On 20 October 2021, the German regulator Bundesnetz-
agentur (BNetzA) published the final determination of
imputed rate of Return on Equity (RoE, < 40%) for the fourth
regulatory period (2024 – 2028). The RoE (< 40%) in the
final determination is 5.07% before tax (4.13% after tax).
TenneT TSO B.V. appeals against the efficiency score
applied by the ACM, the change of the remuneration
method for execution costs of System Operations from
arolling-forward system to a fixed budget and the
disapproved costs of the Borssele projects. In Germany
TenneT TSO GmbH and the German offshore entities
appealed against the determination of the return on equity.
What could prevent us from realising our goals?
TenneT’s revenues depend mainly on the regulatory
frameworks in the Netherlands and Germany. Adverse
changes in any of the regulatory systems might impact
thefinancial performance.The regulatory reimbursement
schedules (revenue cap) in both the Netherlands and
Germany aim to allow TenneT to recover the efficiently
incurred costs including a market-based return. The
regulatory methods underlying the revenue cap are typically
established for a period of three to five years.
The main risks for TenneT are that market returns
continuously decrease because of the low interest
environment on the capital markets. Furthermore, it is
increasingly difficult to accurately forecast efficiently incurred
expenses for future periods as past expense patterns no
longer reflect the future, especially with TenneT’s significant
growth.These developments could lead to substantial
deviations between the allowed revenue in agiven year of
the regulatory period and the actual costs needed to run the
business. Although this risk is partially mitigated by the fact
that TenneT receives additional incomeon top of the
revenue cap for specific investments itremains an area
ofdebate between TenneT, regulators and market parties.
To meet the average annual investment requirement
ofEUR6 billion, TenneT is required to finance itself by
attracting funds on the capital market. By issuing bonds,
thus increasing the debt position, the ratio of funds from
operations to total debt decreases. Hence the financial
riskincreases and credit rating agencies are obligated to
downgrade the credit rating if the leverage ratio is below
adefined rating threshold. To maintain the current A-
(S&P) / A3 (Moody’s) senior unsecured credit rating,
additional capital is required for thecoming years.
Theeconomic outlook could become anadditional influence
for the coming years. The capital market highly appreciates
green investments and combined with the required projects
necessary to meet the energy transition targets, an
expected growth in availability of greeninvestment
opportunities is expected. Resulting into possible fiercer
competition.To date TenneT has always been able to
secure the required financial capital by issuing green bonds
without any notable problems. Investment institutions, like
investment banks, continue to appreciate investments in
green businesses as highly favourable. Combined with the
attractiveness of TenneT’s financial stability, prospect of
future grid projects both onshore andoffshore, the stable
credit rating and the green ambitionthere is no significant
risk of restrictions to thecapital market.
A relatively small risk could occur if shareholder values
bythe current shareholder are misaligned with a potential
new shareholder. The Dutch State could infer additional
requirements, either as shareholder or via legislation and
regulation, to protect their interests in the vital part of the
Dutch grid. Contrary, a new shareholder could argue to
deprioritise planned projects or reorganise part of the
organisation in Germany or the Netherlands.To date no
significant risk is expected to materialise. TenneT is in close
contact with all relevant stakeholders including the Dutch
State to align the ambition, interest and requirements.
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“ The energy
transition has
now really
gained
momentum.”
“I want all parties in our sector
to come together with a shared
ambition, agreed tasks and
priorities. This is how we will
shape the energy system of
thefuture.
The energy transition has now really gained
momentum and we see a need for extra capacity on
the electricity grid in almost all sectors. This means
that both TenneT and the regional grid operator will
have to do everything they can in the coming years
to expand and, where necessary, upgrade the grids.
At the same time, we have to do this in a smart
way and with collaboration between all players.
Producers, network operators and customers must
work together on smart solutions, such as storage,
conversion, cable pooling and demand management.
And in the meantime, we need to expand the grid
significantly to realise the energy transition. In times
of transition, there are many interdependencies
between different players, each with their own role
and specific priorities. With so many interconnected
parties it is crucial that there is more coordination so
that the energy transition is as efficient as possible.
Therefore, more than ever, I want all parties in our
sector to come together with a shared ambition,
agreed tasks and priorities. This is how we will shape
the energy system of the future.”
Evert den Boer
CEO of the Dutch regional grid
operator, Enexis Group
The group works closely with TenneT
on smart solutions to make maximum
use of existing and new networks.
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Solve societal challenges with stakeholders
andthrough partnerships
As a European TSO, the main societal challenge we can help overcome, is to mitigate climate
change by enabling the energy transition. Driven by ambitious European and national goals,
the energy transition will require a fundamental redesign of our energy system and radical
new thinking.
The energy transition presents big challenges for the usage
and expansion of the electricity grids and the dynamic
stability of the power system. The scale and complexity of
the task means that conventional solutions are no longer
adequate. We need new ideas and fresh thinking, with
multiple stakeholders collaborating to find solutions and
create value. This is why TenneT works together with a wide
range of strategic partners, both within and outside the
electricity domain. And our collaborations are not solely
focused on technical innovations. We draw on the power of
partnerships to achieve each of our four strategic pillars and
also to ensure we grow responsibly.To give a broad but
brief overview of our collaborative efforts, we have selected
a sample below of just a few partnershipsper strategic pillar.
Our performance in 2021
As we invest in our grid, our workload increases and our
organisation grows. Therefore we have to make responsible
choices. For example, this means that we, as a regulated
company, make responsible choices on our investments,
which represent societal costs, and which are targeted at
solutions and assets that will serve the future energy system
in the long-term. We must deliver what is expected of us,
but we must also find the smartest, most efficient and
affordable way to do so. Our partnerships can help us in
finding these solutions.
Partnerships to drive the energy transition
In our aspiration to drive the energy transition, we aim to
work with a wide range of other ambitious players to find
solutions that will enable us todesign an energy system fit
for a climate neutral Europe, while also helping us to grow
responsibly by making smart use of our existing grid.
InnoSys 2030
InnoSys 2030 seeks new ways to increase grid utilisation
asa valuable complement to grid extension. Today,
ourassets are operated with a considerable safety margin
in case an element fails (n-1 security). The joint research
project InnoSys 2030 searches new ways on how to
optimise grid utilisation by load flow optimisation and
real-time measures in case of failures.
A powerful research consortium under the lead of TenneT,
with all four German TSOs, five DSOs, universities and
industry partners, is currently working on five different fields
of research. The starting point of InnoSys 2030 was the
analysis of existing measures to increase grid utilisation.
In2019 and 2020 new concepts were developed and
tested with regard to their practical suitability. Simulations,
demonstrations, and field experiments were started in 2021.
In the end of this project a roadmap was developed and will
be published in 2022, which shows the implementation
path of those concepts until 2030.
Control Room of the Future
In order to drive the energy transition while maintaining a
high level of grid reliability, TenneT needs to modernise the
heart of our power system – the control room – to make
itfitfor the future. The Control Room of the Future
programme (CROF) is at the leading edge of technology
inthe energy transition, with a goal to move from the
manual control of independent technologies to a model
thatcombines the best of manual and automated systems.
Forthis ambitious vision, various projects need to be
defined that include methodologies and software
development, grid data, grid measurements, network
model, network security assessment, decision support,
communication interfaces and operator training.
TheCROFroadmap includes the development of these
andotherprojects until 2031. The CROF programme
willbearichlearning and development environment,
combiningthe expertise of our subject-matter experts
withthe latest insights from our partners, including
suppliersand universities.
Working together with other companies to lead
asagreen and responsible grid operator
Together with many other Dutch critical infrastructure
organisations, in a coalition called ‘De Brede Welvaart’,
weare working together to make the economy more
sustainable and resilient and to create long-term value.
Theway we contribute to and report on this work is included
in our value creation model. The societal impact ofthis work
is described in the respective chapters in this report.
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We are also working together with other infrastructure
companies in the ‘Groene Netten’ coalitioninthe
Netherlands on several topics such as biodiversity and
circularity. Together with other European TSOs we have
joined forces via the Renewables Grid Initiative (RGI).
Herewe are collaborating with them with respect to how
wecan develop our offshore agenda in a nature-friendly
manner. Viathe RGI, we are a member of the OCEaN
(Offshore Coalition for Energy and Nature) coalition where
we work together also with NGOs on this topic.
Partnerships to secure supply, today and
tomorrow
ENTSO-E
Our partnership with the European Network of Transmission
System Operators for Electricity (ENTSO-E) is important
inour efforts to secure supply for today and tomorrow.
ENTSO-E is a collaboration of 39TSOs from 35 countries
who work together in a number of key areas. These include
drafting technical and market-related network codes,
coordinating plans to develop European infrastructure
andpromoting technical cooperation between TSOs.
Asmember of ENTSO-E, TenneT is helping to build a more
integrated European electricity market, contributing to a
sustainable energy landscape, and promoting electricity
inEurope is affordable, sustainable and secure.
Data innovation: GAIA-X and energy data-X
TenneT is among the partners who participate in the
international GAIA-X project. Representatives from
business, science and politics collaborate to create
aproposal for the next generation of data infrastructure,
including the realisation of sovereign data exchange in
aEuropean cloud. This work is essential for designing
anenergy system of the future, because it will depend
onareliable and secure architecture for exchanging data
across borders, between different energy players and
withconsumers. It will also need to be robust, to cope
withincreasing decentralisation and complexity, expansion
of smart meter charging for electric vehicles, and the
increasing application of artificial intelligence (AI) models.
The establishment of a large and comprehensive energy
data infrastructure will enable interoperability between
energy systems and form a foundation for new data-driven
solutions to the energy transition.
Within GAIA-X, TenneT is part of a research project funded
by BMWi (the German Federal Ministry for Economic Affairs
and Energy) to demonstrate new approaches for data
exchange. In the only winning consortium from the energy
sector, TenneT is leading a consortium of all four German
TSOs, several DSOs (E.ON, enercity Netz, Energienetze
Mittelrhein) and other partners to realise a new and innovative
approach for data exchange(‘energy data-X’), with
integration into smart services and artificial intelligence (AI).
Infrastructure Outlook 3050
In April 2021, TenneT, Gasunie and the Dutch DSOs
published the Infrastructure Outlook 2030-2050 (II3050).
Based on broad stakeholder participation, the study
provides insight into the scenarios of a future energy
systemuntil 2050 and assesses the required energy
systemdevelopments to enable such a system. Some of
the important conclusions: the infrastructure for electricity
mustbe expanded on a large scale, a nationwide hydrogen
transport pipeline network is needed, infrastructure for heat
and CO
2
must be constructed, more speed is needed since
the current lead times for investments in the grid lead to
bottlenecks and a long-term perspective is needed for
anefficient transition. The fact that the Dutch government
announced a plan to adapt existing natural gas transport
pipelines for the transport of hydrogen (‘hydrogen
backbone’) is a direct result of the insights presented
intheII3050.
“Quo vadis, electrolysis?” study
Together with Gasunie and Thyssengas, TenneT published
the “Quo vadis, electrolysis?” study in 2021, taking into
account the existing and future energy infrastructures and
developments that serve the energy system. According to
this study, the North-Western part of Lower Saxony is a
preferred location for the infrastructural coupling of
electrolysers. As a result ofthe large-scale conversion from
L-gas (low-calorific) to H-gas (high-calorific), existing natural
gas pipelines can be made usable for the widespread
distribution of hydrogen ona short term. The existing gas
infrastructure enables thetransport of generated green
hydrogen to the major loadcentres. In a second phase,
large electrolysers in Schleswig-Holstein could be
connected to a hydrogen network after 2025. More
short-term, regional hydrogen applications could relieve
thebottleneck situation in the electricity transmission grid.
Partnerships to energise our people and
organisation
Cooperation with educational institutes
Sharing expertise and insights with educational institutes
plays an important part in building knowledge for our sector
and also educating the new generation of technical talent.
Itis also important to help us access the latest thinking and
technology to unlock new solutions for the energy transition.
TenneT builds a wide range of close partnerships with the
academic world and research centres.
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These include partnerships with the University of Bayreuth,
TU Delft and Radboud University Nijmegen, which are
focused on specific areas of research, and a wide range of
further alliances with academic institutions including: FAU
Erlangen-Nürnberg; TU Eindhoven; TU Ilmenau; RWTH
Aachen, Hogeschool van Arnhem en Nijmegen, Hogeschool
van Amsterdam and Hasso-Plattner Institut.
Refugee Talent
We provide opportunities for refugees in the Netherlands
and Germany through apprenticeships and vocational
training. To find qualified refugee talents, we partnered
upwith the Refugee Talent Hub and TENT Partnership –
whichlink refugees and employers, with paid employment
as the goal. In 2021 TenneT Netherlands employed seven
newcomers through a work experience position. Of the
newcomers who started in 2019 on such a position, two
have found permanent employment at TenneT in 2021.
TenneT Netherlands provided a learning path
(‘opleidingstraject’) for these refugee talents to learn more
about the company and gaininsights into the working
culture in the Netherlands. Inaddition to this learning path
for newcomers, TenneT’s leaders and teams have been
made aware and enabled to be more inclusive and
understand the cultural background of refugee talent.
Partnerships to safeguard our financial health
Our cooperation with co-investors
To finance the expansion of offshore grid connections,
TenneT cooperates with external co-investors such as
KfW-IPEX, Copenhagen Infrastructure Partners (CIP)
andChubu Electric Power. Via separate legal entities
theco-investors contribute equity and receive financial
participation rights in return. Their contribution helps
toensure adequate financial ratios. Furthermore, their
participation strengthens TenneT’s interest in a reliable and
stable regulatory framework as co-investors interests have
been communicated towards policymakers and regulators.
Partner banks
To secure a solid financing and ensure that we can drive
theenergy transition in an affordable way, we maintain
strong relationships with our shareholder, the Dutch state,
and with the banks that are participating in TenneT’s
Revolving Credit Facility (RCF) – ABN AMRO, BNG,
BNPParibas, Commerzbank, Deutsche Bank, HSBC,
ING,NatWest, Rabobank, Santander, UniCredit and SMBC.
Themajority of these relationship banks also participated
inTenneT’s previous RCF, showing the strength of our
long-term relationships. Through these partnerships,
weareable to secure our financing.
In 2021, we issued EUR 2.8 billion of Green Bonds with the
support of our banking partners and have become one of
the top 3 corporate issuers of green debt financing globally.
The financial importance of this model is strengthened by
the growing number of investors seeking to invest in
companies that contribute to the EU’s Green Deal
ambitions, such as companies of which their activities are
eligible with the EU Taxonomy. For more information on how
we as TenneT assessed how our activities are eligible with
the EU Taxonomy can be found in the chapter 'Secure
sustainable financial performance and investor ratings'.
What could prevent us from realising our goals?
To be able to drive the energy transition and lead as a green
grid operator, it is important to consider societal acceptance
of the energy transition. Extending the grid and deliver on
the green ambition could directly affect the impact on
nature, available ground and expansion space for the
physical assets or the debate about overhanging
transmission lines and the effect on health and safety.
Improper alignment could result into the inability to fulfil
ourambition, potential delay of the energy transition or
lessthan promised carbon footprint reduction.While TenneT
always aims to comply to all rules and regulations and while
sufficient precautions are taken at planning and constructing
the grid, societal acceptance remains for TenneT an important
and influential stakeholder.
Both the German and Dutch government have indicated
anincrease in ambition with regard to the energy transition.
It is expected that the number of projects could grow and
therefore could impact the project delivery times. This infers
that TenneT must be even more agile than before. It is
important that alignment takes place between the political
aspiration and the TenneT ambition to result feasible project
delivery without contradicting promises. The political
landscape TenneT operates in, could sometimes be
considered complex. Either by different coalition
agreements, a difference in local governance structure or
due to national and European interests. Without proper
alignment it could impact cross-border innovation.
Ultimately, TenneT relies on strong partnerships with a wide
range of stakeholders to achieve the work that will enable
aclimate-neutral Europe. Getting there will involve
collaboration, negotiation and the balancing of common
and individual goals, but the destination of a clean energy
future is shared by all.
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Statements of the Executive Board
The Executive Board is responsible for designing and operating TenneT's risk management
and internal control system, and for reviewing its effectiveness.
In control statement
The Executive Board is responsible for designing and
operating TenneT's risk management and internal control
system, and for reviewing its effectiveness.
The risk management and internal control system consists
of the following elements:
• The enterprise risk management system aimed to
identify, analyse, define mitigating measures and monitor
the development of risks relevant to TenneT;
• The internal control framework aimed to manage and
control critical processes, including control self-
assessments to document the effectiveness of control
processes;
• Business plans and quarterly reports with information
onfinancial and non-financial objectives and their
achievement;
• Internal audits of key processes andfollow-up to audit
findings with relevant management;
• Actions based on recommendations made in the external
auditor’s management letter;
• An upwardly cascading internal Letter of Representation
(LOR) process, resulting in a company-wide LOR signed
by the Executive Board;
• A compliance management system that enables TenneT
to demonstrate itscompliance with relevant laws- and
regulations, industry codes and standards, as well as its
commitment to good corporate governance, best
practices, ethics and stakeholder expectations among
others risk of internal fraud, bribery or corruption.
The Executive Board periodically reviews and analyses
thestrategic, operational, financial and compliance risks
towhich TenneT is exposed. It also regularly assesses
thedesign and effectiveness of the risk management and
internal control system. The results of these assessments
are shared with the Audit, Risk & Compliance Committee,
acting as a committee of Supervisory Board, the
Supervisory Board itself and the external auditor.
The risk management and internal control system does
notprovide absolute assurance that all corporate objectives
will be fully achieved, nor does it give full assurance that
material errors, losses, fraud or violations of laws and
regulations will not occur in the operational processes
and/or the financial reporting.
Taking the above into account, the Executive Board is of
theopinion that TenneT's risk management and internal
control system provides reasonable assurance that
TenneT's financial reporting does not contain any errors
ofmaterial significance and that the risk management
andinternal control system has operated effectively in
theyear under review.
Statement of responsibility
We confirm that, to the best of our knowledge, the financial
statements for the period 1 January to 31 December2021
have been prepared in accordance with IFRS, as adopted
by the EU, and with Part 9, Book 2 of the Dutch Civil Code;
that the disclosures in the financial statements are a true
and fair view of TenneT's assets, liabilities, financial position
and results as a whole; and that the disclosures in the
annual report give a true and fair review of TenneT's financial
performance, results and position, together with a
description of the most significant risks and uncertainties
the company faces. Furthermore,we confirm that to the
best of our knowled ge, the Group has adequate resources
to remain in operation during the next 12 months and
consequently the financial statements have been prepared
on a going concern basis.
Arnhem, 14 March 2022
M.J.J. van Beek
T.C. Meyerjürgens
M.C. Abbenhuis
A.C.H. Freitag
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Our Executive Board
M.J.J. (Manon)
van Beek
Chair Executive Board /
ChiefExecutive Officer
51, Dutch (f)
Initial appointment:
1 September 2018
Expiry first term:
31 August 2022
T.C. (Tim) Meyerjürgens
Member of the Executive Board /
ChiefOperating Officer
46, German (m)
Initial appointment:
1 March 2019
Expiry first term:
29 February 2024
M.C. (Maarten) Abbenhuis
Member Executive Board /
Chief Operating Officer
48, Dutch (m)
Initial appointment:
1 January 2021
Expiry first term:
31 December 2024
A.C.H. (Arina) Freitag
Member of the Executive Board /
ChiefFinancial Officer
51, German (f)
Initial appointment:
1 January 2022
Expiry first term:
31 December 2025
O. (Otto) Jager
Member of the Executive Board /
ChiefFinancial Officer
52, Dutch (m)
Initial appointment:
1 August 2013
Second appointment:
1 August 2017
Expiry last term:
31 December 2021
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Our Executive Board
Other positions qualitate qua:
• Chair Aufsichtsrat TenneT TSO GmbH
• Member Board TenneT Verwaltungs GmbH
Other positions:
• Chair Supervisory Board Kanker.nl Foundation
• Chair Board Giving BackFoundation
Other positions qualitate qua:
• Member Board TenneT TSO B.V.
• Member Board TenneT TSO GmbH
• Member Board TenneT Verwaltungs GmbH
• Member Board TenneT Offshore GmbH
• Member Board GreenNet
Other positions:
• Member Executive Board WAB
(Wind Energy Association Bremerhaven)
Other positions qualitate qua:
• Member Board TenneT TSO B.V.
• Member Board TenneT TSO GmbH
Other positions:
• Formal representative Vereniging Nederlandse
EnergieData Uitwisseling (NEDU)
• Member Board Netbeheer Nederland
(as of 14 January 2021)
• Member Cooperation Board TSCNET Services GmbH
Other positions qualitate qua:
• Member Board TenneT TSO B.V.
• Member Board TenneT TSO GmbH
Other positions:
• Member Supervisory Board of GreenneT
• Member Board Flexcess GmbH
Other positions qualitate qua:
• Member Board TenneT TSO B.V.
• Member Board TenneT TSO GmbH
• Member Board GreenNet
Other positions:
• Chair Advisory Council of the New CFO Executive
Program, Erasmus University Rotterdam
• Chair Board Refugee Talent Hub Foundation
• General Member Board of German-Dutch Chamber
ofCommerce DNHK
• Council of the Thinktank Agora Energiewende
• Chair of the Roundtable for Europe’s Energy Future (REEF)
• Co-Chair Energy Roundtable of the European Clean
Hydrogen Alliance (part of EU efforts)
• Member Advisory Board Offshore Wind Energy MBA
• Member Board of Trustees German Offshore Wind
Energy Foundation
• Member Advisory Board Federal Association of Wind Farms Offshore
• Member Board of Directors FGH (Forschungsgemeinschaft für
Elektrische Anlagen und Stromwirtschaft e. V.)
• Member Board of Trustees FGE (Forschungsgesellschaft Energie e. V.)
• Member of the German National Committee of CIGRE
• Member Supervisory Board of GreenneT
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“ The year 2021 was again characterised by extremely
challenging circumstances. Enormous volumes in the
project environment as well as in the maintenance
and operation of the network demanded a lot from our
colleagues, and the shortage of raw materials and supplies
made it even more difcult. The effects of the transformation
also created hurdles that had to be overcome and
sometimes resulted in renewed organisational adjustments.
It was also not easy to recruit the necessary colleagues,
who are urgently needed at all levels of the company to
cope with the tasks of the present, but above all those of
the future. And all this under the conditions of the corona
pandemic.
As Betriebsrat, we would like to take this opportunity to say
a big thank you to each and every one of you for creating
such an outstanding achievement despite all the obstacles,
burdens and hard times. It does not depend on the job or
the position, but ALL together have managed to lead our
company TenneT so successfully through this year. What
is important now is that we always treat each other with
respect and consideration, even under time pressure and
stress, take care of each other and ourselves, recognise
stress limits and act accordingly, so that everyone can
continue to be healthy and efcient in 2022.”
Michael Kunter (Betriebsrat)
“ The world inside and outside TenneT has been very eventful this year. Many external changes have a major
impact on TenneT and its employees. The tight labour market, rapidly rising energy prices, the energy transition
and, of course, Covid-19 with all its restrictions, uncertainties and discussions. TenneT employees have adapted
their working methods, with home working becoming the norm. Despite the fact that we are now less able to
speak to each other, this has not had a negative impact on the quality of our work. All our colleagues have put
their shoulders to the wheel and we have achieved good results. They have shown that they really are at the
heart of TenneT. TenneT's organisation is getting bigger and bigger as it grows. It is important that we continue
to ensure that we do not place too great a burden on this heart. Themany projects and initiatives we are
involved in mean that we can expect a high workload. The prospect that TenneT will be taking decisions about
what we will not be doing (temporarily) should help to keep the workload under control. We are very curious
about the implementation and we are convinced that this will contribute to another good result next year.”
Tom Goossens (Ondernemingsraad)
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Supervisory
Board Report
Report of the Supervisory Board
The Supervisory Board (SB) supervises the Executive Board (EB) on its overall management
of the company. The SB supports and challenges the EB in setting and realising its long-term
strategic goals.
Supervisory Board Report
Safety
The SB deeply regrets that in 2021 three fatalities
occurredduring the carrying out of works for TenneT.
Theseunacceptable incidents underline the importance
ofcontinuous awareness and improvement of safety for
each person working for and with TenneT. To this end,
theSB closely monitors TenneT’s safety performance,
whichis the first topic on the agenda of each SB meeting.
The SB advises and challenges the EB by discussing the
latest safety reports and relevant trends, as well as all
noteworthy incidents.
With respect to COVID-19, TenneT’s overall performance
was not significantly affected due to measures already
takenin 2020. However, the SB remains mindful of the
psychological effects the pandemic may have on TenneT’s
employees, on top of the already heavy workload.
Security of supply
In 2021, TenneT once again delivered a very high grid
availability. The performance on security of supply is closely
monitored by the SB, especially in the context of challenges
arising from the increasing infeed of renewable energy,
which is intermittent by nature.Because of that, and due to
the increasing uncertainties in the European Energy Market,
we see the mutual dependencies of European countries
rising to secure adequacy, and thus security of supply, in
2030. Cross-border coordination with all the neighbouring
countries is of vital importance.
Other attention topics
Financing
During 2021, TenneT continued its constructive dialogue
with its shareholder, the Ministry of Finance, with respect
toTenneT’s financing needs to enable the energy transition.
The SB is pleased that the Dutch government has
confirmed in a letter to the Dutch parliament that the equity
required for TenneT TSO B.V. will be made available by
theDutch state and has been included in the state budget.
TheSB trusts that, with a new Dutch government in place,
a sustainable equity funding solution for the entire company
will be available soon.
At the same time, the SB welcomed the issuance of
EUR2.8 billion of green senior bonds and bank financing of
more than EUR 1 billion over 2021. The SB supported the
EB in ensuring adequate regulatory returns in the light of the
goals and affordability of the European climate ambitions.
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Investment portfolio
TenneT’s investment portfolio is growing as it strives to
support government climate ambitions, calling for the
integration of continuously increasingly volumes of
renewable energy sources. As well as upgrading and
expanding the grid to meet this need, TenneT also needs
tocarry out maintenance work to keep the grid working
effectively. To facilitate the planning of these works, the SB
discussed and supported the optimisation of TenneT’s grid
maintenance portfolio.
Challenges
The SB regularly exchanged views with the EB on the
challenges of TenneT’s comprehensive investment portfolio,
which are accelerated by increasing European and national
ambitions on decarbonisation. For this reason, the SB
welcomed the introduction of the standardised 2GW
offshore wind connection programme. This will enable
moreefficient project management and project execution.
Another market development followed closely by the SB is
the scarcity of resources, both in terms of (raw) materials
and people. The SB supports the supply chain initiative for
TenneT to become a preferred customer.for key suppliers
to secure timely execution of projects and to speed up joint
innovation – within the framework of European procurement
law. TenneT’s standardised cross-border portfolio is a good
starting point in this process.
Strategy
The EB organised a separate strategy session for the
SBinwhich TenneT’s strategy was scrutinised. The SB
recognised (i) TenneT’s need to grow – and to do so in a
responsible way, and (ii) the necessity to further advance
theorganisational transformation process started in 2019.
To this end, the SB welcomed the sharpened strategic
goals for 2025, which led to three transformational priorities.
The SB is convinced that these changes will form a good
basis for an increase in TenneT’s delivery capabilities, as it
works to deliver on the 2030 energy transition targets.
Leadership
In 2021, the SB was able to successfully recruit
MsA.I.H.Freitag as TenneT’s new CFO (starting 1 January2022)
,
resulting in a 50/50 balance within the EB in terms of
gender and nationality.
The SB was pleased to see the Senior Leadership Team,
with a good balance between genders, as well as Dutch
and German nationalities, in operation in 2021. As part
ofitsregular and additional meetings, the SB met or
interactedwith most of the 22 direct reports of the EB.
The SB continued to monitor progress on targets of
inclusion and diversity. Another topic that the SB closely
monitored was the development of potential internal
leaders, including senior leaders.
Composition of the Executive Board
In 2021, CFO Mr O. Jager announced his intention to
pursue his ambitions outside of TenneT, after two full terms
in the EB and more than 13 years at the company. His
second and final term in the EB ends on 31 December 2021.
His successor, Ms A.I.H. Freitag, will start as of 1January 2022,
following a thorough handover in the lastquarter of 2021.
Ms Freitag combines strong expertise infinance with
international experience in major German infrastructure
companies, where regulatory aspects played an important
role. The SB is very pleased to welcome MsFreitag to the
EB team.
Mr Jager has successfully and with full dedication
fulfilledthe role of CFO over the past eight years.
Underhisguidance, TenneT has seen a twelvefold
increasein its investment portfolio: from EUR 275 million
in2008 to EUR3,967 billion in 2021. At the same time,
ithas remained financially healthy and green-financed,
withasolidcredit rating and outlook. The SB appreciates
this performance very much, and thanks Mr Jager
wholeheartedly for his excellent leadership in the finance
arena, as well as his valuable contributions to TenneT’s
people and leadership agenda.
Composition of the Supervisory Board
The SB consists of three female SB members and
twomaleSB members representing various European
nationalities. AllSB members have extensive executive
andnon-executive (supervisory) experience in the
Netherlands, Germany and elsewhere in Europe,
reflectingTenneT’s truly European character.
The SB discusses the external positions of the SB and
ofthe EB members quarterly to ensure a high level of
engagement for TenneT and to avoid potential conflicts
ofinterest.
The composition of the SB complies with the Dutch Electricity
Act, which stipulates that the majority of its members have no
direct or indirect links to legal entities (orshareholders thereof)
engaged in the production, purchase or supply of electricity
or gas. While it was noted that Ms E. Kairisto is also a
member of the supervisory board of Fortum Oyj and that
Mr S. van Els is a member of the supervisory board of
EVOS B.V., the SB concluded that these roles currently do
not contradict the aforementioned stipulation.
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For more information on individual members of the SB, as
well as on the appointment and reappointment schedule,
please visit our website.
SB meetings
The SB had 12 meetings in 2021. Most of these were virtual
meetings due to government restrictions resulting from
COVID-19. Each SB meeting ended with an evaluation by
both SB and EB members, in which reflections were shared
in an open and trusted atmosphere. Evaluation topics were,
among others, the quality of the dialogues, the level of detail
and quality of the documents provided, and the setting of
the agenda.
Permanent education
To keep SB members up to date on relevant topics, TenneT
organised various interactive education sessions during the
year. Topics included regulatory and political developments
in the Netherlands, Germany and Europe, the risks and
mitigating measures of cybersecurity for a TSO, tax aspects
and supply chain management.
A joint education session on ‘The energy system of the
future 2030 – 2050’ was organised together with the SB
and EB of Gasunie. The SB members participated in a
webinar on the Annual Market Update and in other events,
such as the opening of the NordLink interconnector.
SB attendance 2021
Supervisory
Board
Audit, Risk
and
Compliance
Committee
Remuneration
and
Appointments
Committee
Strategic
Investments
Committee
A.F. van der Touw (chair) 10/11 3/4 5/5 -
L.J. Griffith 11/11 - 5/5 -
E. Kairisto 11/11 4/4 - 4/4
A.C.C. van Els 11/11 - 5/5 4/4
E.M Schöne 11/11 4/4 - 4/4
Total attendance 98.2% 91.7% 100.0% 100.0%
Committees
Strategic Investment Committee
The Strategic Investment Committee (SIC) supports
SBdecision making on investments worth more than
EUR50 million by reviewing the proposals and advising the
SB accordingly. The SIC reviewed 36 investment proposals
in 2021 – over a third more than the year before.
Whenassessing investment proposals, the SIC paid
attention to the technical choices made, the financial
aspects, the timing/optimisation and the impact on society.
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The SIC discussed TenneT’s quarterly investment reports,
inpreparation for the SB’s dialogue on these. As well as
general developments in TenneT’s investment portfolio,
thereports also update on progress with regard to TenneT’s
large projects, offshore and onshore, in Germany and the
Netherlands. Aspects considered by the SIC were timely
delivery, possible risks for delay, and external factors that
may impact project planning and/or budget.
The SIC was pleased to see that TenneT has started to
implement a Building Information Model (a digital model
ofexisting and/or planned construction, constructed from
adiverse range of factors, to which specific information is
linked).The implementation and use of this model will be
followed further in 2022.
Special areas of attention for the SIC in 2021 continued
tobe the scarcity of resources (raw materials and skilled
people) as well as scarcity of specialist suppliers. TenneT
aims to address this by becoming a customer of choice for
its suppliers. In this respect, TenneT is optimising its position
through greater standardisation, which the SIC supports.
Safety and of security of supply were the first topics on
theagenda of all SIC meetings.
Further topics discussed by the SIC were: Innovations,
theset-up of the TenneT project budgets, including risk
andpolitical developments in Germany. Regulatory
developments in both the Netherlands and Germany
hadthe special attention of the SIC (and the Audit, Risk &
Compliance Committee), due to the dilemma between the
affordability of the energy transition and the financeability
ofthe company.
The SIC consists of Mr S. van Els (Chair), Ms E. Schöne
and Ms E. Kairisto. The SIC met four times in 2021 with
both COOs present. One of the SIC meetings was attended
by the external auditor. In one SB meeting, a further SIC
meeting was integrated.
Audit, Risk & Compliance Committee
The SB’s Audit, Risk & Compliance Committee (ARCC),
monitors TenneT’s financial reporting, including quarterly
and annual reports, financing, risk management and
internalcontrol, internal audit, the independent external
audit of the financial statements and the evaluation of
theexternal auditor.
The ARCC prepares the dialogue on the quarterly finance
reports as well as the reports on internal audit, risks,
opportunities, compliance and integrity. Reports on internal
audit findings and the way these were addressed within
TenneT were a topic of special attention for the ARCC.
TheARCC recognised that some improvements to follow-
up procedures were made, yet also saw the need for further
improvements in 2022. Compliance and integrity findings
were also discussed with the ARCC, and risk management
and control systems were evaluated as part of the dialogue
on risks and opportunities. The most important legal
proceedings were discussed with the ARCC twice in 2021.
The individual SB members were interviewed on the
topicsof the annual internal audit plan, the annual strategic
risk assessment and compliance and integrity topics by
theHead of Internal Audit, the Head of Compliance and
Integrity and the Lead Risk Management &
Insurance.TheARCC reviewed TenneT’s Group Integrated
Planning & Performance and Financing Plan before it was
approved by the SB. Furthermore, the reports of the
external auditor were discussed with the ARCC before they
were shared with the SB. Also during 2021, the ARCC paid
special attention to TenneT’s credit rating.Next to that, IT
and cyber security will remain a topic of focus for the ARCC.
The ARCC consists of Ms E. Kairisto (chair),
Mr A. van der Touw and Ms E. Schöne. The ARCC met
fourtimes in 2021, with the CFO, the CEO, TenneT’s Head
Internal Audit and the external auditor, Deloitte, attending
the full meetings.For the relevant parts of the ARCC
meetings regarding specific reports or topics, the respective
Senior Leaders and/ or experts joined the meetings as well.
Management Letter
In the Management Letter, Deloitte reported that there
areno significant deficiencies. Deloitte stated that the tone
at the top is seen as supportive of the internal control
environment. Deloitte found that the updated fraud risk
assessment is a good improvement in the entity level
controls. Deloitte reported several findings with regard
toITaccess and information security, valuation basis
ofthedecommissioning provision and accrual for in-feed
management expenses. The SB will keep monitoring
themitigation of the risks resulting from these findings.
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Integrated reporting and audit
In 2021, the SB discussed the financial statements for
the2020 financial year. This dialogue was prepared by
theARCC and the respective meeting was preceded by
theregular meeting between the ARCC and external auditor
without any EB member, nor the Company Secretary,
beingpresent. The SB reviewed the 2020 internal quarterly
reports and the interim annual report. Furthermore, it
discussed the independent auditor’s reports, results from
internal risk and control assessments, the 2022 budget
andthe Integrated Performance Plan 2022-2024.
Financial statements
The SB examined the Integrated Annual Report 2020, the
financial statements 2020, the independent auditor’s report,
the assurance report of the independent auditor related to
non-financial information, the interim report/management
letter and the audit results report issued by TenneT’s
external auditor. The ARCC prepared and advised on these
documents. As a result, the SB endorsed the documents
and recommended that the General Meeting of
Shareholders adopt the financial statements. The SB
recommended that the General Meeting of Shareholders
discharge the EB members from liability for its management
of the company and release the SB from liability for its
supervision over the year 2020.
Remuneration & Appointment Committee
The Remuneration and Appointment Committee (RAC)
prepares, among others, the SB's decision-making
regarding the remuneration of individual EB members and
the appointment of EB and SB members. The RAC also
closely monitors the review of the Senior Leadership Team
(SLT), as well as succession planning for the EB and SLT.
The RAC conducted performance dialogues with the EB
members, prepared by the SB members. The SB
furthermore reviewed the performance of the SLT.
Transformation
The RAC regularly discussed the organisational
transformation with the EB in various meetings. The RAC
supported this topic to be included in the employee survey
in Q4 2021, the results of which will be discussed in 2022.
Furthermore, the RAC considered setting the strategic
priorities, the next step of the organisational transformation,
to be a valuable instrument for doubling TenneT’s
executioncapacity.
Inclusion and diversity
The SB supports TenneT’s goal to work with people from
diverse backgrounds and ages, with a range of experience,
skills and knowledge. In addition, TenneT believes that
diversity contributes to exploring new approaches and
freshthinking that may contribute to a more efficient way
ofworking. During 2021, inclusion and diversity were
discussed as part of the management team review.
In 2021, TenneT met its target on female recruitment;
unfortunately, the target for cultural diversity has not been
met yet. The RAC will continue to focus its attention on
TenneT’s progress with regard to inclusion and diversity.
Remuneration
In 2020 the SB reached a temporary agreement with
TenneT’s shareholder on the remuneration policy for EB
members, pending a potential revised shareholder structure.
TenneT’s request to have committee remuneration for all
SBmembers aligned with ARCC remuneration and to have
a higher remuneration for the chairs of the committees
(vis-à-vis the committee members) has not been honoured.
SB Succession
In view of currently synchronous appointment terms of
threeof the five SB members, the RAC has started to
contemplate measures to mitigate continuity risks
relatedthereto.
The RAC consists of Ms L. Griffith (chair),
Mr A. van der Touw and Mr S. van Els and met five times
during 2021; one further meeting was integrated in a SB
meeting. The RAC meetings were attended by the CFO,
theCEO and the Director of People. Where the topics
posed a potential conflict of interest, the EB members
andthe Director of People did not attend.
Self-evaluation of the SB
The self-evaluation of the SB was conducted in December
2021. Several 2020 topics aimed at a better SB functioning
and interaction with the EB and finding the right balance
between exercising supervision and acting as sparring
partner have proved to work well during 2021, such as
anSB-only moment of reflection after each SB meeting
andaconstructive-critical dialogue on TenneT’s strategy.
For 2022, the SB will, among others, monitor progress
onresolving high-risk audit findings and maintain its focus
onITand cybersecurity matters.
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Competencies
A.F. van der
Touw (chair)
E. Kairisto A.C.C. van Els E. Schöne L.J. Griffith
General management
■ ■ ■ ■ ■
Financial management
● ■ ● ● ●
Capital market/ investor relations
● ■ ● ● ●
Technology
● ◆ ■ ◆ ◆
IT
● ● ■ ● ●
Risk management
■ ■ ■ ■ ■
Project management (large infrastructure projects)
■ ■ ■ ■ ●
Human resources
■ ■ ■ ■ ■
Marketing/Public Affairs/ Brand image
■ ● ■ ■ ■
Regulation
● ● ● ■ ●
Public sector/State owned companies
■ ● ● ■ ●
Political/managerial experience and network the Netherlands
■ ◆ ● ◆ ■
Political/managerial experience and network Germany
■ ■ ■ ■ ◆
International background/experience
■ ■ ■ ● ●
Legal
● ● ● ■ ■
Experience in energy-, industrial and/or financial sector
■ ■ ■ ■ ■
Knowledge of Dutch Corporate Governance Code
■ ● ● ● ■
Corporate Social Responsibility (ESG)
■ ■ ■ ■ ■
■ = H● = M◆ = L
Capabilities matrix Supervisory Board
The SB capability matrix was completed as part of the
SBself-evaluation; there were no changes compared to
theprevious year. The matrix serves as a guideline for
topicsonthe permanent education calendar, as well as
forcompetences to consider regarding future vacant
SBpositions.
Contact with the works councils
Ms L. Griffith and Mr S. van Els, both appointed SB
members on the nomination of the Dutch Works Council,
regularly met with its members. Other SB members also
met with the Dutch Works Council to exchange information
about the important subjects in the SB and the Dutch
Works Council. Ms Griffith is also a member of the
Aufsichtsrat of TenneT TSO GmbH. Because of this,
shealso had close contact with members of the German
Works Council. The SB considers these interactions to
bevery valuable since they display the relevant topics for
employees of TenneT.
Thanks
TenneT again looks back on a year excellent performance.
This success is the result of the enormous commitment,
enthusiasm, and hard work of all employees of TenneT,
allofwhom the SB wholeheartedly thanks. The SB would
like to thank specifically the Company Secretary, Ancella
Anssems, for her advice and constant support during 2021.
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Remuneration policy
TenneT's remuneration policy primarily aims to offer remuneration at a level that will attract
and retain qualified and capable statutory directors (including those from within the
organisation). The remuneration policy meets the best-practice provisions on remuneration
defined in the Dutch Corporate Governance Code. Since all of the shares in TenneT are held
by the State of the Netherlands, TenneT's remuneration policy falls within the scope of the
2013 state participations policy (‘Nota Deelnemingenbeleid Rijksoverheid 2013’).
TenneT's revised remuneration policy has been approved
bythe Shareholder and is effective asof January 2020.
Themost important elements of the current remuneration
policy are described below.
Employment market reference group
Remuneration for the statutory directors of TenneT has been
set using a benchmark, comparison withorganisations
competing in the same business andemployment markets
as TenneT. These organisations include
• International transmission system operators (TSOs);
• Operators of infrastructure;
• Installation/engineering companies;
• Building companies;
• Financial institutions.
This reference group is divided in three sub reference
groups, (semi-)public, private and international TSOs.
Theremuneration level of the statutory directors is
determined based on the level of the median of the
sub-reference groups, taking into account the relevant job
grading. The remuneration policy includes “equal pay”,
regardless of gender or nationality.
The Supervisory Board intends to review the remuneration
policy for statutory directors once every four years. The
Supervisory Board may resolve to do this as well in case of
important policy changes, changes in shareholder structure
or ownership and changes in the labour market. Such
changes will be submitted to the shareholder for approval.
Remuneration norm
The benchmarking method as applied by TenneT results
ina‘norm’ level of remuneration for TenneT statutory
directors that significantly exceeds the maximum amount
desired by the Shareholder ofEUR383,160 (level 2019).
Upon the appointment of a new statutory director, the
Supervisory Board shall, at the request of the Shareholder,
limit the amount of remuneration. For 2021, this limit was
set at EUR414,564 for TenneT's Chief Executive Officer.
The remuneration of the other statutory directors of TenneT
has been capped at 90% of the remuneration of the
CEO.The Supervisory Board applies the principle of equal
pay to the remuneration policy for the statutory directors.
If, in the opinion of the Supervisory Board, the
maximumremuneration as required by the shareholder
leads to unacceptable risks to the organisation because
nosuitable candidates can be found to fulfil the role of
statutory director, the Supervisory Board shall consult
theShareholder.
The Supervisory Board decides on the annual increase
insalary. If the remuneration of a statutory director has
reached its maximum, further increases will be limited to
thestructural increments as agreed upon in the collective
labour agreement which is applicable to all Dutch TenneT
employees. Ms. Freitag and Mr. Meyerjürgens, whilst being
based in Germany both have a Dutch labour agreement
with TenneT.
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Service agreement and compensation
forearlytermination
In principle, with effect from 2017, employment contracts
– with the exception of internal appointments – are
concluded for a fixed term of four years. In the event that
the employment contract is terminated prior to the expiry
date, TenneT pays a maximum of one year's salary as a
termination compensation, unless the statutory director
resigns voluntarily or the termination is the result of his
orher actions. Mrs. Freitag will also receive this termination
compensation if she will not be employed for a second term
at the initiative of TenneT.
Other allowances and secondary benefits
The total remuneration package for statutory directors
includes an allowance for necessary out-of-pocket
expenses, the use of a lease car (of a type comparable
tothose provided to statutory directors of similar
organisations) including possible private use, accident
anddirectors’ andofficers’ liability insurance, and thirty
days’ paid leave per annum.
Secondary benefits also include a nominal contribution
towards health insurance premiums and the choice of
otherflexible individualised benefits, such as converting
holiday allowance into extra leave hours. Most of these
benefits areapplicable to all TenneT employees, working
under theDutch collective labour agreement. The company
doesnot extend any loans, loan guarantees or advances
against future earnings to any statutory director.
The Dutch and German tax authorities have taken the
position that part of the remuneration of Mr. Jager is
subjectto taxation in each country separately, resulting
indouble taxation of the same income. By decision of
theSupervisory Board, outline with TenneT's policy
applicable to all employees, TenneT holds Mr. Jager
harmless and hascompensated Mr. Jager for the negative
tax consequences, arising from the international allocation
ofthe TenneT remuneration.
Pensions
The retirement age of statutory directors is based on the
statutory pension age for Dutch contracts and the German
age for German contractsas the case may be. Statutory
directors participate in the regular pension scheme of the
country in which they are covered for social insurance.
The Netherlands based statutory directors participate in
apension arrangement as defined in the collective labour
agreement and as applicable for all employees in the
Netherlands. Theemployer and employee contribution for
the statutory directors follow the same rules as applicable
toall other employees. Dutch pension regulations define
thepensionable salary up to thefiscal maximum of
EUR112,189 (gross pension, 2021).
The statutory directors based in the Netherlands receive
thesame compensation as TenneTemployees with an
income above the fiscal maximum pension salary.
Thecompensation is based on the fiscally allowed,
age-dependent premium percentages upto fiscal
maximumpension salary.
German based statutory directors participate in the
regularpension scheme (“Beitragsplan”) or any other
pension scheme that such statutory director may have
already beenentitled to.
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Board remuneration
This section specifies the current remuneration for statutory directors as well as members
ofthe Supervisory Board. As of 2020, no variable remuneration is applicable anymore for
statutory directors, following a change in remuneration policy agreed by the shareholder.
Asaresult, statutory directors’ variable remuneration component has been converted into
fixed salary as of 2020.
During 2021, the Executive Board of TenneT was
composed of the following statutory directors:
Position Date of first appointment End of 1
st
term End of 2
nd
and last term
M.J.J. van Beek CEO 1 September 2018 31 August 2022
O. Jager CFO 1 August 2013 31 July 2017 31 December 2021
T.C. Meyerjürgens
1)
COO 1 March 2019 29 February 2024
M.C. Abbenhuis COO 1 January 2021 31 December 2024
A.C.H. Freitag CFO 1 January 2022 31 December 2025
1)
As of 1 March 2020 Mr. Meyerjürgens is statutory director
Ms. Van Beek has a fixed-term employment contract with
the company. Mr. Abbenhuis and Mr. Meyerjürgens both
have open-ended employment contracts. Mr. Jager
announced that this second term would be his last term.
His extended second term ended the 31
st
of December
2021. The 2
nd
of August 2021 TenneT announced the
appointment of Ms. Arina Freitag as TenneT’s new CFO,
per1
st
of January 2022.
Remuneration of the statutory directors
The comparative figures of the remuneration of the statutory
directors have been adjusted to include the termination
compensation for former Board member Ben Voorhorst,
which has incorrectly been omitted from the 2020
Integrated Annual Report. The termination benefit was paid
out in 2021.
Total remuneration
2021 (in EUR thousand)
Fixed
remuneration
Gross
Pension
Net pension
Total
pension
Termination
benefit
Other
M.J.J. van Beek 415 34 50 84 - 14
O. Jager 372 32 53 85 513
1)
52
T.C. Meyerjürgens 372 213 - 213 - 26
M.C. Abbenhuis 332 31 32 63 - 19
Total 1,491 310 135 445 513 111
2020 (in EUR thousand)
Fixed
remuneration
Gross
Pension
Net pension
Total
pension
Termination
benefit
Other
M.J.J. van Beek 399 30 34 64 - 14
B.G.M. Voorhorst 359 29 36 65 580
2)
21
O. Jager 359 28 23 51 - 21
T.C. Meyerjürgens
3)
300 158 - 158 - 16
Total 1,417 245 93 338 580 72
1)
The amount of EUR 513k consists of EUR 402k severance payment and EUR 111k of salary payments for the period of handover and strategic advice.
2)
The amount of EUR 580k consists of EUR 372k severance payment and EUR 208k of salary payments for the period of handover and strategic advice.
3)
As of 1 March 2020 Mr. Meyerjürgens is statutory director.
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For former statutory directors the end of their term as
statutory director is different from the end date of their
underlying, indefinite employment contract. Because the
statutory board terms were not prolonged by the Supervisory
Board, TenneT had to initiate the termination of the underlying
indefinite term employment contracts as a result of which
Mr Voorhorst and Mr Jager were entitled to a severance
payment in the amount of one gross annual salary. In view
of handover and strategic advisory services for the company
and in accordance with good governance, both Mr Voorhorst
and Mr Jager stayed on for a few more months, after
whichtheir employment contracts were terminated.
Thecompensation for this period is, in accordance with
IFRS standards, included in the termination benefit.
Fixed remuneration
In accordance with the indexation foremployees as
determined by the collective labour agreement for TenneT,
the salaries of all statutory directors have been increased by
3.5% as of January 2021.The Supervisory Board sets and
evaluates performance targets for each statutory director
onan annual basis.
Pension cost
The pensions of all Dutch statutory directors are
administered by the ABP Pension Fund. The pension
accrual is based on an average pay system up to the
fiscalmaximum (gross pension). With respect to the fixed
remuneration exceeding the fiscal maximum, the Dutch
statutory directors mayparticipate in a net pension system.
The 2021 net pension contributions for Mr. Voorhorst and
Mr. Jager include recalculations for previous years.
The pension of the German statutory director is based on
actuarial calculations in line with IAS19. The amount is equal
to the yearly service costs.
Other allowances and secondary benefits
All statutory directors have a company car available to
them. The value of theprivate useis part of the Other
income shown in the table. The company does not
reimburse its statutory directors for any personal income tax
consequence resulting from the privateuse of leased cars.
For Dutch statutory directors the secondary benefits
asshown in the remuneration table, include acontribution
tohealth insurance and a budget for flexibleterms of
employment. Each statutory director received an allowance
fornecessary out-of-pocket expenses, of EUR2,196 a year.
This allowance is not included in the remuneration table as
itis a compensation of expenses incurred and hence not
considered a remuneration component.
Other allowances also include reimbursement in respect
ofdouble taxation on the same income for Mr. Jager. We
are in discussion with the tax authorities regarding double
taxation for other board members for the years 2018 and
2019. TenneT will start a mutual agreement procedure for
these years to avoid double taxation.
The total remuneration paid to the statutory directors is
reconciled to and further disclosed innote 4 of the
consolidated financial statements.
Remuneration ratio
The remuneration ratio CEO to employees is measured by
comparing the CEO's annual total compensation with the
median annual total compensation, including fixed salary,
variable remuneration and pension benefits of all other
employees. The remuneration ratio CEO to senior
management is measured by comparing the CEO's
annualtotal compensation withthe median annual total
compensation, including fixed salary, variable remuneration
and pension benefits of the Senior Leadership team
(SLT).With the TenneT Transformation that was introduced
in July 2020 the group for the comparison of the CEO
remuneration partly changed. Instead of the 57 Senior
Managers reported before, the new organisation includes
22 Senior Leadership team (SLT) members at Director level,
which is the new comparison group. As a result the
remuneration ratio CEO vs. SLT in 2021 is different compared
to CEO vs. Senior Management in 2020 and 2019.
2021 2020 2019
Remuneration ratio to employees 5.4 5.6 5.4
Remuneration ratio to SLT 1.9 2.1 2.1
Compared to other companies that are wholly owned by the
Dutch government the remuneration ratio to employees is
below average.
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Remuneration of the Supervisory Board
The remuneration policy for the Supervisory Board defines
the remuneration for the different roles and committees of
the Supervisory Board. During 2021 each Supervisory
Board member was serving on one or two committees.
The roles and responsibilities of members of the Supervisory
Board were as follows:
Supervisory
Board
Audit, Risk
and
Compliance
Committee
Remuneration
and
Appointments
Committee
Strategic
Investments
Committee
A.F. van der Touw Chair Member Member
L.J. Griffith
1)
Vice-chair Chair
E. Kairisto Member Chair Member
A.C.C. van Els Member Member Chair
E. Schöne Member Member Member
1
Mrs. Griffith is also member of the Aufsichtsrat of TenneT TSO GmbH;
The Shareholder agreed to an annual indexation of the
Supervisory Board remuneration following TenneT's
collective labour agreement, from 1 January 2015 onwards.
As a result, Supervisory Board member remuneration
increased by 3.5%as of January 2021.
Following this increase, Supervisory Board member
remuneration was as follows from January 2021
andonwards:
(EUR)
Chair 31,490 per annum
Vice-chair 25,327 per annum
Member 22,602 per annum
Audit, Risk and Compliance Committee 7,529 per annum
Remuneration and Appointment Committee 5,955 per annum
Strategic Investment Committee 5,955 per annum
The total remuneration received by the Supervisory Board
intheir capacity as TenneT Holding B.V. Supervisory Board
members during 2021 was as follows, resulting in the
following remuneration amounts as of 1 January 2021:
2021 2020
(in EUR thousand)
Fixed
remuneration
Committee
fee
Total
Fixed
remuneration
Committee
fee
Total
A.F. van der Touw 32 14 46 30 13 43
L.J. Griffith 25 6 31 22 6 28
E. Kairisto 23 13 36 22 7 29
A.C.C. van Els 23 12 35 22 11 33
E.M Schöne 23 13 36 22 7 29
P.M. Verboom - - - 18 10 28
R.G.M. Zwitserloot - - - 20 5 25
Total 126 58 184 156 59 215
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Our Supervisory Board
A.F. (Ab)
van der Touw
Chair of the Supervisory Board /
Member of the Audit, Risk &
Compliance Committee / Member
Remuneration & Appointments
Committee
66, Dutch (m)
Initial appointment:
1 June 2019
Expiry first term:
31 May 2021
L.J. (Laetitia)
Griffith
Vice-Chair of the Supervisory Board /
Chair of the Remuneration &
Appointment Committee
56, Dutch (f)
Initial appointment:
1 July 2015
Expiry second term:
30 juni 2023
E.M. (Edna)
Schöne
Member of the Supervisory Board /
Member Strategic Investments
Committee
Member of the Audit, Risk &
Compliance Committee
50, German (f)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
E. (Essimari)
Kairisto
Member of the Supervisory Board /
Chair of the Audit, Risk & Compliance
Committee
Member of the Strategic Investments
Committee
55, German and Finnish (f)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
A.C.C. (Stijn)
van Els
Member of the Supervisory Board /
Chair Strategic Investments
Committee / Member Remuneration
& Appointments Committee
57, Dutch (m)
Initial appointment:
1 May 2019
Expiry first term:
30 April 2023
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Principal position:
• Former CEO Siemens Nederland
(until 1 April 2018)
Other positions:
• Member Board Deutsch-Niederländische Handelskammer
• Chair Supervisory Board Universiteit Leiden
• Chair Board Dutch BachAssociation
• Chair Board Fonds Slachtofferhulp
• Chair Supervisory BoardNIBA
• Member Board GAK Foundation
• (External) member Ondernemingskamer Gerechtshof ’
s Gravenhage
• Chair Advisory Council Ministry of Defence
• Chair Advisory Council Ministry of Infrastructure
• Chair Supervisory Board, Platform Talent voor Techniek
• Member Supervisory Board Van Leeuwen Buizen
Groep B.V.
Principal position:
• Former State Councillor in the Advisory Division
of the Dutch Council of State
Other positions:
• Member of the Aufsichtsrat TenneT TSO GmbH
• Chair Supervisory Board Holding Nationale
Goede Doelen Loterij / Postcode Loterij
• Chair Supervisory Board Nederlands Filmfonds
• Member of the Supervisory Board of Gassan
Diamonds B.V.
• Member of the Supervisory Board of ABN AMRO
• Chair Stichting Nederlands Vioolconcours
Principal position:
• Member Executive Board Euler Hermes AG
Other positions:
• Member of the Board ‘Lateinamerikaverein’
• Member of the Executive Committee ‘Ostausschuss
der deutschen Wirtschaft’
• Member of the Executive Committee International
Chamber of Commerce Germany
• Member of the Undernehmensbeirat KfW Ipex
Principal position:
• Former CFO Hochtief Solutions AG
Other positions:
• Member Supervisory Board Fortum Oyj
• Member Supervisory Board Applus+ SA
• Member Supervisory Board Freudenberg SE
• Chair ‘Deutsch-Finnische-Gesellschaft e.V.’
• Member Supervisory Board Iveco Group N.V.
Principal position:
• Former CEO Shell Germany
• Commercial director (non-executive)
at Havenbedrijf Rotterdam N.V.
Other positions:
• Chair Supervisory Board IDA Foundation
• Chair Supervisory Board EVOS B.V.
• Member Advisory Council Dutch Ministry of Infrastructure
• Honorary consul general of the Bundesrepublik
Deutschland in Rotterdam
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“For the energy transition we
aim to strike a balance between
developments that are good for
Friesland and the effects they
have on nature, our landscape
and our community as a whole.
We encounter TenneT in various ways on this quest.
One the one hand, we need each other to solve
congestion issues for the grid, while on the other
hand, TenneT’s work affects nature, the landscape,
and the community. At the moment, we are working
with TenneT on researching Friesland’s energy future
and the infrastructure that this will require. We need
to work together to strike the right balance, in order
to tackle these challenges. I look forward to working
with TenneT on these challenges and to looking
beyond our own borders towards a healthy balance
that can count on the support of our community
inFriesland.”
Sietske Poepjes
Provincial Executive of the
Dutch province of Friesland
Sietske Poepjes views the energy
transition as a collaboration between
multiple parties and works with TenneT
and others to ensure that Friesland’s
abundant nature and landscape are
safeguarded.
“ It’s about
striking a
balance between
TenneT’s work
for the energy
transition and
preserving
our nature and
landscape.”
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Corporate governance
As a transmission system operator, TenneT plays an important role in society. We believe in
having a solid governance structure, effective oversight and a transparent accountability to all
stakeholders. To that end, we comply with the Dutch Corporate Governance Code (hereafter:
the Code), insofar as it is applicable.
Governance
and risk
management
Governance and risk management
Corporate governance structure
TenneT's corporate governance structure comprises the
Executive Board, the Supervisory Board and the General
Meeting of Shareholders. Additionally our internal auditor
and external auditor play an important role in this structure.
Executive Board
The Executive Board of TenneT Holding B.V. has four
statutory directors. The Executive Board members have
joint authority to represent the company. Each board
member also holds limited individual power of attorney.
Three members of the Executive Board of TenneT Holding
B.V. are managing directors of TenneT TSO B.V., three
members of the Executive Board are managing directors of
TenneT TSO GmbH and one of these three members is
managing director of TenneT Offshore GmbH.
The Executive Board is responsible for the management
ofthe company, which includes regulated and non-
regulated activities.
Supervisory Board
The Supervisory Board of TenneT Holding B.V. supervises
the policies, management and the general affairs.It carries
out its duties in the interests of the company and its
stakeholders, and also takes into account relevant aspects
of corporate social responsibility. TenneT has a two-tier
board structure, as specified in the Electricity Act.
All information about the Supervisory Board (such as
itsrules and rotation schedule) is available on our
corporatewebsite.
General Meeting of Shareholders
All shares in TenneT's capital are held by the Dutch state,
which is represented by the Ministry of Finance. Under
theElectricity Act, only the Dutch state may hold voting
interests in the company. A General Meeting of
Shareholders is held within six months after the end of
eachfinancial year.The General Meeting of Shareholders
in2021 was held virtually due to the COVID-19 restrictions.
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The General Meeting of Shareholders discharged the
Executive Board and Supervisory Board members from
liability from their respective activities in the previous year.
Other shareholder meetings are held as and when deemed
necessary by the Executive Board, Supervisory Board or
theShareholder.
External auditor
The General Meeting of Shareholders has the power to
appoint external auditors to audit the financial statements
prepared by the Executive Board. These auditors report to
the Supervisory Board and the Executive Board, and their
findings are presented in an independent auditor's report,
an assurance report, a management letter and an audit
review results report.The General Meeting of Shareholders
appointed Deloitte Accountants B.V. as TenneT's external
auditor as per 1 January 2020.
The performance of the external auditor is evaluated by
theExecutive Board and the Audit, Risk & Compliance
Committee and, if necessary, also by the entire
SupervisoryBoard.
The external auditor attends all meetings of the Audit,
Risk& Compliance Committee. It also attends Supervisory
Boardmeetings when the independent auditor's report
onthe financial statements is discussed and the financial
statements approved.Furthermore, in 2021 the external
auditor attended one meeting of the Strategic Investments
Committee for information purposes.
Internal auditor
The Head Internal Audit attends all meetings of the Audit,
Risk & Compliance Committee.Internal Audit aligns its audit
scope and reports directly to the Executive board and the
Audit, Risk & Compliance Committee on minimum
quarterly basis.
Compliance & integrity officers
TenneT has a Head Compliancy & Integrity Officer, who is
also a member of the Senior Leadership Team, and Local
Compliance & Integrity Officers in both the Netherlands
andGermany. All material compliance and integrity
issuesare shared and discussed with the Audit, Risk &
Compliance Committee.Additionally, Compliance & Integrity
officers report directly to the Executive board and the Audit,
Risk & Compliance Committee on at least a quarterly basis.
Related parties
Related party transactions are disclosed in note 30to
theconsolidated financial statements.
Diversity
Diversity is disclosed in the Supervisory Board report.
Deviations from the Dutch Corporate
Governance Code
Certain principles and best-practice provisions in the Code
do not apply to TenneT. The reasons why and to what
extent TenneT decided not to or could not adopt these
particular principles and best-practice provisions are
explained below:
2.1.3, 3.1.3: Not applicable: no Executive Committee has
been established at TenneT.
2.3.8: Not applicable: no delegated Supervisory Board
member is employed by TenneT.
2.3.2: If the Supervisory Board has more than four
members, the Code stipulates that the board shall appoint
from among its members an Audit Committee, a
Remuneration Committee, and a Selection and
Appointments Committee. The TenneT Supervisory Board
has combined the tasks of the latter two committees into
aRemuneration and Appointments Committee.
2.7.5 - 2.8.3, 3.3.2, 3.3.3: Not applicable: these provisions
do not apply to TenneT because it only has one shareholder,
being the Dutch state.
Chapter 4: Regarding paragraph 4.1 TenneT complies
withthe Code. Paragraphs 4.2 – 4.4 are not applicable to
TenneT because it only has one shareholder, namely the
Dutch state.
Chapter 5: Given TenneT’s two-tier board structure,
thischapter is not applicable.
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Corporate risk management and Internal control
Professional corporate risk management with integrated internal control processes are key
throughout the organisation that results into effective risk-based decisions.
Corporate risk management and internal control
framework
Risk Management continuously identifies risk, assesses
severity of risk, prioritises risk, implements risk responses
and maintains a portfolio view. It reports the identified
uncertainties, opportunities or control issues proactively on
a quarterly basis towards the Executive Board, Supervisory
Board and Senior Leaders. The principles of corporate risk
management and internal control should be taken into
account in all activities performed at and for TenneT.
Corporate risk management facilitates top down and
bottom up dialogues, workshops, detailed analyses and
general trainings on risk awareness at all levels within
TenneT. The resulting outcome provides management
insights to take risk-based decisions that support the
achievement of objectives set at all organisational levels.
As corporate risk management the focus and key objectives
are to:
• Identify events, assess the risk, formulate risk responses,
inform and communicate, implement control activities
and continuous monitoring;
• Establish and maintain a uniform risk management
framework;
• Provide the required tools, framework and guidelines for
risk based decision making;
• Transparent and uniform reporting based on the ISO and
COSO framework.
As TenneT the corporate risk framework is structured into:
• Strategic Risk Management (SRM);
• Operational Risk Management (ORM);
• Project Risk Management (PRM);
• Risk and Portfolio management;
• Internal Control and Process Risk Management.
TenneT’s corporate risk management and internal control
frameworks are based on ISO 31000 and COSO standards
and are compliant with the requirements of applicable laws
and regulations such as the Dutch Corporate Governance
Code, the German Control and Transparency in Business
Act and the German Accounting Law Reform Act.
Risk management and internal control
Purpose,
Promise &
Principles
Objectives
Risk
Management
Process
Achieve
Objectives
Achieve objectives supported
by risk management and internal
control framework
Derive and implement
strategic objectives
Derive business objectives
• Department level
• Project level
• Process level (end-to-end)
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Strategic risk management (SRM)
Within the Strategic Risk Management (SRM) domain, all
significant risks and opportunities are assessed that could
arise and impact the strategic objectives of TenneT now or
in the near future. These topics are derived by in-TenneT
workshops and aligned across the different units within
TenneT using key informative reports published by objective
and respected publishers. It is the objective of SRM to
assist the Executive Board by reporting key decisional
information, deemed necessary to steer or adjust the
strategic goals.The findings of SRM are discussed
regularlywith the Supervisory Board and the Audit,
Risk & Compliance Committee.
Operational risk management (ORM)
TenneT’s Operational Risk Management (ORM)
supportsthemanagement of the units in managing
risksand opportunities related to TenneT’s objectives.
Onabi-annualbasis, ORM facilitates risk & opportunity
dialogues with the unit leaders and the unit risk champions
to discussrisk & opportunity developments. Furthermore
ORMcontinuously assists the risk champions to coordinate
risk management activities.
While management is the one responsible for daily risk
management, it is the task of ORM to streamline the risk
process and to ensure the usage of the same methodology,
process and understanding across all units. Significant
risksor opportunities that could either impact the strategy
or have a significant influence on other units are escalated
appropriately.
Project risk management (PRM)
To meet challenges arising from the investment portfolio
andrelated objectives, TenneT implements project risk
management to all planned and executed projects.
PRMaims to boost the likelihood of realising project
goalson time, on budget and with a high level ofquality.
Forall large projects, dedicated project risk managers
systematically review and manage risks together with
project leads within the quality and uniformity
standardssafeguarded by corporate risk management.
Project risk management works closely together with
claimmanagement and has reached a high maturity
levelwithin TenneT.
Risk and portfolio management
To strengthen security of supply, TenneT’s asset
management uses condition monitoring and risk based
assessments to plan maintenance and investments. Grid
constraints are identified by analysing grid components and
failures and by monitoring the necessary transport capacity.
These constraints are assessed according to the risk they
pose to TenneT’s objectives. Should the risk exceed a
predefined level, responses are proposed and included.
Internal control
The internal control framework is designed to support
andsafeguard the realisation of our process objectives,
thecompliance with laws, regulations, internal policies and
procedures and the reliability of the internal and external
reporting. To assess the effectiveness of this framework
andidentify opportunities forimprovement, a control
self-assessment is performed twice a year bycontrol
owners and validated by management. The risk
management & internal control team performs quality
reviews on the assessments and reports, monitors and
follows-up on theidentified issues, for mitigation and
remediation with therelevant business owners.
The outcome ofthe control self-assessments provide
directinput for the Letter of Representation process
andsubstantiates the in-control statement of the Executive
Board. Overall control effectiveness andthe scope of
TenneT’s internal control framework arepart of the bi-annual
report to the Executive and Supervisory Board.
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Internal audit
Internal Audit functions under the responsibility of the full
EB, the Head Internal Audit reports to the CEO. The Head
Internal Audit has direct access to the Supervisory Board,
advised by the Audit, Risk and Compliance Committee
(ARCC) and attends all meetings of the ARCC.The
Supervisory Board supervises the functioning and
performance of Internal Audit and has regular contact
withthe Head Internal Audit.
Executive Board
Three lines of defence
External
Assurance
Providers
First line roles
Own and manage risk
and control (front line
operating management)
Second line roles
Expertise, support,
monitoring and
challenge on risk- and
control-related matters
Third line roles
Independent and objective
assurance and advice on
all matters related to the
achievement of objectives
Key
Accountability,
reporting
Delegation, direction,
resources, supervision
Alignment, communication,
coordination, collaboration
Management
Actions (including managing risk and control)
to achieve organzational objectives
Internal audit
Independent assurance
Strategy formulation and implementation
Supervisory Board
Supervision
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Compliance and integrity
A culture of compliance and integrity, or simply said “responsible behaviour”, is essential to
betrustworthy and successful in a sustainable manner. We therefore aim to predict, prevent,
detect and respond to compliance & integrity risks that threaten the realisation of TenneT’s
strategy and objectives, and may lead to economic or reputational harm. The applicable laws
and regulations as well as internal policies and procedures determine the boundaries within
which we operate, but more importantly it is our mindset and the way we behave and act that
demonstrate our commitment to a compliant and integer culture. To achieve this, we need
leadership, the right tone from the top and to act consistently with our principles Ownership,
Courage and Connection.
For the implementation of our compliance management
system, ISO 19600 (succeeded in 2021 by ISO 37301)
served as reference model. An internal charter and
framework provide guidance to TenneT and describe the
compliance organisation, roles and responsibilities, and the
systems, processes and tools used. Our guiding principles
Ownership, Connection and Courage, our Code of
Conduct; “The way we act” and Supplier Code of Conduct,
and a set of other compliance policies and directives
support our employees in doing the right things.
The compliance & integrity officers and data protection
officers (DPO’s) are positioned independent from the
business. The Head of Compliance & Integrity has a direct
reporting line to the CEO and the Audit Risk & Compliance
Committee (ARCC) and the local compliance officers and
DPO’s have direct access to local management. Also in
2021, the compliance officers and DPO’s have been able to
act independently, whilst maintaining a good connection to
the business. They are frequently requested for advice, and
reporting channels where compliance or privacy incidents or
concerns can be reported (like the Speak Up Portal or
special mailboxes) are familiar to the organisation.
Regular and ad hoc reporting to, alignment and dialogues
with the CEO, Executive Board, the Audit Risk &
Compliance Committee and local management about the
state of compliance & integrity and privacy take place and
are considered effective. Furthermore, a GRC platform with
respective representatives from other second and third line
functions has been formed and quarterly meeting of the
Compliance & Integrity Committee take place.
Besides the regular duties of the compliance & integrity
organisation, in 2021, special attention has been given to
amongst others the following topics:
• The privacy organisation has been further
professionalised with the appointment of Privacy
Champions in each unit of TenneT, who function as a
liaison or single point of contact between the privacy
officers and the business units. This will better
accommodate for ensuring compliance of our data
privacy processes with laws and regulations.
• TenneT has followed up on the agreed commitment
tothe Dutch energy regulator ACM to improve the
prevention of incidents in the high voltage network.
Aspart of that, TenneT has provided all requested
information regarding the compliance management
system and compliance organisation and culture for
assessment by a third party, the UMS Group, and
received positive feedback from UMS Group.
• TenneT has ensured its compliance with the new EU
Directive 2019/1937 on the protection of whistleblowers.
The Speak Up Portal, which was already implemented in
2018 complies with all requirements. Speaking up is
actively promoted and communicated by TenneT.
• E-learnings are rolled-out to all employees, on a quarterly
basis, about topics like compliance, data privacy,
information protection, health and safe workplace and
fraud, bribery and corruption. All new employees receive
these trainings as part of their onboarding program.
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In 2021, 40 alleged compliance-related breaches were
reported (2020: 56). Most frequently, employees reach out
directly to the compliance & integrity officers, but also the
special e-mail address is used, or the Speak Up portal is
used to report (anonymously). TenneT received 1 external
complaint. All reported alleged breaches are actively
followed up. For 2021 it can be concluded that 11
constituted actual breaches, in most of the cases due to
mistakes and unintentional acts, but have not led to
disciplinary action or termination of employment. In the field
of personnel expenses, certain non-compliances were
identified and reported and remediation actions taken.
There have been 34 data leaks and/or irregularities in 2021
(2020: 27). If and when required, in total in 8 instances, they
have been reported to the relevant authorities. This was an
increase in comparison to 2020, mostly due to the fact that
there have been major IT projects like OneERP and OnePPL.
TenneT did not identify any fraud, bribery or corruption
breaches which had a material impact in 2021. Material
impact is defined in our risk matrix as a breach that has a
significant adverse effect on TenneT’s reputation and/or
financial position.
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Risk appetite
Risk appetite is the amount and type of risk TenneT is willing to pursue or retain.
The risk appetite statement describes the willingness of
TenneT to take on risks in pursuit of its strategic objectives.
Annually, the Executive Board, together with the Senior
Leaders, determine the right balance for TenneT between
the risk, reward and opportunity. It is evaluated by
considering influences such as company culture, financial
strength, capabilities of the organisation, external
influencesand stakeholder influences.
Overarching the risk appetite statement, TenneT has
twoexplicit ’zero tolerance’ criteria:
• TenneT has zero tolerance for harm to people from
exposure to health and safety threats;
• TenneT has zero tolerance for bribery, fraud and other
corrupt business practices as reflected in the TenneT
Code of Conduct.
Both zero tolerance statements are excluded in the risk
appetite assessment.
In terms of the amount of risk that TenneT is willing
toaccept, a differentiation is made between the
categoriesriskaverse (low risk appetite), risk neutral
(balanced risk appetite) and risk taking (high risk appetite).
The following visual summarises risk appetite assessed
bythe Executive Board and Senior Leaders. To learn more
about specific strategic risks please refer to the section
‘Our performance in 2021’.
Strategic pillar Description Risk Appetite
Low - Low - Low -+ High + High + High
Risk Trend Opportunities Trend
Drive the energy
transition
as a green grid operator
and a thought leader.
Safeguard our
financial health
by implementing a regulatory frame-
work to support our strategy, and
delivering a return in line with what our
capital providers expect, and raising
the necessary external financing.
Energise our
people and
organisation
with an inclusive and safe
environment where people
enjoy coming to work.
Risk appetite and trend score
Secure supply
today and
tomorrow
by maintaining the grid to meet
reliability targets and operating
it to its maximum capability.
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To provide one structured risk overview of all the risks and opportunities identified by TenneT,
three risk tables are introduced. A strategic risk table based on the four strategic pillars,
regulatory risks and lastly the climate related risks. Please note that the risks mentioned in
these tables are also presented earlier in the performance section.
Strategic pillar Risks Mitigating measures
Energise our
people and
organisation
• Recruitment in the energy sector is highly competitive
and the shortage of talent will continue for the
foreseeable future.
• Rapid and ad-hoc changes due to governmental
COVID-19 regulations and the inability for social
interactions increases the risk of potential mental
health related problems.
• We face a delicate balance, between growing
responsible and sustainable in such a way that allows
us tostay agile and productive versus growing too
fast, which could slow us down with organisational
inefficiencies and a lack of cohesion in the workforce.
• Safety remains a core concern for everyone
atTenneT.
• Improving TenneT’s attractiveness as employer, the
succession planning and our interaction with potential
candidates and students.
• Education is intensified to commit all stakeholders,
making no difference between internal employees
andcontractors, about the importance and adherence
to all safety regulations whether working at a
construction site orat the office.
• Providing support to our employees via in-house
programs like the ‘Always Energy’ initiative.
Opportunities
• Utilising the new way of working, either partially from home or by opening new work hubs could attract talent.
• Boosting our execution power through finding better ways of working together in a performance-oriented culture.
Secure supply
today and
tomorrow
Risks Mitigating measures
• Uncertainty about the phase-out of conventional
energy production and the future expansion of
renewables.
• Permitting processes by authorities could cause
project delays.
• Some of our older assets require more maintenance
work and presents a growing logistical challenge
andcost.
• High pressure in the supply chain for specialistic
services, resources and scarce materials.
• Too much or too little renewables being fed into the
grid can destabilise the system and interrupt supply.
Congestion scenarios such as this are becoming
more common and redispatch costs rise.
• Customer demand to be connected in reasonable
time to our grid is high.
• Security threats ranging from copper theft, cyber-
attacks, ransomware and social engineering remains
ahigh impact risk due to the nature of our work.
• Introducing new technologies could increase the risk
of outages caused by unforeseen malfunctions.
• We design and strengthen our assets, as well as
providing system back-up in the event of failure.
• Investing in the usage of new technology related
tothe security of supply, particularly in digitalisation
and its potential to make smarter use of our grid.
• Updating our supply chain management including
among others new sourcing models, long-term
partnerships, improving demand planning or revising
contract models and tendering procedures.
• Monitoring M&A activities in the markets
(e.g. cable producers).
• Optimising and simplifying organisational and decision
making processes to increase efficiency and flexibility
in our maintenance programme.
• We are continuously assessing and identifying new
security risks and to define and implement suitable
measures for this.
Opportunities
• New technologies (e.g. big data and data analytics) can support us in improving the utilisation of the grid.
Key risks
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Strategic pillar Risks Mitigating measures
Drive the
energy
transition
• Indicated but not yet implemented governmental
policies, due to the recent elections, could affect or
delay our projects that require new market designs.
• Our strategic plans are complicated by uncertainty
ona national and/or European level due to an
increase of political ambition on energy transition
targets, thephase-out of conventional energy
sources and the future expansion of renewables.
• Limited space is available to build and expand
ourgrid.
• A lack of societal acceptance of the energy transition
could lead to an inability to realise our ambitions.
• Economic developments could influence the
acceptance of costs associated with the energy
transition.
• Together with project stakeholders, we aim to find
thebest solutions for each situation.
• We are actively working with our contractors to make
progress towards climate, circularity and nature
ambitions.
• We aim to use an environmental cost indicator (ECI)
for evaluation purposes, based on the methodology
of a Life Cycle Assessment (LCA).
Opportunities
• New technologies, European collaboration to foster cross-border solutions, sector coupling, integrated
decarbonisation and the ongoing politics of the green industry.
• We have observed a strong preference for underground cabling compared to overhead lines.
Safeguard
our financial
health
Risks Mitigating measures
• Lower regulatory rates of return on capital could
diminish TenneT’s attractiveness for investors.
• Less favourable insurance market and limited options
in risk transfer.
• Our revenues depend mainly on the regulatory
frameworks in the Netherlands and Germany. Adverse
changes in any of the regulatory systems might
impact our financial performance.
• Dependence on regulatory framework and political
commitments and growing concern about the cost
ofenergy are increasing the pressure on the
reimbursement schedules (revenue cap).
• Several alternatives are explored to finance the
remaining equity requirement for our German
investments.
• The revenue cap is partially mitigated by an additional
income stream on top of the revenue cap for specific
investments.
• Application of active cost control and to strive for an
efficient operation of our business as far as reasonably
possible in order to avoid adverse effects from
efficiency assessments of our regulators.
Opportunities
• Standard & Poor’s continued to rate us as ‘strong’ and Sustainalytics indicated that TenneT is at low risk
ofexperiencing material financial impacts from ESG factors.
• Investments in green businesses and economies are increasingly favoured by large investors and banks.
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Regulatory risks
Regulatory risk Risk-mitigating actions
General
• Inability to meet increasing efficiency targets over time
as imposed by incentive regulation, especially taking into
account a strongly growing company and the need for
significant investments in grid expansion, maintenance,
operation as well as innovation.
• TenneT is unable to achieve a reasonable return on
itsinvested capital as well as the full remuneration of
operational costs as the regulated return continues
todecline due to the low interest environment, the
disallowance or only partial recognition of certain
operational costs and stricter regulatory incentives.
• TenneT performs regular reviews of its processes and
organisational structure, introduced lean management,
carries out continuous improvement activities and
automates its IT-related processes. TenneT also makes
careful choices on make-or-buy decisions to optimise
value for money to society and conducts strategic
dialogues with regulators (ACM, BNetzA, ACER),
policymakers and industry partners/suppliers to
co-shape its future regulatory framework.
• TenneT’s strategy is to seek mutually acceptable results
with regulatory stakeholders. However, if needed to
protect pivotal strategic positions on solid legal grounds,
legal action may be taken.
Europe
• The 'Clean Energy Package' (CEP) entered into force.
Itrequires amongst others that TSOs provide 70% of the
total cross-border transmission capacity to the market,
an amount difficult to achieve without extensive and
costly redispatch activities.
The German government introduced an action plan to
gradually achieve this target by 31.12.2025. Delays in
fulfilment of this plan by TenneT could lead to material
financial penalties.
Similarly, the Dutch Ministry of Economic Affairs has
issued an action plan to gradually achieve the 70% target
by 1.1.2026, which also contains derogations forTenneT.
• In Germany TenneT keeps the capacity requirements
along the ‘trajectory’ as defined in the national ‘action
plan’. This means stepping up to full 70% using
instruments such as redispatch and countertrade,
alsowith the involvement of e.g. the DSO of Schleswig-
Holstein Netz supporting through infeed-management
ofRES.
• In the Netherlands, TenneT monitors compliance against
the action plan, in particular also as to the conditions of
the derogation. TenneT reports on issues to the ACM
and the Ministry of Economic Affairs, if any.
The Netherlands
• Regulatory returns in the Netherlands are under
pressure due to the low interest rate environment.
Thisimplies a weakening of operational cash flows in
times when TenneT is investing heavily. Furthermore,
theACM plans to replace the estimated by the actual
risk-free rate. This would expose TenneT to more
variability in cash flows and in the short- to medium-
term is likely to have a further negative impact on returns
as a result of the low market interests, which is partially
offset by the real plus WACC system leading to higher
cash flows in the new regulatory period.
• According to the decision by the ACM, TenneT’s cost
efficiency level will decline from 97.9% in 2021 to 89.1%
in 2025, impacting the next regulatory period with
decreasing revenue.
• TenneT is appealing against the efficiency determination
by the ACM and supports the appeal of Netbeheer
Nederland regarding the determination on the WACC.
Germany
• The BNetzA decreased the rate of return on equity for
the next regulatory period from 6.91% to 5.07% before
corporate tax. This will have a significantly negative
impact on TenneT’s cash flow and revenue as of 2024.
The European Court of Justice decided that the German
legal design of the regulatory framework must be changed
in order to give the BNetzA more independence from
political influences. It is yet unclear how far the degree
ofindependence will reach with regard to parliamentary
and legal checks and balances and how it will be
implemented in a reliable and future-proof way in the
regulatory framework. Furthermore, the independence
ofthe regulator from national legislators may also affect
the relationship of the ACM to the Ministry of Economic
Affairs (EzK) in the Netherlands, as was announced in
apress release by the ACM.
• TenneT together with other grid operators challenges
themethodology used by the BNetzA on the return
onequity determination and is appealing against this
determination.
• TenneT established an internal working group including
colleagues from its regulatory, legal and political
departments to accompany the political process.
• TenneT engages, amongst others, in the German
Association of Energy and Water Industry (BDEW) to
support profound analysis and advocacy work within
thenetwork industry.
• TenneT engages in public and expert discussions
andpositions itself as a competent partner and trustful
advisor to the regulators and policymakers.
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Climate related risks and opportunities
The Taskforce for Climate related Financial Disclosures
provide recommendations for companies to improve and
increase the reporting of climate related financial information.
We have followed up on their recommendations, also in our
risk assessment process and have identified the following
climate related risks and opportunities for TenneT, which
weclustered below. Please note that there might be some
overlap with risks also being mentioned earlier in the report,
but this is to provide one structured overview in this section.
Climate related risks
Risks How might this affect TenneT? Risk mitigating actions
• Transition
risks
• Policy and
legal risks
• Policy and legal risks are related to our regulatory
framework. Choices we make that can help society
andus as a company to transition to a climate-neutral
economy are subject to discussion with our regulator.
Our regulatory framework is updated once every 5 years
and this might pose a risk that if ambitions from
governments in the areas we serve move faster than
thespirit of the regulatory framework, this might be a
constraining factor to drive the energy transition.
• We mitigate this by lobbying on national and European
level, run pilot projects and present business cases and
focus on those topic that promise the highest benefit
for society, which are integration of power and
hydrogen as well as flexibility and grid utilisation
together with partners.
• Technology
risk
• A risk of stranded assets might occur in case a new
technology is developed which makes them obsolete.
• Mitigating actions include challenging the necessity of
each investment and embrace other solutions, if those
promise more societal value and actively work and
invest in new technology as part of our strategy. Next to
this, our approach regarding innovation aims to focus
on the most important areas and implementing new
technology as fast as possible, which reduces this risk.
• Market risk
• Our market risks relate to dealing with the higher infeed
of renewable energy sources and impacting the way we
balance our grid and market prices. Renewable energy
sources are less predictable and cannot easily be
increased in case of a higher demand. Differences in
market prices can lead to too high requests for energy
atone location, e.g. Southern-Germany, where not all
energy can be transmitted to the users. In such
situations additional measures are required to balance
the grid, e.g. redispatch.
• TenneT plans and builds DC-grid connections in
Germany and interconnectors within Europe and we
investigate the grid integration of green hydrogen and
power grids as well as improving the quality of data
topredict power production and consumption.
• Reputation
risk
• A reputation risk could occur when we are unable to
deliver on our strategic goal to drive the energy transition.
Connected to this are the increasing ambitions of the
governments in the areas we serve to meet these
requirements. Also, when realising our assets, we also
have a reputational risk if there is a growing resistance
from local communities and governments, if we do not
engage with our stakeholders properly (“not in my
backyard”). Furthermore the overall cost of the energy
transition is also a risk from a reputational perspective
(affordability).
• To mitigate this risk we aim to communicate in an
openand transparent fashion. Next to this, we invite
stakeholders in the planning and approval process of
projects to voice their opinion which we consider in, for
instance, the final route of a certain project. We also aim
to balance affordability, sustainability and security of
supply in all our investment decisions. Further mitigation
takes place through the usage of professional planning,
project management and costs forecasting.
• Physical
risks
• Acute
• Acute risks are related to for instance (extreme) weather
conditions that could impact our assets and supply
chain.
• Acute weather conditions are mitigated during the
design, construction and maintenance of our assets,
e.g. choice of location and the choice of materials.
Regarding our supply chain, monitoring of suppliers
anddiversification are mitigating factors.
• Chronic
• Chronic physical risks can relate to rising sea and ground
water levels for instance, where our assets might bear a
risk due to this.
• We monitor developments to gain more experience and
insights related to the scenarios and effects. Examples
include projects related to assets such as our Krimpen
aan de IJssel substation and one of our pylons, which
we both have elevated. TenneT insures all substations
and buildings during construction and operation against
risks from natural catastrophes. Pylons and overhead-
lines are not insured.
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Climate related opportunities
Opportunities How might this affect TenneT?
• Resource efficiency • Increased decentralised power production and storage including self-balancing micro grids as well as
electrolysers if they are correctly located can relieve high-voltage grids. Furthermore, DC-interconnectors
enhance the transmission of power of very long distances and connect renewable power production and
demands in different countries.
• Solutions related to flexibility help us to make smarter use of our grid. This might have a positive effect as
this could lead to less grid expansion and therefore help us reduce the amounts of resources required to
secure supply today and tomorrow.
• Energy source • TenneT is a leading investor in the energy transition and so we have been able to gain a vast amount of
experience connecting renewable energy sources, such as offshore wind, to our grid. This experience helps
us to further drive the energy transition together with partners and fulfil the future investment portfolio.
• Products and Services • Our project portfolio has significantly changed in order to meet national and European climate goals. Key
projects are connecting offshore wind energy to our grid or to ensure that our onshore grid is prepared for
a new energy future. The gathering and analysis of energy data may lead to new products and services
provided by TSOs, such as Equigy.
• Markets • Strategies and objectives of financial institutes and banks provide opportunities for TenneT to attract
sustainable financing at favourable terms and conditions by issuing green finance products to finance
andrefinance our investments in green infrastructure projects.
• Resilience • Trends in the society, like the electrification of mobility result in higher demand on a stable grid and power
supply. To ensure resilience integration of power and gas grids is a vital alternative. Digitalisation using
technologies like automatisation, robotics and block-chain will help to optimise grid utilisation while
safeguarding a reliable supply of electricity.
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Consolidated financial statements 96
Notes to the consolidated financial statements 103
Company financial statements 156
Company statement of income 157
Notes to the company financial statements 158
Other information 162
Profit appropriation 162
Independent auditor’s report 163
Assurance report of the independent auditor 172
About this report 175
SWOT Analysis 181
Company addresses 182
Key figures: five-year summary 183
Glossary 184
Financial
statements
Financial statements
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Consolidated financial statements
Consolidated statement of financial position
For the year ended 31 December (EUR million)
Assets
Notes
2021 2020
Non-current assets
Tangible fixed assets 8 23,811 20,859
Right-of-use assets 9 433 505
Intangible assets 10 254 212
Investments in joint ventures 12 638 673
Investments in associates 12 34 34
Deferred tax assets 6 162 37
Other financial assets 13 37 28
Total non-current assets 25,369 22,348
Current assets
Inventories 14 83 65
Account- and other receivables 15 2,401 3,795
Income tax receivable 6 143 31
Cash and cash equivalents 16 3,204 567
Total current assets 5,831 4,458
Total assets 31,200 26,806
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Consolidated financial statements
Consolidated statement of financial position
For the year ended 31 December (EUR million)
Equity and liabilities
Notes
2021 2020
Equity
Equity attributable to ordinary shares 18 4,844 5,324
Hybrid securities 18 2,125 2,125
Equity attributable to owners of the company 6,969 7,449
Non-controlling interests 19 638 689
Total equity 7,607 8,138
Non-current liabilities
Borrowings 20 12,366 10,217
Contract liabilities 21 428 376
Deferred tax liability 6 7 146
Provisions 22 1,417 1,282
Lease liabilities 9 235 327
Net employee defined benefit liabilities 23 351 405
Other liabilities 25 5
Total non-current liabilities 14,829 12,758
Current liabilities
Borrowings 20 1,339 2,243
Contract liabilities 21 2 2
Income tax payable 6 6 2
Provisions 22 45 66
Other financial liabilities 281 85
Bank overdrafts 16 64 90
Lease liabilities 9 169 135
Account- and other payables 24 6,858 3,287
Total current liabilities 8,764 5,910
Total equity and liabilities 31,200 26,806
References relate to the notes starting with note 1'Basis for reporting'. These form an integrated part of the consolidated financial statements.
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2021
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in 2021
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97
Consolidated statement of income
For the year ended 31 December (EUR million)
Notes
2021 2020
Revenue 3 5,524 5,025
Grid expenses 4 -4,102 -2,252
Personnel expenses 4 -287 -239
Depreciation and amortisation of assets 8,9,10 -1,165 -1,074
Other operating expenses 4 -303 -171
Other (gains)/losses -4 7
Total operating expenses -5,861 -3,729
Share in profit of joint ventures and associates 12 62 60
Operating profit -275 1,356
Finance income 2 2
Finance expenses 5 -182 -197
Finance result -180 -195
Profit before income tax -455 1,161
Income tax expense
*
6 135 -324
Profit for the year -320 837
Profit attributable to:
Equity holders of ordinary shares
*
18 -401 748
Hybrid securities 18 57 44
Owners of the company -344 792
Non-controlling interests 19 24 45
Profit for the year -320 837
Earnings per share attributable to the equity holders of ordinary shares
For the year ended 31 December (EUR per share)
Notes
2021 2020
Basic and diluted earnings per share 7 -2,005 3,740
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Consolidated statement of comprehensive income
For the year ended 31 December (EUR million)
Attributable to equity holders of the company
Hedging
reserve
Retained
earnings
Unappro-
priated
result
*
Equity
attributable
to ordinary
shares
Hybrid
securities
Equity
attributable
to owners
of the
company
Non-
controlling
interest
Total
equity
Notes
18 18 18 18 19
2020
Other comprehensive income to be
reclassified to profit or loss in
subsequent years:
Amortisation of hedges 18 -1 - - -1 - -1 - -1
Taxation 6 - - - - - - - -
-1 - - -1 - -1 - -1
Items not to be reclassified to profit or
loss in subsequent years:
Re-measurement of defined benefit
pensions 23 - -24 - -24 - -24 - -24
Taxation 6 - 8 - 8 - 8 - 8
- -16 - -16 - -16 - -16
Total other comprehensive income
2020 -1 -16 - -17 - -17 - -17
Profit for the year - - 748 748 44 792 45 837
Total comprehensive income 2020 -1 -16 748 731 44 775 45 820
2021
Other comprehensive income to be
reclassified to profit or loss in
subsequent years:
Amortisation of hedges 18 - - - - - - - -
Taxation 6 - - - - - - - -
- - - - - - - -
Items not to be reclassified to profit or
loss in subsequent years:
Re-measurement of defined benefit
pensions 23 - 79 - 79 - 79 - 79
Taxation 6 - -23 - -23 - -23 - -23
- 56 - 56 - 56 - 56
Total other comprehensive income
2021 - 56 - 56 - 56 - 56
Profit for the year - - -401 -401 57 -344 24 -320
Total comprehensive income 2021 - 56 -401 -345 57 -288 24 -264
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Consolidated statement of changes in equity
For the year ended 31 December (EUR million)
Attributable to equity holders of the company
Paid-up
and
called-up
capital
Share
premium
reserve
Hedging
reserve
Retained
earnings
Unappro-
priated
result
Equity
attributable
to ordinary
shares
Hybrid
securities
Equity
attributable
to owners
of the
company
Non-
controlling
interest
Total
equity
(EUR million)
Notes
18 18 18 18 18 18 19
At 1 January 2020 100 1,790 1 2,271 534 4,696 1,120 5,816 744 6,560
Profit for the year - - - - 748 748 44 792 45 837
Total other comprehen-
sive income - - -1 -16 - -17 - -17 - -17
Total comprehensive
income - - -1 -16 748 731 44 775 45 820
Dividends paid 18 - - - - -112 -112 - -112 -50 -162
Capital contribution 18 - - - - - - - - 5 5
Capital repayment 18 - - - - - - - - -55 -55
Issue of hybrid securities 18 - - - - - - 1,000 1,000 - 1,000
Distribution on hybrid
securities 18 - - - - - - -39 -39 - -39
Tax on distribution on
hybrid securities 18 - - - 9 - 9 - 9 - 9
Appropriation remaining
prior year result - - - 422 -422 - - - - -
At 31 December 2020 100 1,790 - 2,686 748 5,324 2,125 7,449 689 8,138
Profit for the year - - - - -401 -401 57 -344 24 -320
Total other comprehen-
sive income - - - 56 - 56 - 56 - 56
Total comprehensive
income - - - 56 -401 -345 57 -288 24 -264
Dividends paid 18 - - - - -149 -149 - -149 -33 -182
Capital repayment 18 - - - - - - - - -42 -42
Distribution on hybrid
securities 18 - - - - - - -57 -57 - -57
Tax on distribution on
hybrid securities 18 - - - 14 - 14 - 14 - 14
Appropriation remaining
prior year result - - - 599 -599 - - - - -
At 31 December 2021 100 1,790 - 3,355 -401 4,844 2,125 6,969 638 7,607
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Consolidated statement of cash flows
For the year ended 31 December (EUR million)
Notes
2021 2020
Operational activities
Operating profit -275 1,356
Non-cash adjustments to reconcile profit to net cash flows:
Depreciation, amortisation and impairment of assets 8,9,10 1,165 1,074
Share in profit of joint ventures and associates 12 -61 -60
Dividends received from joint ventures and associates 12 85 31
Movements in provisions and other (financial) liabilities and assets -59 101
1,130 1,146
Working capital adjustments excluding EEG working capital:
(Increase)/decrease in account- and other receivables 15 -90 -85
(Increase)/decrease in inventories -18 1
Increase/(decrease) in account- and other payables 24 -319 -13
Increase/(decrease) in contract liabilities 21 52 36
Increase/(decrease) in current financial liabilities 196 6
Cash generated from operation -179 -55
Income tax paid (net) -246 -402
Net cash flows from operating activities excluding EEG
working capital 430 2,045
EEG working capital adjustments:
(Increase)/decrease in EEG receivables 15 1,956 -1,625
(Increase)/decrease EEG deposits > 3 months 15 -472 -
Increase/(decrease) in EEG payables 24 2,961 -516
4,445 -2,141
Net cash flows from operating activities 4,875 -96
Investing activities
Purchase of tangible and intangible fixed assets 8,10 -2,852 -3,413
Proceeds from sale of tangible and intangible fixed assets 11 -
Interest received 3 -
Acquisition of subsidiary - -12
Capital contribution to joint ventures and associates 12 - -44
Net cash flows used in investing activities -2,838 -3,469
Financing activities
Net financing
Proceeds from borrowings 20 3,481 3,316
Repayment of borrowings 20 -2,243 -566
1,238 2,750
Continuation >
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Notes
2021 2020
Other financing activities
Payment of lease liabilities 9 -156 -169
Interest paid -174 -189
Dividends paid to ordinary shareholders of the company 18 -149 -112
Proceeds from issue of hybrid securities 18 - 1,000
Distribution on hybrid securities 18 -57 -39
Dividends paid and capital repayments to non-controlling interests 19 -76 -100
-612 391
Net cash flows from financing activities 626 3,141
Net change in cash and cash equivalents 2,663 -424
Cash and cash equivalents at 31 December 16 3,140 477
Cash and cash equivalents at 1 January 16 477 901
2,663 -424
Consolidated statement of cash flows
For the year ended 31 December (EUR million)
< Continuation
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Notes to the consolidatedfinancial statements
We are continuously improving our financial reporting to make it more relevant and
understandable to our stakeholders. These financial statements focus on the key (financial)
topics for 2021. Like last year, the notes to the consolidated financial statements are
disclosed following more or less the sequence of items in the consolidated statement of
financial position and consolidated statement of income. Accounting policies are indicated
with i, while key assumptions and estimates are identified by using + in front of the header.
1 Basis for reporting 104
2 Segment information 105
3 Revenue 111
4 Operating expenses 112
5 Finance expenses 115
6 Corporate income tax 115
7 Earnings per share 118
8 Tangible fixed assets 118
9Right-of-useassets and lease liabilities 121
10 Intangible assets 124
11 Business combinations 126
12 Investments in joint ventures and associates 126
13 Other financial assets 129
14 Inventory 130
15 Account- and other receivables 130
16Cash, cash equivalents and bank overdrafts 131
17 Capital management 132
18 Equity 134
19 Non-controlling interests 135
20 Borrowings 137
21 Contract liabilities 139
22 Provisions 140
23 Net employee defined benefit liabilities 142
24 Account- and other payables 146
25 Financial risk management 147
26 Fair values 150
27i Accounting policies for financial instruments 151
28 Contingencies and commitments 152
29 Related parties 153
30 Consolidated subsidiaries 154
31 Events after the reporting period 155
Notes to the company financial statements 158
32 Company accounting policies 158
33 Finance income 158
34Finance expenses 158
35 Personnel expenses 158
36 Investments in subsidiaries 158
37 Investments in joint ventures and associates 159
38 Other financial assets 159
39 Account- and other receivables 159
40 Equity 160
41 Borrowings 160
42 Account- and other payables 160
43 Events after the reporting period 161
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Notes to the consolidated financial statements
1 Basis for reporting
Basis for preparation
The accounting policies describe our approach to recognise and measure transactions and balance sheet items in our
financial statements. Accounting policies, including new European Union (EU) endorsed accounting standards, amendments
and interpretations, relating to the consolidated financial statements as a whole are described below. This section also
provides general guidance regarding assumptions, estimates and judgements used in the preparation of the financial
statements. A more detailed description of accounting policies and significant estimates related to specific reported amounts
is presented in the respective notes. Only accounting policies which are deemed material are presented in these financial
statements. We consider an item material if, in our view, it is likely to have an impact on the economic decisions of primary
users of these financial statements.
General
TenneT Holding B.V. and its subsidiaries are a leading electricity transmission system operator with activities in the
Netherlands and a large part of Germany. In the Netherlands, our activities are conducted by TenneT TSO B.V. and
itssubsidiaries. In Germany, our activities are performed by TenneT GmbH & Co. KG and its subsidiaries.
The Dutch State owns the entire issued share capital of TenneT Holding B.V. Furthermore, TenneT Holding B.V. has
issuedhybrid securities which are deeply subordinated and are accounted for as part of equity attributable to equity holders
of theCompany. The registered office of TenneT Holding B.V. is located at Utrechtseweg 310, Arnhem, the Netherlands, with
its statutory seat in Arnhem and a registration with the Dutch Commercial Register under number 09083317.
These consolidated financial statementsof TenneT Holding B.V. and its subsidiaries (hereafter referred to as‘TenneT’, ‘the
Company’ or ‘the Group’) for the year ended 31 December 2021 were prepared by our Executive Board and authorisedfor
issuance in accordance with a resolution of the Supervisory Board on 14 March 2022. The financial statements will be
submitted for adoption at the General Meeting of Shareholders. These consolidated financial statements have been audited
by Deloitte Accountants B.V.
Restatement of key management remuneration
In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors, comparative figures of the key
management remuneration have been retrospectively adjusted to include the termination compensation for former Board
member Ben Voorhorst (EUR 580k), which has incorrectly been omitted from the 2020 Integrated Annual Report. We refer
toNote 4 for the updated key management remuneration disclosure schedules.
Changes in EU-endorsed published IFRS standards and interpretations effective in 2021
Significant new and amended standards adopted by the Group
TenneT has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
IFRS standards issued but not yet effective and adopted by the Group
It is anticipated that any issued changes to IFRS standards that are not yet effective and adopted by TenneT will not have a
significant impact. Changes in EU-endorsed published IFRS standards and interpretations effective in 2021
Basis for consolidation
The consolidated financial statements incorporate the financial statements of TenneT Holding B.V. and its subsidiaries as at
31 December 2021. A list of the legal entities included in the consolidation is included in note 30. Subsidiaries are
consolidated from the date of acquisition, constituting the date on which control is obtained and continue to be consolidated
until the date when such control ceases. The financial statements of subsidiaries are prepared for the same reporting period
as the parent company, using consistent accounting policies. All intercompany balances, transactions, unrealised gains and
losses resulting from intercompany transactions and dividends are eliminated in full in consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
Ifwecease to have control over a subsidiary, we derecognise the subsidiary's assets (including goodwill), liabilities and
anynon-controlling interest in the former subsidiary at the date control is lost (including the cumulative translation
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differences). Furthermore, the fair value of the consideration received, the fair value of any investment retained and any
surplus or deficit in statement of income are recognised. Acquisitions are accounted for using the acquisition method,
wherethe purchase price is allocated to the identifiable assets acquired and liabilities assumed on a fair value basis and
theremainder is recognised as goodwill.
Basis for preparation
These consolidated financial statements are prepared in accordance with IFRS as adopted by the EU and Part 9, Book 2
ofthe Dutch Civil Code. The company financial statements for TenneT Holding B.V. are prepared in accordance with the
provisions of Part 9, Book 2, of the Dutch Civil Code.
The consolidated financial statements are prepared on a going concern basis. The going concern basis presumes that the
Group has adequate resources to remain in operation and that the Executive Board intends it to do so, for at least one year
from the date of the end of the reporting period.
The consolidated financial statements are prepared on a historical cost basis, unless described otherwise in the
accountingpolicy of a balance sheet position. They are presented in euros and all values are rounded to the nearest million
(EUR 000,000), except when otherwise indicated.
Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts
ofassets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses
during the reporting period.Such estimates are assessed continuously on the basis of previous results and experience,
consultations with experts, trends, prognoses and other methods which we deem appropriate in each individual case.
Actual results could differ from these estimates. Significant items containing estimates and assumptions are as follows:
Item
Note
Estimate/assumptions
Tangible fixed assets 8
Estimate of remaining useful life, identification of
cash-generating units for fixed asset impairment testing and
TSO NL impairment testing assumptions
Right-of-use assets and liabilities 9
Estimates of discount rate and expected extension or
accelerated termination date
Intangible fixed assets 10 Estimate of recoverable amount and remaining useful life
Impairment review of goodwill 10 Estimate of cash flow projections and pre-tax discount rate
Grid expense payable 24 Amongst others estimate of electricity usage and energy prices
Provision for environmental management and decommissioning 22
Estimate of removal costs, removal dates, discount rate and
price increases in the period leading up to removal
Tariff related provisions 22 Estimate of electricity usage and number of parties
Other provisions 22
Mainly relate to estimate of probability, realisation date and
curtailed feed-in volumes and prices
Net employee benefit obligations 23 Financial, actuarial and demographic assumptions
Functional currency
These consolidated financial statements are presented in euros, which is also the parent company’s and all subsidiaries`
functional currency.
COVID-19 impact
The COVID-19 pandemic continued during 2021. Measures initiated in 2020 and continued in 2021 allowed us to run
operations in the field and in our control room without interruption, despite challenging circumstances. We are proud of the
resilience of our employees. During 2021, COVID-19 had, like in 2020, no material impact on the financial figures of TenneT.
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2 Segment information
This section sets out the financial performance for the year in accordance with the way in which we manage our business
(operating segments). We measure and assess our performance based on underlying financial information, which is
explained further below.
We generate substantially all of our revenue from our regulated operating segments in the Netherlands and Germany.
Therefore, close collaboration with our respective regulators to obtain regulations and agreements that provide reasonable
compensation for the risks we faceis key to us. Our involvement in certain limited non-regulated activities is closely related
and ancillary to our core tasks.
Segment analysis
Our operating segments consist of:
• TSO Netherlands
• TSO Germany
• Non-regulated activities
For management information purposes, the performance of our regulated activities in the Netherlands and in Germany is
considered separately into two geographicalsegments. This segmentation, based on separately applicable regulatory
frameworks, is the key determinant for financial management of the business and for decision-making on budgets, allocation
of resources and financing.
Financing activities (including finance income and expenses) are managed on a Group basis and amounts related thereto are
not allocated to the segments. Transfer prices between the Netherlands and Germany are set at arm’s length in a manner
similar to transactions with third parties. These intercompany transactions are eliminated in consolidation.
Our Executive Board is the chief operating decision-making body of the company (as defined by IFRS 8 ‘Operating
segments’). Periodically, it monitors the performance of the respective operating segments for the purpose of performance
management and decision making about resource allocation. The segment performance is based on underlying financial
information, where EBIT, investments and return on capital are key metrics. The definition of EBIT equals operating profit.
Performance of non-regulated activities is evaluated based on EBIT and return on capital of these activities.
Underlying financial information is based on the principle of recognising regulatory assets and liabilities for all of our regulated
activities. This implies that amounts resulting from past events and which are allowed to be received or are required to be
returned through future tariffs are recorded as an asset or liability, respectively. TenneT’s Executive Board believes that the
presentation of underlying financial information provides additional relevant insight in the actual business, financial
performance, and as such economic reality. Furthermore, this reflects the regulatory regime.
i Accounting policies applied for underlying financial information
Underlying financial information matches regulatory revenues and expenses in a corresponding reporting period and defers
certain income items until used for investments or tariff reductions.
IFRS
Regulatory
Deferral Accounts
Underlying
Matching is achieved through recognition of regulatory deferral accounts. The key requirement for such recognition is that an
existing regulatory framework must be in place that permits the future reimbursement or requires the future settlement of
regulated assets or liabilities, respectively. Consequently, a regulated asset is recognised in underlying financial information in
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respect of permitted reimbursements of current year expenses in future year's tariffs. Vice versa, a regulated liability is
recognised in underlying financial information in respect of required settlements (i.e. repayments) of current year revenues
through future tariffs.Furthermore, until 2015 certain investments in the Netherlands were financed via auction receipts
resulting from auctioning available electricity transmission capacity on cross-border interconnections.
During 2021, there werethreecustomers, being two DSOs and one TSO, in the German segment that generated revenues
that were more than 10% of our total revenue. The revenue from these customers amounted respectively EUR 703 million
(2020: EUR 816 million), EUR 611million (2020: EUR 572 million)andEUR 552 million (2020: EUR 770 million).
2021 2020
(EUR million) Investments Assets Liabilities Investments Assets Liabilities
TSO Netherlands 1,552 9,651 6,384 1,281 7,790 4,564
TSO Germany 2,408 22,325 16,943 2,121 19,637 14,271
Non-regulated activities 9 437 206 10 841 204
Total segments 3,969 32,413 23,533 3,412 28,268 19,039
Eliminations and adjustments - -452 601 - -968 730
Consolidated underlying information 3,969 31,961 24,134 3,412 27,300 19,769
2021 2020
(EUR million) Assets Liabilities Assets Liabilities
TSO Netherlands 9,106 6,013 7,405 3,976
TSO Germany 22,109 16,773 19,517 13,747
Non-regulated activities 437 206 857 215
Total segments 31,652 22,992 27,779 17,938
Eliminations and adjustments -452 601 -973 730
Consolidated IFRS information 31,200 23,593 26,806 18,668
Investment amounts recognised under IFRS equal underlying investments.
For an analysis of underlying results please refer to the ‘Secure a sustainable financial performance and investor rating’
section of the integrated annual report.
Regulatory deferral accounts: reconciliation to IFRS figures
The difference between underlying financial information - as presented in the segment information and board report - and
IFRS reported figures is related to the recognition of regulated assets and liabilities, auction receipts and the measurement of
tangible fixed assets. In the IFRS financial statements, revenue from contracts with customers is recognised when control of
the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services.In the underlying financial information revenues are recognised
according the permissible tariff decision adopted by the regulator.By doing so, volume and post calculation differences are
directly matched to the related costs and therefore provide additional relevant insight to manage TenneT's business.
These differences also result in different deferred tax balances in underlying financial information compared to IFRS reported
figures. No other differences between underlying financial information and IFRS exist.
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Underlying financial information can be reconciled to reported IFRS figures as follows:
2021
(EUR million) TSO NL TSO Germany
Non-
regulated
Total
segments
Eliminations Total
Connection and transmission services 1,504 3,008 - 4,512 - 4,512
Maintenance of the energy balance 91 283 - 374 - 374
Operation of energy exchanges 4 - - 4 - 4
Offshore (balancing) 187 1,142 - 1,329 - 1,329
Other 59 120 27 206 -58 148
Inter-segment 28 48 1 77 -77 -
Total underlying revenue 1,873 4,601 28 6,502 -135 6,367
Inter-segment adjustments and eliminations -28 -48 -1 -77 77 -
Total underlying revenue from contracts with
customers 1,845 4,553 27 6,425 -58 6,367
Grid expenses -1,075 -2,772 -2 -3,849 32 -3,817
Other operating expenses -546 -1,232 -19 -1,797 19 -1,778
Share in profit of joint ventures and associates 1 12 - 13 49 62
Underlying operating profit 225 561 6 792 42 834
Revenue adjustment to IFRS -503 -340 - -843 - -843
Cost adjustment to IFRS 7 -273 4 -262 -4 -266
IFRS operating profit/(loss) -271 -52 10 -313 38 -275
Finance result -180
Profit/(loss) before income tax -455
Income tax expense 135
Profit/(loss) for the year -320
2020
(EUR million) TSO NL TSO Germany
Non-
regulated
Total
segments
Eliminations Total
Connection and transmission services 907 2,011 - 2,918 - 2,918
Maintenance of the energy balance 52 92 - 144 - 144
Operation of energy exchanges 4 - - 4 - 4
Offshore (balancing) 153 1,082 - 1,235 - 1,235
Other 52 99 26 177 -28 149
Inter-segment 22 23 - 45 -45 -
Total underlying revenue 1,190 3,307 26 4,523 -73 4,450
Inter-segment adjustments and eliminations -22 -23 - -45 45 -
Total underlying revenue from contracts with
customers 1,168 3,284 26 4,478 -28 4,450
Grid expenses -446 -1,666 -2 -2,114 11 -2,103
Other operating expenses -483 -1,000 -21 -1,504 7 -1,497
Share in profit of joint ventures and associates 1 30 3 34 26 60
Underlying operating profit 240 648 6 894 16 910
Revenue adjustment to IFRS -44 619 - 575 - 575
Cost adjustment to IFRS 7 -136 - -129 - -129
IFRS operating profit 203 1,131 6 1,340 16 1,356
Finance result -195
Profit before income tax 1,161
Income tax expense -324
Profit for the year 837
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Reconciliation IFRS to underlying figures
2021 2020
(EUR million) IFRS figures
Underlying
items
Underlying
figures
IFRS figures
Underlying
items
Underlying
figures
Revenue 5,524 843 6,367 5,025 -575 4,450
Grid expenses -4,102 285 -3,817 -2,252 149 -2,103
Personnel expenses -287 - -287 -239 - -239
Depreciation and amortisation of assets -1,165 -20 -1,185 -1,074 -20 -1,094
Other operating expenses -303 1 -302 -171 - -171
Other (gains)/losses -4 - -4 7 - 7
Total operating expenses -5,861 266 -5,595 -3,729 129 -3,600
Share in profit of joint ventures and associates 62 - 62 60 - 60
Operating profit/(loss) -275 1,109 834 1,356 -446 910
Finance income 2 18 20 2 4 6
Finance expenses -182 -11 -193 -197 -14 -211
Finance result -180 7 -173 -195 -10 -205
Profit/(loss) before income tax -455 1,116 661 1,161 -456 705
Income tax expense 135 -303 -168 -324 135 -189
Profit/(loss) for the year -320 813 493 837 -321 516
Profit/(loss) attributable to:
Equity holders of ordinary shares -401 805 404 748 -321 427
Hybrid securities 57 - 57 43 - 43
Owners of the company -344 805 461 791 -321 470
Non-controlling interests 24 8 32 46 - 46
Profit/(loss) for the year -320 813 493 837 -321 516
Basic and diluted earnings per share -2,005 2,020 3,740 2,135
Underlying items
To be settled in tariffs 1,317 -353
Auction receipts -387 -179
Investment contributions -1 5
Maintenance of the energy balance -85 -48
Revenue 844 -575
To be settled in tariffs 285 149
Grid expenses 285 149
Depreciation and amortisation of assets -20 -20
Total operating expenses -20 -20
Share in profit of joint ventures and associates - -
Operating profit/(loss) 1,109 -446
To be settled in tariffs
Revenue surpluses and deficits resulting from differences between expected (ex ante) and realised (ex post) electricity
transmission volumes are incorporated in the tariffs of subsequent years in both Germany and the Netherlands. In underlying
financial information, these surpluses and deficits are recorded as assets and liabilities, respectively, under ‘to be settled in
tariffs’. The expenses related to these items have to be settled in future tariffs in the coming years.
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The underlying item “to be settled in tariffs” is related to the revenue stream “connection and transmission services” and
concerns an increase amounting to EUR 1,317 million (2020: decrease of EUR 353 million).
Auction receipts & investment contributions
Auction receipts result from auctioning the available electricity transmission capacity on cross-border interconnections.
These receipts are not at TenneT's free disposal. In accordance with Regulation (EU) 2019/943, auction receipts shall be
used to fulfil the following priority objectives:
a. guaranteeing the actual availability of the allocated capacity including firmness compensation; or
b. maintaining or increasing cross-zonal capacities through optimisation of the usage of existing interconnectors by means
of coordinated remedial actions, where applicable, or covering costs resulting from network investments that are relevant
to reduce interconnector congestion.
When these priority objectives have been adequately fulfilled, auction receipts may be used as income to be taken into
account by the regulatory authorities when approving the methodology for calculating network tariffs or fixing network tariffs,
or both. In the Netherlands, TenneT agreed with its regulator (Autoriteit Consument en Markt) that investments in
interconnectors are no longer financed through the auction receipts as of 2016. The current outstanding balance of auction
receipts will be used in accordance with the aforementioned objectives. On 24 November 2021, an additional addendum
tothe original agreement was signed where ACM decided that no auction receipts will be used to reduce tariffs in 2022.
Investments in previous years financed by using auction receipts are classified as investment contributions and are reported
under ‘liabilities’. A periodic amount equal to the depreciation charges, plus a portion of the operating expenses, is released
to the statement of income, following the release scheme as described above.
In Germany, the use of auction receipts for investments was effectively achieved by reducing tariffs over a rolling 20-year
period as of 2019.
Investments financed by using auction receipts are classified as investment contributions and are reported under ‘liabilities’.
A periodic amount equal to the depreciation charges, plus a portion of the operating expenses, is released to the statement
of income, following the release scheme as described above.
The underlying item auction receipts is part ofrevenue stream “operations of energy exchanges” for a decrease amounting
to EUR 387 million (2020: decrease EUR 179 million). The underlying item investment contribution is part of revenue stream
“other” for an amount of EUR 1 million decrease (2020: EUR 5 million increase).
Maintenance of the energy balance
As system manager of the high-voltage grid in the Netherlands, TenneT receives funds for performing certain statutory
duties, such as the maintenance of the energy balance. The proceeds from these activities (i.e., imbalance settlements) may
only be used after approval by the ACM. Imbalance settlements collected during the year are to be offset in transmission
tariffs in the subsequent year. Consequently, these amounts are recorded as a liability and released in the subsequent year
inthe underlying financial information.
As the balancing group coordinator, TenneT TSO GmbH (“TTG”) is responsible for balancing the balancing groups in terms
ofenergy. We balance surplus or shortfall balancing groups by means of control energy and bill the balancing group
managers for the resulting costs. For this billing of balance imbalances, the so-called “Uniform balancing energy price across
control zones” (reBAP) is used. As a result, TTG receives higher payments from the balancing group managers than TTG
pays to the power plant operators. The resulting additional revenues from the balancing energy billing system are to be
deducted from the grid charges. Analogously, revenue shortages will increase future grid fees.
The underlying itemmaintenance of the energy balance is part of revenue “stream maintenance” of the energy balance for
anamount of EUR 85 million decrease (2020: EUR 48 million decrease).
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Depreciation and amortisation of assets
Differences in depreciation and amortisation of assets occur due to the difference in accounting treatment of the regulatory
deferral accounts and the related cash flows in order to determine the economic useful life and recoverable amount of the
assets resulting from acquisitions and used for impairment analysis.
There is no difference in depreciation methodbetween underlying and IFRS, but the amount of depreciation differs mainly
due toan impairment under IFRS of the NorNed cable in 2015 of EUR 232 million which was not recognised in underlying
financial information.
With regard to TenneT's German segment, depreciation as well as assets in underlying financial information are higher due
tohigher acquisition costs resulting from an adjustment in connection with the Purchase Price Allocation in 2010.
3 Revenue
2021
(EUR million) TSO NL
TSO
Germany
Non-
regulated
Total
segments
Eliminations Total
Connection and transmission services 801 2,419 - 3,220 - 3,220
Maintenance of the energy balance 166 294 - 460 - 460
Operation of energy exchanges 164 228 - 392 - 392
Offshore (balancing) 161 1,142 - 1,303 - 1,303
Other 50 130 27 207 -58 149
Inter-segment 28 48 1 77 -77 -
Total IFRS revenue 1,370 4,261 28 5,659 -135 5,524
Inter-segment adjustments and eliminations -28 -48 -1 -77 77 -
Total IFRS revenue from contracts with
customers 1,342 4,213 27 5,582 -58 5,524
2020
(EUR million) TSO NL
TSO
Germany
Non-
regulated
Total
segments
Eliminations Total
Connection and transmission services 617 2,538 - 3,155 - 3,155
Maintenance of the energy balance 97 96 - 193 - 193
Operation of energy exchanges 99 85 - 184 - 184
Offshore (balancing) 270 1,082 - 1,352 - 1,352
Other 41 102 26 169 -28 141
Inter-segment 22 23 - 45 -45 -
Total IFRS revenue 1,146 3,926 26 5,098 -73 5,025
Inter-segment adjustments and eliminations -22 -23 - -45 45 -
Total IFRS revenue from contracts with
customers 1,124 3,903 26 5,053 -28 5,025
Connection and transmission services
Revenue from connection and transmission services is regulated by the ACMin the Netherlands and by the BNetzA in
Germany and includes revenue from services provided to DSOs and industrial clients (such as resolution of transmission
restrictions, congestion management and reactive power management).
Revenue increased mainly due to ongoing investments and a growing asset base.
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Maintenance of the energy balance
TenneT is responsible to ensure that electricity supply and demand is in balance at all times (i.e. the alternating current
frequency in the power grid must be at 50 Hz continuously). If this balance is significantly disrupted, it may result in a power
outage or even a black-out, depending on the length and severity of the imbalance.To ensure this balance, TenneT contracts
and deploys (among others) reserve and emergency capacity to compensate unexpected fluctuations in supply and
demand. The cash in- and outflows associated with maintaining this energy balance (e.g. imbalance settlements) fluctuate
considerably and are settled through regulated tariffs in both the Netherlands and Germany in subsequent years.
Revenue increased mainly due to higher energy prices.
Operation of energy exchanges
This amount includes revenues resulting from the auctioning of cross-border (electricity transmission ‘interconnection’)
capacity.
Revenue increased mainly due to higher energy prices.
Offshore (balancing)
Total offshore (balancing) slightly decreaseddue to the additional non-recurring income pertaining to the years 2017-2019 of
EUR 29 million in 2020.
Revenue from offshore (balancing) is regulated.
i Accounting policy
Revenue primarily represents the sales value derived from the connection and transmission of electricity together with
thesales value derived from the provision of other services to customers during the year. Revenue from contracts with
customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects
theconsideration to which the Group expects to be entitled in exchange for those goods or services.
Revenues arise from contracts with a single performance obligation. The assessment of unbilled connection and
transmission services supplied to customers between the date of the last meter reading and year-end is subject to significant
judgement. This assessment is primarily based on expected consumption and weather patterns.
If revenue received or receivable exceeds the maximum annual amount as determined by the national regulators, ACM or
BNetzA respectively, a downward adjustment will be made to future tariffs to reflect this over-recovery. Under IFRS, no liability
is recognised since this adjustment relates to the provision of future services. Similarly, no asset is recognised under IFRS
when a regulator permits increases to be made to future tariffs in respect of under-recovery.
Offshore (balancing) revenues in The Netherlands are accounted for in accordance with the recognition and measurement
principles of IAS 20. These revenues are not recognised until there is reasonable assurance that the Group satisfiesthe
conditions attached to receiving this income.
4 Operating expenses
Grid expenses
(EUR million) 2021 2020
System services 2,266 1,238
Connection and transmission services 829 360
Maintenance of the energy balance 374 145
Maintaining and operating transmission grids 637 516
Other -4 -7
Total 4,102 2,252
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System services increased additionally due to higher costs related to feed-in management, transmission restrictions,
gridlosses and redispatch costs. The increase is caused both by higher energy prices due to market situation and more
transmission restrictions. Increase of cost of maintaining and operating transmissions grids mainly related to higher
insurancecosts.
Personnel expenses
(EUR million) 2021 2020
Salaries 390 318
Social security contributions 57 47
Pension charges defined benefit plans 24 20
Pension charges other plans 32 23
Other personnel expenses 39 35
Capitalised costs for (in)tangible fixed assets -255 -204
Total 287 239
Average workforce in FTEs (internal employees only) 4,586 3,927
Average workforce in FTEs employed in the Netherlands 1,975 1,712
Average workforce in FTEs employed in the Germany 2,611 2,215
Key management remuneration
Members of the Executive Board and Supervisory Board are regarded as key management.The comparative figures of the
key management remuneration have been adjusted to include the termination compensation for former Board member Ben
Voorhorst (EUR 580k), which has incorrectly been omitted from the 2020 Integrated Annual Report. The termination benefit
was paid out in 2021.
Aggregate remuneration of members of the Supervisory Board and Executive Board is as follows:
Supervisory Board (EUR thousand)
Fixed
remuneration
Committee
fee
Total
2021 126 58 184
2020 156 59 215
Executive Board (EUR thousand)
Fixed
remuneration
Pension cost
Termination
benefit
Total
2021 1,602 445 513 2,560
2020 1,489 338 580 2,407
The aggregate Executive Board remuneration comprises remuneration of statutory directors of EUR 2,560 thousand
(2020:EUR 2,321 thousand) and remuneration of non-statutory directors of nil(2020: EUR 86 thousand). As of 1 March 2020
the entire Executive Board consisted of statutory directors. Pension remuneration equals (i) the contributions payable tothe
defined contribution plan for service rendered in the period or (ii), for defined benefit plans, the current service cost and,
whenapplicable, past service cost.We refer to the Supervisory Board Report for a more detailed disclosure on remuneration.
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Other operating expenses
(EUR million) 2021 2020
Accommodation and office expenses 99 71
Consultancy expenses 48 39
Hiring of temporary personnel 49 38
Travel and living expenses 13 10
Other expenses 94 13
Total 303 171
The increase of the accommodation and office expenses is mainly due to the increased size of the organisation. Further, the
increase of the other operating expenses is mainly related to normalisation of the other expenses. These were significantly
lower last year due to a release of the offshore liability.
The fees listed in the table below relate to the services provided to the Company and its consolidated Group entity by
Deloitte Accountants B.V., The Netherlands, the external auditor as referred to in section 1(1) of the Dutch Accounting Firm
Oversight Act (Dutch acronym: Wta), as well as by other Dutch and non-Dutch Deloitte individual partnerships and legal
entities, including their tax services and advisory groups.
(EUR thousand) 2021 2020
Audit of the financial statements
Deloitte Accountants B.V. 826 813
Deloitte GmbH Wirtschaftsprüfungsgesellschaft 700 833
Total audit of the financial statements 1,526 1,646
Other assurance services
Deloitte Accountants B.V. 374 451
Deloitte GmbH Wirtschaftsprüfungsgesellschaft 164 52
Total other assurance services 538 503
Total audit fees 2,064 2,149
The financial audit fees include the aggregate fees in 2021 and 2020for professional services rendered for the audit of
TenneT’s Integrated Annual Report and annual statutory financial statements of subsidiaries or services that are normally
provided by the auditor in connection with these audits.
The other assurance fees include the aggregate fees invoiced for assurance and services for other audit services, which
generally only the company’s independent auditor can reasonably provide, such as comfort letters, regulatory statements
and audits of grant statements.
i Accounting policy
TenneT has energy purchase contracts for the forward purchase of energy or gas that are used to satisfy physical delivery
requirements to customers or for the energy that the group uses itself. Substantially all our costs of purchasing electricity for
supply to customers are recoverable at an amount equal to cost. The timing of recovery of these costs can vary between
financial periods leading to an under- or over-recovery within any particular year that can lead to large fluctuations in the IFRS
income statement. We follow approved policies to manage price and supply risks for our commodity activities.
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TenneT's energy procurement risk management policy and delegations of authority govern its commodity trading activities
for energy transactions. The purpose of this policy is to ensure we transact within pre-defined risk parameters and only in the
physical and financial markets where we or our customers have a physical market requirement. In addition, state regulators
require TenneT to manage commodity risk and cost volatility prudently through diversified pricing strategies. In both The
Netherlands and Germany, we are required to file a plan outlining our energy procurement strategy to be approved by the
respective regulator. In certain cases, we might receive guidance with regard to specific hedging limits.
Energy purchase contracts for the forward purchase of electricity that are used to satisfy physical delivery requirements to
customers, or for energy that TenneT uses itself, meet the expected purchase or usage requirements of IFRS 9. They are,
therefore, not recognised in the financial statements until they are realised. In note 28 of the consolidated financial
statementscommitments under such contracts have been disclosed as “Grid related commitments”.
Operating expenses are expenses incurred during regular day-to-day business, such as system services, connection and
transmission services, personnel expenses, depreciation and accommodation and travel costs. Operating expenses are
recorded in the statement of income in the period they are incurred.
5 Finance expenses
(EUR million) 2021 2020
Interest on borrowings and credit facilities 175 188
Capitalised interest on assets under construction -13 -11
Interest on provisions 1 2
Interest on defined benefit pension plans 3 4
Interest on lease liability 2 2
Other finance expenses 14 12
Total 182 197
Finance expenses decreased due to lower interest rates on new loans.
i Accounting policy
Finance expenses comprise mainly interest expenses, such as interest and fees on borrowings and credit facilities, interest
on provisions, interest on defined benefit plans and interest on lease liabilities. Finance expenses are recorded in the
statement of income using the effective interest rate method.
6 Corporate income tax
TenneT strives to comply with all applicable tax legislation in a socially responsible manner, maintaining among the highest
levels of transparency, quality and integrity. Management responsibility and oversight of our tax strategy lies with our“Chief
Financial Officer” (CFO), our Director Financial Governance & Services and our Head of Tax who monitor our tax activities
and report to the Executive Board and the Audit, Risk and Compliance Committee.
Our tax strategy is fully consistent with our corporate strategy. Building a transparent relationship with tax authorities based
on mutual trust is an integral part of this strategy. We have built and are continuously improving our tax control framework to
be“in control” of tax risks and to allow the company to demonstrate to all its stakeholders, including the tax authorities, that
the company complies with all applicable laws and regulations.
Corporate income tax is payable in the Netherlands and Germany. In the Netherlands, we have entered into a so called
‘horizontal monitoring agreement’ with the Dutch tax authorities. Based on transparency and mutual trust, this agreement is
meant to ensure that tax positions are fully disclosed and agreed on in advance, as a result of which generally no tax audits
are performed by the Dutch tax authorities. All corporate income tax returns in the Netherlands have been filed up to and
including 2019. Corporate income tax paid in the Netherlands in 2021 amounted to EUR58 million.
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In Germany, corporate income and trade tax returns for all German entities have been filed up to and including fiscal
year2020. The German tax authorities started the tax audit for the fiscal years 2017 to 2019.In 2021, we paid
EUR 188 million of corporate income tax in Germany.
Key components of corporate income tax expense are:
Consolidated income statement (EUR million) 2021 2020
Current income tax charge 152 190
Deferred tax: -287 134
Income tax expense reported in the statement of income -135 324
Consolidated statement of comprehensive income (EUR million) 2021 2020
Effect of re-measurement of defined benefit pensions -23 8
Income tax charged directly to other comprehensive income -23 8
Corporate income tax on profits has been applied at the rates prevailing in the respective countries. In the Netherlands,
astatutory corporate income tax rate of 25% was applied, while in Germany, on average, a marginal statutory corporate
income tax rate of29,52% was applied (including trade tax levied by municipalities or‘Gewerbesteuer'). Reconciliation
between corporate income tax expense and the accounting profit multiplied by a statutory corporate income tax rate of 25%
is as follows:
(EUR million) 2021 2020
Profit/(loss) before corporate income tax -455 1,162
Statutory corporate income tax rate of 25% (The Netherlands, 2020: 25%) -113 290
Effect of higher corporate income tax rate in Germany -8 46
Effect of future tax rate change in the Netherlands -4 1
Adjustments in respect to current and deferred tax of previous years - -3
Non-deductible costs 2 1
Non-taxable income -9 -6
Tax paid by third parties -3 -5
At the effective corporate income tax rate of 30% (2020: 28%) -135 324
The main reason for the higher effective tax rate of 30% compared to the Dutch statutory tax rate of 25% is the effect of the
higher tax rate in Germany. Since the accounting profit before tax is in a loss position, the items non-taxable income and tax
paid by third parties, increase the effective tax rate, which in a profit position normally decrease the effective tax rate.
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Deferred taxes relate to the following:
Statement of
financial position Statement of income
(EUR million) 2021 2020 2021 2020
Auction receipts -60 -139 -79 -46
Investment contributions -71 -69 2 6
Tariffs to be settled 85 -115 -200 165
Depreciation for tax purposes -150 -156 -6 56
Provisions 403 378 -48 -46
Profit allocation to hybrid securities -6 -6 - -
Other -46 -2 44 -1
Net deferred tax assets/(liabilities) 155 -109
Deferred tax expense/(income) -287 134
Deferred taxes are presented in the statement of financial position as follows:
(EUR million) 2021 2020
Deferred tax assets 162 37
Deferred tax liabilities -7 -146
Deferred tax, net 155 -109
Movements in deferred tax positions are set out below.
(EUR million) 2021 2020
At 1 January -109 20
Tax expense during the period recognised in statement of income 287 -134
Adjustment tax expense relating to rate change 4 -
Initial recognition of acquired companies (note 11) - -3
Tax income during the period recognised in other comprehensive income -23 8
At 31 December 159 -109
iAccounting policy
The corporate income tax charge for the period is recognised in the statement of income, equity orthe statement of
comprehensive income, in accordance with the relevant accounting treatment of the related transaction. The corporate
income tax charge comprises both current and deferred tax.
Current income tax assets and liabilities are measured at the amount expected to be recovered from, or paid to, the tax
authorities. The tax rates and tax laws used to calculate these amounts are those enacted or substantively enacted at the
reporting date in those countries where we operate and where we generate taxable income.
Deferred tax is recognised using the liability method with respect to temporary differences between the tax bases of assets
and liabilities and their respective carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets
and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date in the
relevant jurisdictions.
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Deferred tax is generally recognised in respect of all temporary differences, the carry-forward of unused tax credits and any
unused tax losses. Deferred tax assets (also in association withinvestments in subsidiaries, associates and interests in joint
arrangements)are recognised to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised. This assessment is
performed annually. Deferred tax is not recognised for the temporary differencesarising from the initial recognition of goodwill
or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.There are no unrecognised carry forward
losses per 31 December 2021 (2020: nil).
Deferred tax assets and liabilities are recognised on a gross basis in the statement of financial position unless:
• the entity has a legally enforceable right to set off current tax assets against current tax liabilities and
• the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on
either:
• the same taxable entity, or
• different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
7 Earnings per share
Earnings per share were calculated by dividing profit for the year attributable to ordinary shareholder of the Group, after
adjustment for the distribution on hybrid securities, by the weighted average number of ordinary shares outstanding during
the year. The following table reflects the income and share data used for the basic and diluted earnings per share
calculations.
(EUR million) 2021 2020
Profit/(loss) for the year attributable to the ordinary shareholder of the company -344 792
Allocation to hybrid securities -57 -44
Profit/(loss) for the year attributable to equity holders of the company adjusted for the allocation to
hybrid securities -401 748
Weighted average number of ordinary shares in issue (in thousands) 200 200
i Accounting policy
Calculation of earnings per share is based on the profit for the year attributable to TenneT's sole shareholder and the
weighted average number of shares outstanding during the year.
8 Tangible fixed assets
(EUR million)
High-voltage
substations
High-voltage
connections
Other assets
Assets under
construction
Total
Cost
At 1 January 2020 10,359 8,530 961 3,627 23,477
Additions 260 324 60 2,698 3,342
Transfers 536 824 32 -1,392 -
Initial recognition of acquired companies (note 11) - - 11 - 11
Changes in estimations -17 -90 - - -107
Disposals -6 - -2 - -8
At 31 December 2020 11,132 9,588 1,062 4,933 26,715
Continuation >
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(EUR million)
High-voltage
substations
High-voltage
connections
Other assets
Assets under
construction
Total
Additions 131 258 70 3,439 3,898
Transfers 358 382 24 -764 -
Changes in estimations 119 -78 - - 41
Disposals -8 -5 -5 -8 -26
At 31 December 2021 11,732 10,145 1,151 7,600 30,628
Depreciation and impairment
At 1 January 2020 2,462 2,144 330 - 4,936
Depreciation for the year 503 358 60 - 921
Disposals -1 - - - -1
At 31 December 2020 2,964 2,502 390 - 5,856
Depreciation for the year 530 378 61 - 969
Disposals -5 -2 -1 - -8
At 31 December 2021 3,489 2,878 450 - 6,817
Net book value:
At 1 January 2020 7,897 6,386 631 3,627 18,541
At 31 December 2020 8,168 7,086 672 4,933 20,859
At 31 December 2021 8,243 7,267 701 7,600 23,811
High-voltage substations include onshore and offshore transformer and converter stations. High-voltage connections consist
of overhead and underground connections. Unlike lands for substations, lands surrounding high-voltage pylons and cables
are generally not owned by TenneT. Other tangible fixed assets consist of office buildings, office ICT equipment and other
company assets.
In 2021 the discount rate used for the decommissioning provision wasbetween 0.165% and 0.318% (2020: 0.0% and
0.1%) for offshore wind farms(OWF) connections (see note 22).The discount rate was adjusted in 2021 to reflect current
market assessments ofthetime value of money and the risks specific to this liability.The main part of the decommissioning
provision was recognised as part of the carrying value of the related asset. Besides the change of the discount rate, also
changes in inflation, changes in underlying assumptions and updated price levels are included in the change of estimates.
The amount of borrowing costs capitalised during 2021 is disclosed in note 5. The effective interest rate used to determine
the amount of borrowing costs capitalised was 2.0% (2020: 2.1%).
Annual impairment trigger analyses on tangible assets, and where applicable testing for impairment, is done at the
individualasset level, or smallest identifiable group of assets that generates cash inflows that are largely independent of
thecash inflows from other assets or groups of assets (cash generating units (CGUs)). For our three operating segments
thisconsists of:
• TSO Netherlands (One large CGU consisting of regulated on- and offshore assets, and the NorNed cable tested, for
impairment (triggers), on individual level);
• TSO Germany (One large CGU consisting of regulated on- and offshore assets);
• Non-regulated companies(Several small CGUs as well as individual assets).
The non-regulated companies also include the Joint Venture investment in the BritNed cable, tested, for impairment
(triggers), on individual level.
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Impairment test for tangible fixed assets
On 20 September 2021, the ACM published a new method decision for the Netherlands, which includes a decrease in
thebenchmark score from 97.9% in 2021 to 89.1% in 2025 and 2026 (making an average of 92.37% in the regulatory
period 2022-2026 due to the grace period). Although TenneT appealed this ACM's efficiency decision in 2021, the
adjustment of the benchmark score was identified as a triggering event to perform an impairment test at the level of the
regulatory assets of TenneTTSO Netherlands.
A test for impairment has been conducted as at 31 December 2021. The recoverable amount of the CGU TSO Netherlands
is determined based on value-in-use calculations using a discounted cash flow method. The determination of the
recoverable amount is primarily based on:
• the provisions in the regulatory framework, as laid down in the 2022-2026 Method Decree (Methode Besluit) and in other
applicable regulations and decrees. The WACC reimbursement is expected to convergetowards the IFRS-based nominal
discount rate in the long run;
• the operational projections and liquidity forecast for four regulatory periods based on approved budgets and committed
investment plans. In our model itis assumed that the benchmarkscore will increasein the next regulatory period to being
fully efficient as of the second next regulatory period – also based on the substantial arguments that TenneT brought
forward against the current benchmark score;
• IFRS-based nominal pre-tax discount rate (3.75%);
• The continuing value of the grid is derived from the then expected standardised asset value (GAW). The standardised
asset value is the value of the investments that a TSO is allowed to charge via the tariffs with a reasonable return.
Based on the information currently available and the above-mentioned test for impairment, management has concluded
thatas at 31 December 2021 there was no impairment on the CGU TSO Netherlands.
The forecast period assumed is up to 2041, which exceeds the limitation of 5 years for value in use calculations as described
in IAS 36. Management considers it appropriate to exceed beyond 5 years since the forecast period should be at the end of
a regulatory period and long enough to include the start of operations of the committed investment projects to be able to
reflect a steady state situation.
Sensitivity analyses have been performed, including changes in the (i) investment plans, (ii) WACC reimbursement in
subsequent regulatory periods and (iii) increases of the benchmark score for future regulatory periods. The sensitivity
analyses did not result in a different outcome.
i Accounting policy
Tangible fixed assets are valued at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Suchcosts include the cost of replacing part of the asset and borrowing costs for long-term construction projects if the
recognition criteria are met. When significant parts of the asset are required to be replaced at intervals, such parts are
recognised as individual assets with specific useful lives and depreciated accordingly. Likewise, when major maintenance
isperformed, its cost is recognised in the carrying amount of the asset as a replacement, if the recognition criteria are met.
Allother repair and maintenance costs are recognised in the statement of income as incurred. The present value of the
expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset, if the
recognition criteria for a provision are met. Depreciation is calculated on a straight line basis.
An asset is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of income when the asset is derecognised.
General and specific borrowing costs directly attributable to the acquisition, construction or production of the
tangiblefixedassets, are added to the cost, until such time that the assets are substantially ready for their intended use
orsale. Noborrowing costs are capitalised if and to the extend such borrowing costs are directly compensated in the year
ofconstruction.
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+ Key estimates and assumptions
To calculate depreciation amounts, the following useful lives of various asset categories were assumed:
Estimated useful lives tangible fixed assets Years
Substations
Switches and offshore converter stations 20-35
Offshore platforms 20
Security and control equipment 10-20
Power transformers 20-35
Capacitor banks 20-35
Telecommunications equipment 10-20
Connections
Pylons/lines 35-40
Cables (subsea and underground) 20-40
Other
Office buildings 40-50
Office IT equipment 3-5
Process automation facilities 5
Other company assets 5-10
Residual values, useful lives and methods of depreciation of assets are reviewed at each financial year-end and adjusted
prospectively, if appropriate.
9Right-of-useassets and lease liabilities
Right-of-use assets
(EUR million)
Land &
buildings
Power plants
NordLink
cable
Other
right-of-use
assets
Total
Cost
At 1 January 2020 101 205 - 86 392
Additions 7 14 249 3 273
Remeasurement 5 -39 - 2 -32
Depreciation -11 -90 -7 -14 -122
Other movement -9 - - 3 -6
At 31 December 2020 93 90 242 80 505
Additions 37 51 - 10 98
Disposal -1 - - -1 -2
Remeasurement 2 - -2 - -
Depreciation -14 -60 -81 -13 -168
At 31 December 2021 117 81 159 76 433
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Leased Land & Buildings
Land is mainly leased to set up pylons for electricity transmission lines and for constructed substations. These contracts run
for a period of 2-170 years. Buildings are leased mainly as office space and for storage space. These contracts run for a
period of 1-35 years.
Lease contracts for buildings are negotiated individually and include a range of different terms and conditions, including
extension options.
Lease payments are in substance fixed, only a minority of the lease contracts contain clauses with reference to the CPI index.
Leased power plants
TenneT is committed to the use of grid reserve power plants representing lease commitments according to IFRS 16.
The commitments have a maturity of 2-7 years and can be prolonged depending on the decision of regulatory authorities.
Lease payments were in substance fixed and TenneT had no power plant leases which contained variable lease payments.
Lease contracts did not include any clauses with reference to an index or contractual rate.
Leased NordLink cable
TenneT leases the NordLink submarine cable to transport electricity between Germany and Norway. The lease contract
hasaremaining maturity of 2 years and no extension option according to IFRS 16 is included in the lease contract.
Leasepayments are in substance fixed.
Leased others
Telecom lease contracts (includingfibreglass cables) run for a period between 3 and 36 years.For qualifying employees
TenneT leased cars with a lease term between 1 and 10 years.TenneT does not purchase or guarantee the value of
leasedtelecom assetsorcars.
TenneT had several contracts with termination / extension options. In determining the lease term all relevant facts and
circumstances that create a significant economic incentive to exercise those options are taken into consideration.
TenneT had no material 'sub lease' contracts in 2021 and 2020and therefore no material income from subleasing right-of-
use assets. TenneT has not entered into any sale and leaseback contracts. No lease contracts with residual value guarantees
are entered into.No lease contracts have been concluded that contain restrictions or covenants.
Lease payments were in substance fixed, only some of the lease contracts had pre-determined lease payment changes.
Short-term leases and leases of low value
TenneT leased certain other assets with terms up to 1 year.TenneT considers these assets to be of low-value or short term
in nature and therefore no right of use assets and lease liabilities were recognised for these leases. The aggregate total of
short-term lease expenses for more than one month and low value assets lease expenses amounted to EUR 2million
(2020: EUR 2 million).
Lease liability
2021 2020
(EUR million) Current Non-current Total Current Non-current Total
Lease liability Land & buildings 17 101 118 12 80 92
Lease liability power plants 72 9 81 42 48 90
Lease liability NordLink 66 64 130 68 131 199
Lease liability other leases 14 61 75 13 68 81
Total 169 235 404 135 327 462
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(EUR million)
Lease liability
Land &
buildings
Lease liability
power plants
Lease liability
NordLink
Lease liability
other leases
Total
At 1 January 2020 100 207 - 87 394
Addition 8 13 250 4 275
Interest 1 - - 1 2
Remeasurement 5 -39 - 2 -32
Repayments -12 -91 -51 -15 -169
Other movements -10 - - 2 -8
At 31 December 2020 92 90 199 81 462
Addition 36 51 - 8 95
Interest 1 - - 1 2
Remeasurement 3 - -2 - 1
Repayments -14 -60 -67 -15 -156
At 31 December 2021 118 81 130 75 404
The total cash outflow (including low value items and short-term leases) in 2021 was EUR 158million (2020: EUR 171 million).
Future cash outflows of leases not yet commenced but to which TenneT is committed mainly relate to leased power plants
and amount to EUR 46 million yearly from 2022 till 2032.
The maturity analysis of lease liabilities is disclosed in note 25.
(EUR million) 2021 2020
Depreciation expense of right-of-use assets -168 -122
Short-term lease expenses -2 -2
Interest expense on lease liabilities -2 -2
Total amount recognised in profit and loss -172 -126
i Accounting policy
At inception of a contract, TenneT assesses whether a contract conveys the right to control the use of an identified asset for
a period in exchange for consideration, in which case it is classified as a lease.
TenneT recognises a right-of-use asset and a lease liability at the lease commencement date. The asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any
lease incentives received.
The lease asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term, considered to be indicated by the lease term.
The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any).
The lease liability is initially measured at the present value of outstanding lease payments, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, TenneT's incremental borrowing rate.If available, the interest
rate implicit in the lease is used for discounting (e.g. car leases). Otherwise the incremental borrowing rate is used and
shown on the next page.
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2021 2020
Under 5 year 0.00% 0.00%
5-10 years 0.00% 0.50%
10-15 years 0.24% 1.10%
15-25 years 0.58% 1.60%
Above 25 years 0.95% 2.00%
After initial recognition, the lease liability is measured at the present value of the remaining lease payments using the effective
interest method and is remeasured when there is a change in future lease payments arising from a change in an index or rate
or if TenneT changes its assessment of whether it will exercise a purchase, extension or termination option. A corresponding
adjustment is made to the carrying amount of the right-of-use asset with any excess over the carrying amount of the asset
being recognised as profit or loss.
Short-Term Leases and Leases of Low Value
TenneT has elected not to recognise right-of-use assets and lease liabilities for short-term leases (leases with a term of 12
months or less) and leases of low-value assets. TenneT recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term or another systematic basis, if that basis is more representative of the
pattern of the lessee’s benefit. Furthermore, TenneT has elected not to recognise the lease of intangible assets.
10 Intangible assets
(EUR million) Goodwill Software
Customer
contracts
Other
intangible
assets
Intangible
assets under
construction
Total
Cost
At 1 January 2020 31 269 64 41 45 450
Additions - 1 - -1 66 66
Initial recognition of acquired companies (note 11) 4 - - 9 - 13
Transfers - 38 - - -38 -
At 31 December 2020 35 308 64 49 73 529
Additions - 21 - -2 52 71
Transfers -1 52 - - -52 -1
At 31 December 2021 34 381 64 47 73 599
Amortisation and impairment
At 1 January 2020 - 223 53 14 - 290
Amortisation for the year - 21 5 1 - 27
At 31 December 2020 - 244 58 15 - 317
Amortisation for the year - 21 5 2 - 28
At 31 December 2021 - 265 63 17 - 345
Net book value:
At 1 January 2020 31 46 11 27 45 160
At 31 December 2020 35 64 6 34 73 212
At 31 December 2021 34 116 1 30 73 254
As at 31 December 2021 and 2020, goodwill was allocated to the cash generating units (CGUs) in the following operating
segments: TSO Netherlands (EUR 3 million), TSO Germany(EUR24 million) and non-regulated activities (EUR7 million,
2020: EUR 8 million). Please refer to note 11 for details on change of goodwill.
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During 2021 EUR 39million (2020: EUR 12 million) of software was internally developed.
i Accounting policy
Intangible assets are measured at acquisition cost on initial recognition. The cost of intangible assets acquired in a business
combination is recognised at fair value at the date of acquisition. Following initial recognition, intangible assets are carried
atcost less any accumulated amortisation and accumulated impairment losses. Except for capitalised development costs,
internally generated intangible assets are not capitalised and expenses are reflected in the statement of income in the period
in which they incur.
Goodwill is initially measured at cost and represents the excess (i) of the consideration transferred over (ii) TenneT’s interest
inthe value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of the non-
controlling interest in the acquiree. After initial recognition, goodwill is measured at cost less accumulated impairment losses.
At each reporting date, we assess whether there is an indication that an asset may be impaired. If any indication exists,
orwhen annual impairment testing for an asset is required, the asset’s recoverable amount is estimated. The recoverable
amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. If the carrying amount
ofanasset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverableamount.
+Key estimates and assumptions
Estimated useful lives intangible assets Years
Goodwill Indefinite
Software 3-12
Customer contracts 10-14
Purchased rights to use land 25-45
Other 5-15
Intangible assets, with the exception of goodwill, are assumed to have a fixed useful life within the ranges outlined above
andare amortised over this useful life. The useful life is re-assessed each reporting period. Intangible assets are amortised
ona straight line basis, as this best reflects the use of the asset.
Goodwill is assumed to have an indefinite useful life and is therefore not amortised, but is tested for impairment annually
ormore frequently, if events or changes in circumstances indicate a triggering event, either individually or at CGU level.
Impairment testing of goodwill
For the purpose of annual impairment testing, goodwill acquired in a business combination is allocated to each of the
CGUs.For our three operating segments this consists of:
• TSO Netherlands (One large Cash Generating Unit consisting of regulated on- and offshore assets)
• TSO Germany (One large Cash Generating Unit consisting of regulated on- and offshore assets)
• Non-regulated companies (Several small Cash Generating Units)
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
ratethat reflects our assessment of current market conditions in respect of the time value of money and the risks specific
tothe asset. In determining fair value less costs of disposal, an appropriate valuation model is used, if no recent market
transactions can be identified.
The impairment calculation is based on detailed projections, which are prepared separately for each of the CGUs to which
the individual assets are allocated. The projections take into account current regulatory parameters, considering expected
future regulatory developments. Management believes that the resulting cash flows can be determined reliably and that they
give an appropriate reflection of the CGUs cash flow generating potential.
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The recoverable amount of the German CGU was determined based on a value in use calculation using cash flow
projections from our three year business plan. The pre-tax discount rate applied to cash flow projections was 3.9% (2020:
3.5%). The cash flows beyond the three-year period until 2043 were estimated on the basis of projected regulatory allowed
returns and invested capital. The terminal value was determined estimating the regulatory asset base as of December 2043.
We concluded that the recoverable amount as at 31 December 2021 wassignificantly inexcess of the carrying value and as
such no impairment loss needed to be recognised.
11 Business combinations
At 30 October 2020 TenneT acquired, through its subsidiary Relined GmbH, 100% of the shares of Globalways GmbH
effective 1 January 2020. This company operates a network of internet connections via fibre glass cables. The acquisition
consideration contains an additional earn-out option in 2021 and 2022 of EUR 1.5 million per annum. The 2021 earn-out
option was not used. In 2020 the fair value of the assets and liabilities acquired was determined and was accounted for
accordingly. This initial consideration, which amounted to approximately EUR 16 million, led to an amount EUR 4 million of
goodwill. As of 2021, the initial amount of goodwill was adjusted downwards for changes in working capital with an amount
of EUR 1 million.
i Accounting policy
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as
theaggregate of assets and liabilities measured at their acquisition-date fair value (with a limited number of specified
exceptions)including the amount of any non-controlling interest in the acquiree. For each business combination, we
decidewhether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the
acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred in connection with an acquisition
andincluded in administrative expenses.
Non-current assets held for sale are defined as non-current assets (other than financial instruments or property investments)
immediately available for sale and highly likely to be sold within a year. Non-current assets held for sale have been stated at
the lower of (i) the asset’s carrying value and, (ii) fair value less costs of disposal.
12 Investments in joint ventures and associates
Joint ventures
TenneT has, directly or indirectly, 50% equity stakes in BritNed Development Ltd. ('BritNed'), DC Nordseekabel GmbH & Co.
KG (‘NOKA’), DC Nordseekabel Beteiligungs GmbH, Reddyn B.V. and Tensz B.V. We have a 20% equity stake in Equigy B.V.
and a 25% indirect equity stake in Open Tower Company (OTC). For the investments in Equigy B.V. and OTC, joint control
isexercised, despite unequal equity stakes. Therefore both investments are classified as joint ventures as of 2021.
InDecember 2021 Flexcess GmbH was established as joint venture together with TransnetBW. Both shareholders have
a50% equity stake. Flexcess GmbH has a 20% participates in Equigy B.V. effective as of 1 January 2022.
These investments are classified as joint ventures, for which only the investments in BritNed (legal seat: Arnhem,
theNetherlands), OTC (legal seat: Vianen, the Netherlands) and NOKA (legal seat: Bayreuth, Germany) are each considered
as an investment of material value. Other joint ventures are considered immaterial and are therefore not furtherdisclosed.
TenneT's share in profit (which is equal to other and total comprehensive income) of these immaterial joint ventures
amounted to EUR 1 million in 2021 (2020: EUR 3 million).
The table below contains summarised financial information with respect to material joint ventures and a reconciliation
withtheir carrying amounts.
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2021 2020
Statement of financial position (EUR million) BritNed NOKA OTC BritNed NOKA OTC
Non-current assets 468 840 82 483 888 86
Cash and cash equivalents 56 12 19 46 48 8
Other current assets 38 44 24 29 59 21
Non-current liabilities -47 -51 -161 -47 -80 -161
Current liabilities -85 -6 -6 -72 -15 -2
Equity 430 839 -42 439 900 -48
Ownership TenneT 50% 50% 25% 50% 50% 25%
Carrying amount of the investment 215 420 - 220 450 -
2021 2020
Statement of income (EUR million) BritNed NOKA OTC BritNed NOKA OTC
Revenue 163 13 26 88 78 27
Depreciation and amortisation -19 -41 -7 -16 -5 -6
Other costs -57 -5 -7 -12 -3 -7
Operating profit 87 -33 12 60 70 14
Finance income and expenses -2 -1 -5 -2 -2 -5
Income tax expense -15 -2 -2 -14 -8 -2
Profit for the year* 70 -36 5 44 60 7
Ownership TenneT 50% 50% 25% 50% 50% 25%
Group's share in profit 35 -18 1 22 30 2
* Profit for the year is equal to other and total comprehensive income.
BritNed
BritNed is a joint venturewith National Grid International Ltd (National Grid), the British TSO. It owns and operates a
1,000MW 'Direct Current'(DC) interconnector between the United Kingdom and the Netherlands. Operating costs and
trading revenue are shared equally between TenneT and National Grid.BritNed had contingent liabilities of EUR 2 million
(2020: EUR 2 million) mainly related to comfort letters issued.In 2021 EUR 40 million dividend was received from BritNed
(2020: EUR 25 million). TenneT Holding B.V. has, together with the other shareholder, National Grid Holding One plc,
provided a parent company guarantee on the liabilities of BritNed.
NOKA
NordLink is an interconnector between Norway and Germany jointly owned by Statnett SF, TenneT and KfW IPEX-Bank
GmbH (KfW) made a final investment decision to establish an interconnector between Norway and Germany under the
project name ‘NordLink’. Ownership of the interconnector is equally split, with TenneT and KfW owning the southern part
through NOKA, a jointly owned company and Statnett owning the northern part. In 2021 the main activity of NOKA was
operating in the southern part of the interconnector. Operating costs and trading revenue are shared equally between
NOKAand Statnett.
As at 31 December, NOKA had contingent liabilities of EUR 3 million (2020: EUR 13 million) mainly related to purchase
obligations.During 2021 TenneT has withdrawn EUR 42 million from NOKA's capital (2020: capital contribution of
EUR42million).
OTC
OTC (legal seat: Vianen, the Netherlands) is a holding company and holds majority interests in four separate asset
companies: Colonne B.V., Mobile Radio Networks Vehicle B.V. (MRNV),OTC Networks B.V. and OTC II B.V. These
companies mainly own infrastructure assets specifically designed for terrestrial communications. OTC had no contingent
liabilities as at 31 December 2021 (2020: nil). No dividend from OTC was received in 2021 (2020: EUR 2 million).
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Other
None of our joint ventures are permitted to distribute profits without the consent from all shareholders or partners.
Wereceived nilfrom other interests in joint ventures (2020: nil).
Other interests in joint ventures amounted EUR 3million at 31 December 2021 (2020: EUR 1 million).
Associates
At 31 December 2021 our substantial investments in associates consisted of a 34% interest in Holding des Gestionaires de
Réseaux de Transport d'Electircité S.A.S. (HGRT). In addition, the Group holds four immaterial investments in Energie Data
Services Nederland B.V. (EDSN), European Market Coupling Company GmbH (EMCC), WL Winet B.V. and TSCNET Services
GmbH (TSC). The Group's share in profit (which is equal to other and total comprehensive income) of these immaterial
associates amounted to nilin 2021 (2020: EUR 4 million).
Summarised financial information in respect of material associatesand reconciliation with their respective carrying amounts,
of the investment in the consolidated financial statements is as follows:
2021 2020
Statement of financial position (EUR million) HGRT HGRT
Non-current assets 91 91
Current assets 1 1
Non-current liabilities - -
Current liabilities - -
Equity 92 92
Ownership TenneT 34% 34%
Carrying amount of the investment 31 31
2021 2020
Statement of income (EUR million) HGRT HGRT
Revenue - -
Depreciation and amortisation - -
Other costs - -
Operating profit - -
Finance income and expenses 11 10
Income tax expense - -
Profit for the year* 11 10
Ownership TenneT 34% 34%
Group's share in profit 4 3
* Profit for the year is equal to total and other comprehensive income.
HGRT
The legal seat of HGRT is in Paris, France. HGRT holds a 49% stake in EPEX. EPEX is the exchange for the power spot
markets for the 'North West Europe' (NWE) region and the United Kingdom.At 31 December 2021, HGRT had no
contingent liabilities outstanding (2020: nil). In 2021 EUR 3 milliondividend was received (2020: EUR 3 million).
Other
Our interest in other associates amounted EUR 3 million at 31 December 2021 (2020: EUR 3 million). From other associates
we received nildividend in 2021 (2020: EUR 1 million).
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i Accounting policy
A joint venture is an arrangement whereby the parties in the arrangement have joint control over the net assets of the
jointarrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about
therelevant activities require unanimous consent of the parties sharing control. An associate is an entity in which we
havesignificant influence, but no control. Significant influence is the power to participate in the financial and operating
policydecisions of the investor.
Investments in joint ventures and associates are accounted for using the equity method. Under the equity method, the
investment in the joint venture or associate is initially recognised at cost. The carrying amount of the investment is adjusted
to recognise changes in the Group’s share of net assets of the investment since the acquisition date. Goodwill relating to the
associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.
The statement of income reflects our share in the results of operations of investments. Any change in other comprehensive
income of these investments is presented as part of the other comprehensive income. In addition, when there is a change
recognised directly in the equity of the investment, our share of any change is recognised in the statement of changes in
equity. Unrealised gains and losses resulting from transactions between us and any investment are eliminated to the extent
ofthe interest in such investment.When an associate or joint venture distributes dividend to us in excess of our carrying
amount, a liability is recognised ifTenneT:
• is obliged to refund the dividend;
• has incurred a legal or constructive obligation; or
• made payments on behalf of the associate.
In the absence of such obligations, the excess in net profit for the period is recognised. When the associate or joint venture
subsequently generates profits, this is only recognised if and to the extent they exceed the excess cash distributions
recognised in net profit plus any previously unrecognised losses.
After application of the equity method, we determine whether it is necessary to recognise an impairment loss on our
investment in the joint venture or associate. At each reporting date, we determine whether there is objective evidence that
the investment is impaired. If such evidence exists, the amount of impairment is calculated as the excess of the carrying
value of the investment over its recoverable amount and recognised in the statement of income.
Upon loss of significant influence over the joint venture/associate, any retained investment is valued at fair value.
Anydifference between the carrying amount of the investment upon loss of significant influence and the fair value of
theretained investment and proceeds from disposal is recognised in the statement of income.
13 Other financial assets
(EUR million) 2021 2020
Receivables from related parties 5 5
Fees for credit facilities available 4 5
Minority participating interests 14 6
Other 14 12
Total 37 28
The receivables from related parties mainly consisted of loans granted to MRNV, a minority participating interest of Novec
B.V.,in anamount of EUR 5 million (2020: EUR 5 million). The other position includes minorities equity investments in
Westley Fund 3 and 4, located in Menlo Park, California, USA, with fair value of EUR 11 million and in Set Ventures 2 and 3,
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located in Amsterdam, for a total fair value of EUR 3 million. We contributed EUR 2 millionin capital for these minorities
(2020: EUR 1 million). Since we have obtained reliable fair value information about these investments, we have accounted
this accordingly, resulting in an EUR 8 million fair value gain recognised. Furthermore due to disinvestments by Westley Fund
3 we accounted a result of EUR 2 million.
i Accounting policy
Please refer to note 27, accounting policies for financial instruments.
14 Inventory
Inventory primarily composed of oil which is used for measures taken at power plants that are standing by for TenneT.
Theallowance for inventory is EUR 6 million (2020: EUR 11 million).The fair value of inventory was not materially different
from the carrying value.
i Accounting policies
Inventory is stated at the lower of cost and net realisable value. Cost comprises direct purchase costs and associated costs
incurred in bringing inventories to their present condition and location. The net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale.
15 Account- and other receivables
(EUR million) 2021 2020
Amounts to be invoiced to EEG trade debtors 790 2,752
EEG trade receivables 21 15
EEG short-term bank deposits > 3 months 472 -
Trade receivables 401 316
Amounts to be invoiced 434 490
VAT receivables 159 51
Other 124 171
Total 2,401 3,795
EEG trade receivables and amounts to be invoiced to EEG trade debtors
In accordance with theRenewable Energy Sources Act (EEG) TenneT TSO GmbH is required to purchase electricity from
producers of renewable energy at fixed feed-in tariffs. Subsequently such renewable energy is sold on power exchanges at
spot prices.
EEG revenues and expenses are legally required to be administrated separately and are legally designated to be equal,
except for certain potential bonus amounts payable to TenneT for marketing the energy on the power exchange.The EEG
levy also includes an additional liquidity buffer to avoid a net financing need for the TSOs. TenneT acts as an agent with
respect to these EEG services.
EEG trade debtors and receivables consisted of the accrual of unbilled EEG levy mainly for the month December, the
outstanding invoices for the EEG levy, the accrual for horizontal balancing amounts (i.e. unsettled charges to the other
German TSOs) and energy trading revenues. EEG trade receivables were not at our free disposal. Please refer to note 24
forthe EEG accounts payable.
As a result of the Climate Programme 2030(“Klimaschutzprogramm 2030”) the four German TSOs received EUR 10.8 billion
from the German government tofinance the EEG in 2021. TenneT received 32% of thisamount in three instalments
(January2021: EUR 1,632million, May 2021: EUR 960 million and October 2021: 864million) to finance paymentsmade
torenewable energy producers.
Please refer to note16 for EEG deposits.
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Trade receivables
As at 31 December, the ageing of trade receivables was as follows:
Past due
(EUR million) Total Not past due 0-30 days 31-60 days
More than
60 days
2021 401 371 30 - -
2020 316 281 2 2 31
Changes in the allowance for expected credit losses were as follows:
(EUR million) 2021 2020
At 1 January 16 13
Charge for the year 22 4
Utilised - 1
Unused amounts reversed 2 -
At 31 December 40 18
As at 31 December 2021, receivables with an initial value of EUR23million (2020: EUR 7 million) were fully provided for.
Amounts to be invoiced
The majority of the amounts to be invoiced related to unbilled grid fees and rechargeable offshore costs in Germany.
i Accounting policy
Please refer to note 27, accounting policies for financial instruments.
16Cash, cash equivalents and bank overdrafts
Cash and cash equivalents consisted of the following items.
2021 2020
(EUR million)
At free
disposal
Not at free
disposal
Total
At free
disposal
Not at free
disposal
Total
Collateral securities - 281 281 - 85 85
EEG funds - 771 771 - 5 5
EEG deposits < 3 months - 2,150 2,150 - - -
Deposits - - - 475 - 475
Cash at bank 2 - 2 2 - 2
Cash and cash equivalents 2 3,202 3,204 477 90 567
Bank overdrafts -64 - -64 -90 - -90
Total cash and cash equivalents used in cash
flow statement -62 3,202 3,140 387 90 477
Funds related to EEG activities have been legally separated as required by BNetzA. EEG Funds are not at the TenneT's free
disposal. For further reference regarding EEG we refer to note 15.Cash at banks carry interest at floating rates based on
daily bank deposit rates which may at times be negative.
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i Accounting policy
In the consolidated statement of cash flows, cash and cash equivalents include cash at bank, deposits held at call with
banks, other short-term highly liquid investments with remaining maturities of three months or less and are presented net
ofoutstanding bank overdrafts. Securities are deposits on collaterals that serve as financial security for auction and energy
exchange transactions. A matching obligation is recognised towards the party that deposited the funds as collateral.
Securities are stated at fair value upon receipt and subsequently at amortised cost.
17 Capital management
The primary objective of TenneT's capital structure is to ensure a sustainable financial position to absorb adverse changes
inthe regulatory environment and to enable us to execute our extensive investment programme which is essential for the
success of the energy transition in the Netherlands and Germany. The majority of the funding for our investment programme
is sourced from the debt capital markets, commercial banks and international financial institutions (e.g. the European
Investment Bank).
To maintain broad access to financial markets at favourable conditions, we have defined capital management objectives,
policies and processes which include:
1. to maintain a senior unsecured long-term credit rating of at least A3/A-;
2. to maintain a long-term average Funds From Operations (FFO) to Net debt based on ‘underlying’ financial information
ofat least 8.5% (with individual years of at least 8.0%);
3. to diversify the maturities of long-term funding instruments to limit refinancing risk;
4. to maintain liquidity through cash and undrawn committed credit lines covering at least our net cash requirement on
arolling 12-month forward-looking basis.
1. Maintain a senior unsecured credit rating of at least A3/A-
As of 31 December 2021 TenneT Holding B.V. had the following senior unsecured long-term credit ratings from
Standard & Poor’s and Moody's Investor Service, which comply with our financial policy.
Unsecured credit rating at 31 December 2020 and 31 December 2021
Long-term
rating
Short-term
rating
Standard & Poor's
A– (stable
outlook) A-2
Moody's Investor Service
A3 (stable
outlook) P-2
2. Maintain a long-term average FFO/Net debt ratio based on underlying financial information of at least 8.5%
To maintain a solid financial position, we intend to maintain along-term average FFO/Net debt ratio of at least 8.5% based
on underlying financial information (see note 2), which meets the minimum requirements for an A-/A3 long-term unsecured
credit rating as formulated by the credit rating agencies Standard & Poor's and Moody's Investor Service. Individual years
can be no lower than 8.0%.
A reconciliation of the Adjusted FFO and net debt is provided in the following table. Please refer to the chapter “Secure a
sustainable financial performance and investor rating” for detailed information about the Adjusted FFO.
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Based on underlying information (EUR million) 2021 2020
Net profit for the year 493 516
+ amortisation, depreciation and impairments 1,185 1,094
+ result on disposal of assets (non-cash) - -
Total FFO 1,678 1,610
Capitalised interest on assets under construction -13 -11
Interest on provisions 1 2
50% Hybrid interest -28 -22
FFO Adjusted 1,638 1,579
Net debt
+ Long-term borrowings 12,366 10,217
+ Short-term borrowings 1,339 2,243
+ Bank overdrafts 64 90
- Cash and cash equivalents at free disposal -2 -476
Lease liabilities 404 462
Net employee defined benefit liabilities 351 405
50% Hybrid loan 1,062 1,063
Net debt 15,584 14,004
Adjusted FFO/net debt 10.5% 11.3%
3. Diversify maturities of long-term funding instruments to limit refinancing risk
To minimise refinancing risk, we diversify the maturity profile of our senior debt. As of 31 December 2021, our interest
bearing debt (excluding bank overdrafts) had the following annual redemption profile:
2022 2023 2024 20282025 2026 2027 2029 2030 2031 2032 2033 2034 2038 2039 20412040 2042 20432035 2036 2037
1,500
1.200
900
600
300
0
4.Maintaining liquidity through cash and undrawn committed credit lines covering at least our net cash
requirement on a rolling 12-month forward-looking basis
We monitor the liquidity of the Group on a rolling 12-month forward-looking basis. This means that the sum of (i) cash and
cash equivalents, (ii) undrawn committed credit facilities and (iii) 12-month expected net cash flow from operating activities
should be sufficient to meet the expected aggregate of scheduled debt repayments, investments in fixed assets and
dividend payments over the subsequent 12 months.The 12-month liquidity requirement was met on 31 December 2021
and31 December 2020.
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18 Equity
Paid-up and called-up capital
The Company’s authorised share capital amounted to EUR 500 million (2020: EUR 500 million), divided into one million
shares of EUR 500 each. Of these shares, two hundred thousand shares have been issued and paid-up.
Share premium reserve
The share premium reserve consists of the capital contributions,made by the shareholder of ordinary shares, the Dutch
State represented by the Ministry of Finance.
Hedging reserve
The hedging reserve relates to the cumulative result of sold forward-starting interest rate swaps (hereafter referred to as
'FSIRS'), classified as cash flow hedges. These interest rate swaps were sold at the moment Euro Medium Term Notes
('EMTN') were issued in 2010 and 2011. The end term of the original FSIRS is 2020 and 2021. As at 31 December 2021,
the2021 FSIRS amounts to nil.
Retained earnings
Part of the retained earnings has been presented as legal reserve. For more details see note 40.
Hybrid securities
Hybrid securities are deeply subordinated securities and are, with the exception of common equity, the most junior
instruments in the capital structure of the Company. The hybrid securities are undated and do not default on non-payment
ofcoupons (unless such payment was mandatory following a resolution or payment of a dividend to common shareholders,
i.e. as so called ‘dividend pusher’).
The holders of the hybrid securities have limited ability to influence the outcome of a bankruptcy proceeding or a
restructuring outside bankruptcy. Consequently, the hybrid security holders cannot oblige TenneT to pay distributions or
redeem the securities in part or in full. Payment of distributions on and redemption of the securities is at our sole discretion.
As a result, the hybrid securities are classified as part of the equity attributable to the company's owners.
On 31 December 2021, TenneT had EUR 2.1 billion of green hybrid securities outstanding divided in two tranches.
Thefirsttranche consisted of EUR 1.1 billion green hybrid securities that bear an optional, cumulative coupon of 2.995%,
payable at TenneT's discretion annually on 1 June of each year. As at 31 December 2021, the unpaid cumulative dividend for
this tranche amounted to EUR 18 million (2020: EUR 18 million), relating to the period 1 June until 31 December and payable
on 1 June 2022.
The second tranche consisted of EUR 1 billion green hybrid securities that bear an optional, cumulative coupon of 2.374%,
payable at TenneT’s discretion annually on 22 October of each year. As at 31 December 2021, the unpaid cumulative
dividend for this tranche amounted to EUR 7million (2020: EUR 7 million).
Dividend distribution
In 2021 a common full-year dividend of EUR 149million (EUR 745per share) to our ordinary shareholder was distributed
(2020: EUR 112 million). In agreement with the State of the Netherlands TenneT has established a dividend policy with a
pay-out of 35% of the underlying profit for the year, after payments of distributions to hybrid securities holders and minority
equity investors. We made aggregate distributions to the holders of hybrid securities of EUR 57million during 2021 (2020:
EUR 39 million). The appropriation of the 2021 profit is at the free disposal of the General Meeting of Shareholders.
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19 Non-controlling interests
The proportion of economic interests held by non-controlling interests in the Group’s subsidiaries is as follows:
% Non-Controlling Interests Country 2021 2020
TenneT Offshore 2. Beteiligungsgesellschaft mbH (“TO2”) Germany 69% 69%
TenneT Offshore 8. Beteiligungsgesellschaft mbH (“TO8”) Germany 63% 63%
TenneT Offshore DolWin3 Beteiligungs GmbH & Co. KG (“TOD3”) Germany 67% 67%
TenneT Offshore DolWin3 Verwaltungs GmbH (“TODV”) Germany 67% 67%
ETPA Holding B.V. (“ETPA”) Netherlands 50% 50%
The Group has the power to control TO2, TO8, TOD3 and TODV and holds 51% of the voting rights in these entities. TenneT
also holds 50.002% of the voting rights of, and has the power to control ETPA.Movements in the non-controlling interest, to
the extent material, are summarised below.
Movement schedule Non-Controlling interests (EUR million) TO2 TO8 TOD3
At 1 January 2020 259 249 236
Profit attributable to non-controlling interests 8 16 22
Dividends paid -13 -37 -
Capital contribution 4 1 -
Capital repayment - - -55
At 31 December 2020 258 229 203
Profit attributable to non-controlling interests 10 -6 20
Dividends paid -16 -18 -
Capital repayment -1 -1 -40
At 31 December 2021 251 204 183
The non-controlling interest in TO2, TO8, TODV and TOD3 are held by Copenhagen Infrastructure Partners (CIP), which
owns respectively 69% for TO2, 63% for TO8 and a 67% economic interest for TODV and TOD3in the adjusted (for certain
regulatory effects) profits of these companies and 49% of thevoting rights.
Financial information of these subsidiaries, to the extent material, is summarised below on a consolidated basis before
intercompany eliminations and in conformity with our accounting principles.
2021
Statement of financial position (EUR million) TO2 TO8 TOD3
Non-current assets 337 634 916
Current assets 160 217 125
Non-current liabilities -47 -296 -653
Current liabilities -88 -226 -94
Equity 362 329 294
Attributable to owners of the parent 111 125 111
Attributable to non-controlling interests 251 204 183
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2020
Statement of financial position (EUR million) TO2 TO8 TOD3
Non-current assets 978 1,410 1,658
Current assets 168 155 168
Non-current liabilities -661 -1,045 -1,413
Current liabilities -113 -155 -86
Equity 372 365 327
Attributable to owners of the parent 114 136 124
Attributable to non-controlling interests 258 229 203
2021
Statement of income (EUR million) TO2 TO8 TOD3
Revenue 164 164 192
Depreciation and amortisation -82 -104 -98
Other expenses -52 -58 -36
Operating profit 30 2 58
Finance income and expenses -8 -15 -24
Income tax expense -7 3 -4
Profit/(loss) for the year 15 -10 30
Other comprehensive income - - -
Total comprehensive income 15 -10 30
Attributable to non-controlling interests 10 -6 20
2020
Statement of income (EUR million) TO2 TO8 TOD3
Revenue 148 222 182
Depreciation and amortisation -82 -102 -96
Other costs -31 -52 -23
Operating profit 35 68 63
Finance income and expenses -18 -32 -25
Income tax expense -6 -11 -4
Profit for the year 11 25 34
Other comprehensive income - - -
Total comprehensive income 11 25 34
Attributable to non-controlling interests 8 16 22
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2021
(EUR million) TO2 TO8 TOD3
Net cash flows from operating activities 75 64 75
Net cash flows used in investing activities -12 -11 -13
Net cash flows from financing activities -63 -53 -62
Change in cash and cash equivalents - - -
2020
(EUR million) TO2 TO8 TOD3
Net cash flows from operating activities 80 157 156
Net cash flows used in investing activities -9 -1 -88
Net cash flows from financing activities -71 -156 -68
Change in cash and cash equivalents - - -
20 Borrowings
(EUR million)
Effective
interest rate
Maturity
Redemption
schedule
2021 2020
4.50% bond 2010 EUR 500 million 4.60% Feb-22 At maturity - 499
4.625% bond 2011 EUR 500 million 4.70% Feb-23 At maturity 500 499
0.75% green bond 2017 EUR 500 million 0.87% Jun-25 At maturity 498 497
1.000% green bond 2016 EUR 500 million 1.04% Jun-26 At maturity 499 499
1.75% green bond 2015 EUR 500 million 1.83% Jun-27 At maturity 498 497
1.375% green bond 2018 EUR 500 million 1.49% Jun-28 At maturity 496 496
1.375% green bond 2017 EUR 500 million 1.41% Jun-29 At maturity 499 498
0.875% green bond 2019 EUR 500 million 0.98% Jun-30 At maturity 496 495
4.75% bond 2010 EUR 200 million 4.92% Jun-30 At maturity 197 197
1.250% green bond 2016 EUR 500 million 1.35% Oct-33 At maturity 494 494
2.0% green bond 2018 EUR 750 million 2.04% Jun-34 At maturity 746 746
1.875% green bond 2016 EUR 500 million 1.97% Jun-36 At maturity 493 493
1.500% green bond 2019 EUR 750 million 1.58% Jun-39 At maturity 740 739
0.125% green bond 2020 EUR 600 million 0.20% Nov-32 At maturity 595 594
0.500% green bond 2020 EUR 750 million 0.54% Nov-40 At maturity 744 744
0.125% green bond 2021 EUR 650 million 0.10% Dec-27 At maturity 648 -
0.500% green bond 2021 EUR 500 million 0.34% Jun-31 At maturity 495 -
0.875% green bond 2021 EUR 1000 million 0.12% Nov-35 At maturity 993 -
1.125% green bond 2021 EUR 650 million 0.65% Jun-41 At maturity 645 -
Non-current interest-bearing bonds 10,276 7,987
4.71% loan 2010 EUR 40 million 4.71% 2016-2022 Linear - 3
2.74% loan 2012 EUR 150 million 2.74% Sep-23 At maturity 150 150
4.44% loan 2010 EUR 140 million 4.44% 2016-2023 Linear 11 22
0.72% loan 2015 EUR 500 million 0.72% 2018-2032 Linear 345 379
0.77% loan 2015 EUR 150 million 0.77% 2018-2037 Linear 112 120
0.813% loan 2016 EUR 125 million 0.81% 2019-2038 Linear 100 106
0.05% loan 2020 EUR 100 million 0.05% 2025-2042 At maturity 100 100
0.436% loan 2020 EUR 350 million 0.44% Sep-26 Linear 350 350
Non-current interest-bearing loans 1,168 1,230
Continuation >
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(EUR million)
Effective
interest rate
Maturity
Redemption
schedule
2021 2020
0.646% green Schuldschein 2016 EUR 77 million 0.67% May-22 At maturity - 77
0.989% green Schuldschein 2016 EUR 100 million 1.01% May-24 At maturity 100 100
1.310% green Schuldschein 2016 EUR 55 million 1.32% May-26 At maturity 55 55
1.500% green Schuldschein 2016 EUR 50 million 1.51% May-28 At maturity 50 50
1.750% green Schuldschein 2016 EUR 43 million 1.76% May-31 At maturity 43 43
1.750% green Schuldschein 2016 EUR 95 million 1.76% May-31 At maturity 95 95
2.000% green Schuldschein 2016 EUR 80 million 2.01% May-36 At maturity 80 80
Non-current interest-bearing Schuldschein 423 500
1.61% USPP 2019 EUR 160 million 1.63% Jan-29 At maturity 160 160
1.83% USPP 2019 EUR 295 million 1.85% Jan-31 At maturity 294 295
2.01% USPP 2019 EUR 45 million 2.02% Jan-34 At maturity 45 45
Total non-current interest-bearing USPP 499 500
Total non-current interest-bearing borrowings 12,366 10,217
0.875% green bond 2015 EUR 500 million 0.96% Jun-21 At maturity - 500
4.50% bond 2010 EUR 500 million 4.60% Feb-22 At maturity 500 -
Current interest-bearing bonds 500 500
EEG related loans 2020 EUR 1,528 million 0.22% Jan-21 At maturity - 1,528
Current interest-bearing EEG related loans - 1,528
0.646% green Schuldschein 2016 EUR 77 million 0.67% May-22 At maturity 77 -
Current interest-bearing Schuldschein 77 -
4.12% loan 2010 EUR 150 million 4.12% Jan-21 At maturity - 150
4.71% loan 2010 EUR 40 million 4.71% Nov-21 Linear 3 3
4.40% loan 2010 EUR 40 million 4.40% Nov-21 Linear - 3
4.44% loan 2010 EUR 140 million 4.44% Nov-21 Linear 11 11
0.72% loan 2015 EUR 500 million 0.72% Sep-21 Linear 34 34
0.77% loan 2015 EUR 150 million 0.77% Jan-21 Linear 8 8
0.813% loan 2016 EUR 125 million 0.81% Oct-21 Linear 6 6
Variable interest loan 2021 EUR 700 million Variable Jan-22 At maturity 700 -
Current interest-bearing loans 762 215
Total current interest-bearing borrowings 1,339 2,243
Total borrowings 13,705 12,460
Changes in borrowings arising from financing activities are as follows:
(EUR million)
(Non) - current
interest-
bearing bonds
(Non) -current
interest-
bearing loans
Non-current
interest-
bearing
Schuldschein
Current
interest-
bearing EEG
related loans
Non-current
interest-
bearing USPP
Total
At 1 January 2020 7,642 1,061 500 - 499 9,702
Cash inflow from new borrowings 1,338 450 - 1,528 - 3,316
Cash outflow from redemptions -500 -66 - - - -566
Amortisation (non-cash) 7 - - - 1 8
At 31 December 2020 8,487 1,445 500 1,528 500 12,460
Cash inflow from new borrowings 2,781 700 - - - 3,481
Cash outflow from redemptions -500 -215 - -1,528 - -2,243
Amortisation (non-cash) 8 - - - -1 7
At 31 December 2021 10,776 1,930 500 - 499 13,705
< Continuation
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TenneT had aRevolving Credit Facility (RCF) of EUR 3.6billion as of 31 December 2021. Subsequent to a one-year
extension executed in September 2021EUR 3.3billion is available till November 2026 and EUR 0.3 billion till the
originalmaturity date of November 2024. Furthermore, TenneT had available EUR 500 million of undrawn long-term loan
commitment from the EIB at 31 December 2021, of which EUR 250 million will be settled in February 2022 with a fixed
interest rate of 0.562% and a linear repayment schedule starting in 2027 and with a last repayment in 2045.
TenneT also has a committed bank facility of EUR 300 million and an uncommitted bank facility of EUR 500 million at its
disposal till February 2024 (including committed extension options) and September 2022 respectively (both facilities were
undrawn at 31 December 2021).
In 2021 TenneT signed a EUR 700 million committed bilateral revolving credit facility, which was fully drawn at
31December2021. The committed bilateral revolving credit facility is available till December 2025 (including committed
extension options).
Finally, TenneT had EUR 450 million of short-term uncommitted credit facilities available at year end of which drawn
EUR 64 million (2020: EUR 90 million).
The amount of borrowing costs (including fair value adjustment) capitalised was EUR 75million (2020: EUR 64 million).
For more information about the fair value see note 26.
i Accounting policy
Refer to note 27, accounting policies for financial instruments.
21 Contract liabilities
(EUR million)
Investment
contributions
Other Total
At 1 January 2020 341 1 342
Addition 48 2 50
Amortisation -13 - -13
Release to profit and loss - -1 -1
At 31 December 2020 376 2 378
Addition 75 - 75
Amortisation -21 -2 -23
At 31 December 2021 430 - 430
2021 2020
(EUR million)
Investment
contributions
Other
contract
liabilties
Total
Investment
contributions
Other
contract
liabilties
Total
< 1 year 2 - 2 2 - 2
1-5 years 12 - 12 52 - 52
> 5 years 416 - 416 324 - 324
Total 430 - 430 378 - 378
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iAccounting policy
Contract liabilities are recognised when payments are made, or the payments are due (whichever is earlier) before a related
performance obligation is satisfied. Contract liabilities are recognised in accordance with the related contract. At initial
recognition, contributions received from third parties are measured at transaction price, presented as contract liabilities
(‘investment contributions’) and are subsequently recognised as revenue over the related asset’s useful life.
22 Provisions
2021 2020
(EUR million) Current Non-current Total Current Non-current Total
Environmental and decommissioning 14 1,364 1,378 15 1,144 1,159
Tariff related 16 14 30 21 101 122
Other 15 39 54 30 37 67
Total 45 1,417 1,462 66 1,282 1,348
(EUR million)
Environmental
management and
decommissioning
Tariff related Other Total
At 1 January 2020 1,142 128 141 1,411
Addition 117 -1 22 138
Utilisation - -2 -8 -10
Changes in estimations -94 -2 2 -94
Unused amounts reversed -8 -1 -90 -99
Imputed interest 2 - - 2
At 31 December 2020 1,159 122 67 1,348
Addition 162 1 11 174
Utilisation -9 -92 -18 -119
Changes in estimations 78 - -1 77
Unused amounts reversed -13 -1 -5 -19
Imputed interest 1 - - 1
At 31 December 2021 1,378 30 54 1,462
Provisions for environmental management and decommissioning
Provisions for environmental management and decommissioning serve to cover future obligationsin relation to high-voltage
connections, underground cables and offshore platforms, including decommissioning costs. In 2021 EUR 163 million was
added(2020: EUR 117 million) for future decommissioning costs for projects constructed during 2021. Changes in estimates
related to the provision for decommissioning amounted to EUR 78 million (2020: -/- EUR 94 million), mainly due to a changes
in the discount rate used, in the inflation rate, underlying assumptions and applicable price levels. Both amounts were not
recognised through the statement of income. There was no material decommissioning of substations in 2021. In line with
current regulation and permits, the first decommissioning of an offshore grid connection is expected to start in 2029.
Tariff related provisions
Tariff-related provisions relate to uncertain regulatory compensations of nil(2020:EUR 91million) and to provisions for
system service fees in the Netherlands. We charge electricity consumers a fee for system services performed. Following a
change in law, the court in the Netherlands concluded that only parties with a direct connection to a grid maintained by a
TSO are required to pay system service fees for the period prior to 31 December 2014. Consequently, we are required to
refund amounts paid by certain parties to us without a direct grid connection. These refunds can be recouped by us through
future tariffs. In 2021, EUR 0 million(2020: EUR 1 million) of the provided amount matured and was released through the
statement of income.
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Other provisions
The majority of other provisions relates to the risk of compensation payments associated with delays and interruptions
ofoffshore grid connections in Germany. The connection of offshore wind farms presents additional technical and
organisational challenges. A number of factors, including a lack of supplier resources required for the construction of
offshoregrid connection systems, as well as weather conditions and the application of new technologies, hindered the timely
realisation and/or interrupted the operational phase of offshore grid connection systems.
i Accounting policy
Provisions are recognised when there is (i) a legal or constructive obligation as a result of past events, (ii) it is probable that
anoutflow of resources embodying economic benefits will be required to settle the obligation and (iii) when the amount can
be reliably estimated. Provisions are measured at the present value of estimated cash flows to settle obligations, based on
expected price levels. Cash flows are discounted at a pre-tax rate that reflects the risks specific to the liability. The unwinding
of interest components associated with provisions is recognised in the statement of income as a finance cost.
Estimated future costs are reviewed annually and adjusted as appropriate. Changes in estimated future costs and discount
rates for decommissioning costs are recognised as changes in estimations and recorded in tangible fixed assets.For all
other provisions changes in estimated future costs and discount rates are recognised in the statement of income.
+ Key estimates and assumptions
The estimated decommissioning provision involves 1) decommissioning costs and 2) assessing the expected
remaininguseful life of relevant assets.The main uncertainties related to the decommissioning costs are the removal
method(currentlyassuming reverse installation), the uncertainties around equipment and vessel availability, and market
ratesat expectedtime of decommissioning. As at 31 December 2021, limited benchmark information was available.
Decommissioning costs areprovided for at the present value of expected costs to settle the obligation. The useful life of
theoffshore grid connections isestimated at 20 years.For interconnectors the useful life is estimated at 40 years. This
provision assumed a discount rate between 0.165% and 0.318% was applied for other provisions (2020: between 0.0% and
0.1%) and an inflation rate of 2.0% (2020: 1.8%). A change in the discount rate of 1 percent point would have a maximum
impact of EUR 164 million on the asset value and liability value.
A discount rate of0.0%was applied for other provisions (2020: 0.0%).A change in discount rate of 1 percent point would
have a maximum impact of EUR 4million on the related book value.
The estimated amount of risks associated with delays and interruptions concerning the Group’s offshore activities in
Germany is based on the number of offshore grid connections and the compensationpayable to the operators of offshore
grid connections.
We are of the opinion that the recorded provisions reflect the best estimate of the probable outflow of resources. However,
uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of these provisions in future periods.
Due to the business TenneT operates in and TenneT's legal structure, TenneT faces several contingent liabilities. In general,
the following items are recognised as contingent liabilities at TenneT:
• Possible impact of the Dutch and German regulatory frameworks on the TenneT's business financial conditions and net
income;
• Operational risks and risks related to material projects;
• Impact of environmental issues;
• Risks relating to the legal structure of TenneT;
• Risks relating to the financing of TenneT;
• Factors which are material for the purpose of assessing market risks.
Uncertainties relating to contingent liabilities make a reliable estimation of the financial impact impossible. For further
contingent liabilities we refer to note 28.
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23 Net employee defined benefit liabilities
Pension plans Germany
We have defined benefit plans for the majority of our German personnel. Said personnel are mainly employed based on the
collective labour agreement of 'Tarifgruppe Energie' and thus enjoy benefits in the form of old-age, disability and surviving
dependents' pensions. The large majority of the benefit obligations are based on pension schemes that define annual
pension claims based on respective employees' pensionable income of a particular year. Furthermore, each employee is
allowed to defer a certain amount of his compensation to raise his pension claim within defined bounds.
The Group contributes to two post-employment defined benefit plans in Germany, pursuant to a works council agreement
called 'Betriebliche Alterssicherung' (hereafter referred to as 'pension scheme 2001') and a works council agreement called
'Beitragsplan' (hereafter referred to as 'pension scheme 2008'), as well as to a small number of individual pension
commitments. The pension obligations related to these plans are partly covered by assets held in two Contractual
TrustArrangements (CTA) administrated by ‘Helaba Pension Trust e.V.’ (Helaba). According to German law, TenneT remains
ultimately liable for fulfilling these pension obligations.
Pension scheme 2001
This scheme covers employees who started their employment with TenneT Germany on or before 31 December 2007
(orlater, if the individual employment contract was agreed on or before 1 April 2008). The scheme became effective on
1January 2001 and absorbed older plans at the time. As part of the transition in 2001 to the new plan, employees were
guaranteed a vested pension claim based on the old plan for their years of service prior to the transition date. The plan offers
benefits in the form of old-age, disability and surviving dependents' pensions and is composed of an employer-funded basic
level based on the respective employee's yearly pensionable income, an employer-funded top-up level based on the
respective company's performance and an employee-funded supplementary level which allows employees to increase their
pension entitlement through deferred compensation. Yearly fixed pension claims are calculated with a fixed internal interest
rate that sum up to the total earned pension benefits of the respective employee.
Pension scheme 2008
This scheme covers employees who started their employment with TenneT Germany after 31 December 2007
(unlesstheindividual employment contract was agreed before 1 April 2008, in which case the pension scheme 2001
applies). This scheme offers benefits in the form of old-age, disability and surviving dependents’ pensions.
Pension cost is composed on the employer-funded basic level based on the respective employee’s yearly pensionable
income, an employer funded top-up level based on the respective company’s performance and an employee-funded
supplementary level which allows employees to increase their pension entitlement through deferred compensation. If the
employee contribution to the supplementary level reaches a certain level, the company pays an additional contribution of
one-third of the respective basic level contribution.
Annually, for each year a contribution to the pension claims is increased with an interest rate that is recalculated based on
the weighted average current yield of German Federal Government Bonds (Bundesanleihen), with an effective floor of 3.0%
(2020: 2.5%) and with different maturities (10, 20 and 30 years) reflecting the average duration of the plan. The annual
pension claim contributions for all years of service sum up to the total earned pension benefits of the respective employee.
Differences between the plans are limited and refer mainly to the way internal interest rates and the pensionable income are
determined. Therefore, the disclosure in the notes below comprises the combined plans.
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Components of the net benefit expense recognised in the statement of income were as follows:
(EUR million) 2021 2020
Current service costs (note 4) 24 14
Past service cost - plan amendments (note 4) - 6
Net interest costs (note 5) 3 4
Net benefit expense 27 24
The funded status of the plans and the amounts recognised in the statement of financial position as at 31 December were as
follows:
(EUR million) 2021 2020
Defined benefit obligation 466 514
Fair value of plan assets -113 -107
Benefit liability 353 407
The defined benefit liabilities as at 31 December 2021 were as follows.
The short-term part of the benefit liability is presented as part of note 22 provisions.
(EUR million) 2021 2020
Defined benefit liability long-term 351 405
Defined benefit liability short-term 2 2
Total defined benefit liability 353 407
Changes in the present value of the long-term defined benefit obligation (‘DBO’) over the year were as follows:
(EUR million) 2021 2020
Defined benefit obligation at 1 January 514 465
Current service costs 24 14
Past service costs - 6
Interest costs 4 5
Contributions by plan participants 3 2
Benefits paid -5 -4
Re-measurements on obligation -74 26
Defined benefit obligation at 31 December 466 514
Re-measurements on obligation aremainly due to the change of the discount rate from 0.7% to 1.3%.
Changes in the fair value of plan assets as at 31 December of the year were as follows:
(EUR million) 2021 2020
Fair value of plan assets at 1 January 107 104
Actual return on plan assets 6 3
Contributions by employer 4 4
Benefits paid -4 -4
Fair value of plan assets at 31 December 113 107
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Major categories of plan assets as a percentage of the fair value of the total plan assets were as follows:
2021 2020
Quoted in active markets:
Equity instruments 36% 32%
Debt securities 47% 47%
Other 4% 4%
Unquoted investments:
Debt securities 0% 5%
Real estate 12% 11%
Cash 0% 1%
Other 1% 0%
Re-measurements, including actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions, recognised in the statement of comprehensive income were as follows:
(EUR million) 2021 2020
Accumulated balance at 1 January 282 258
Re-measurements during the year -79 24
Accumulated balance at 31 December 203 282
Re-measurements of the year originate from; the following items:
(EUR million) 2021 2020
Re-measurements from actuarial gains(-)/losses in DBO -74 26
Exceeding return on plan assets (over net interest incl. in net liability) -5 -2
Accumulated balance at 31 December -79 24
Thereof:
actuarial gains(-)/losses from experience - -7
actuarial gains(-)/losses from changes in demographic assumptions - -
actuarial gains(-)/losses from changes in actuarial assumptions -79 33
iAccounting policy
For defined benefit plans, pension costs are determined using the projected unit credit method. Re-measurements,
comprising of actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets
(excluding net interest), are recognised in other comprehensive income in the period in which they occur. Re-measurements
are not reclassified to the statement of income in subsequent periods.
Service costs comprising current service costs and, if applicable, past-service costs, gains and losses on curtailments
andnon-routine settlements are recognised as personnel expenses in the consolidated statement of income. Interest is
calculated by applying the discount rate to the net defined benefit liability or asset and is recognised as part of the finance
result in the statement of income.
Prepaid pension costs relating to defined benefit plans are capitalised only if they lead to refunds to the employer or to
reductions in future contributions to the plan by the employer.
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+Key estimates and assumptions
Pension obligations and pension entitlements that are known on the reporting date are valued using economic trend
assumptions including, among others, salary growth rates and pension increase rates, that are intended to reflect realistic
expectations, as well as variables specific to reporting dates such as discount rates. The principal assumptions used in
determining the pension obligation were as follows:
2021 2020
Discount rate 1.30% 0.70%
Inflation rate 2.00% 2.00%
Future salary increases 2.50% 2.50%
Future pension increases 1.75% 1.75%
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics
and actuarial experience. An increase in each of the main assumptions would have had the followings effects.
(EUR million) 2021 2020
0.25% change of discount rate -26 -25
0.5% change of salary increase rate 2 2
0.5% change of pension increase rate 2 2
Change of 1 year in life expectancy 17 17
The sensitivities indicated are computed based on the same methods and assumptions used to determine the present value
of the defined benefit obligations and are based on variations in a single variable only. Note that the sensitivity analyses may
not be representative of an actual change in the defined benefit obligation, as it is unlikely that changes in assumptions
would occur in isolation.
Due to the development of plan assets and the change in (statutory) discount rates, we expect to have an obligation to
contribute to plan assets in 2022 of EUR 4 million. We expect the following, undiscounted, benefit payments from the plan.
(EUR million) 2021 2020
Within the next 12 months 6 5
Within 2-5 years 28 25
Within 5-10 years 47 41
More than 10 years 452 382
Total 533 453
Pension plan the Netherlands
For the majority of our Dutch personnel we have a multi-employer scheme offered by ABP Pension Fund (ABP) in the
Netherlands.The pension contribution rate for 2021 was 25.9% of the pensionable salary. In 2022 we expect to contribute
EUR 33million, based on 2021 number of employees, to the ABP scheme. Compared to the total participants in the ABP
pension fund, our share in ABP is limited.We are not liable for any deficits in the multi-employer plan.
ABP has indicated that it is unable to provide the kind of company-specific information required by IFRS for defined-benefit
pension schemes. Consequently, this scheme is treated as if it were a defined contribution scheme.
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Since the financial situation of the ABP pension plan at 31 December 2015 was inadequate from a regulatory perspective,
ABP filed a recovery plan, which was approved by De Nederlandsche Bank (DNB) during the course of 2016. In accordance
with this recovery plan, ABP evaluates how recovery is progressing at the start of each year. Progress is measured by means
of the policy funding ratio at the end of the preceding year. The policy funding ratio is the 12-month moving average of the
nominal funding ratio. ABP’s policy funding ratio as at 31December 2021 was 102.8% (2020: 93.2%) which is above the
critical regulatory coverage rate level under which pensions would have to be reduced.
iAccounting policy
Payments to defined contribution plans are charged as an expense in the period to which they relate.
24 Account- and other payables
(EUR million) 2021 2020
EEG accounts payable 4,206 1,245
Accounts payable 455 473
Payables in connection with tangible fixed asset purchases 423 337
Grid expenses payable 1,410 911
Interest payable 105 104
Social securities and other taxes payable 27 35
Payables to related parties 8 11
Other payables 224 171
Total 6,858 3,287
EEG accounts payable
Refer to note 15.
Payables in connection with tangible fixed assets purchases
Payables in connection with tangible fixed assets purchases related to unbilled services and deliveries for onshore and
offshore investment projects.
Grid expenses payable
The grid expenses payable consisted mainly of accrued expenses for (i) feed-in management and (ii) redispatch measures.
+ Key estimates and assumptions
Accrued expenses for measures taken to restore the imbalance of the electricity grid, relate to balancing services provided
by various electricity generating parties. At year-end, we record an accrual for all balancing costs. The accrual is based on
actual volumes or, if not available, forecast volumes derived from models. Several assumptions are made in these models
such as weather conditions, requested volumes and capacity per plant. Prices are based on underlying contracts and/or
historical data.
Other payables
Other payables mainly comprised compensation payments to offshore wind farm operators (OWFs), personnel related
liabilities and accruals for which invoices had not yet been received.
+ Key estimates and assumptions
Compensation payments to OWFs are based on amounts of electricity which could not be fed into the grid. The pass-
through accrual is based on a comparison of the costs incurred and the revenue generated by the offshore grid surcharge.
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25 Financial risk management
Our business activities are exposed to a number of financial risks such as interest rate risk, credit risk, liquidity risk and
refinancing risk, which are described in detail in this note. Our financial risk management strategy primarily focuses on
protecting liquidity, equity capital and net profit in order to safeguard our ability to continue active operations while providing
an adequate return to our shareholders. Our approach to managing financial risks, including a number of specific disclosures
(such as a maturity analysis of contractual undiscounted financial obligations) required by accounting standards, are set out
in this note. For details about regulatory risks we refer to the 'Risk Management' section of our Executive Board report.
Risk management related to financing activities is done by our Treasury department under policies included in the Treasury
Statute approved by our Executive Board. The Treasury department's objective is to facilitate the realisation of our financial
and strategic objectives from a funding and financial risk perspective. The Treasury Statute includes principles covering
specific areas such as interest rate risk, liquidity risk, the use of derivatives and the investment of excess liquidity. The use of
all ordinary course financial instruments is permitted, provided these are used solely to cover open positions of the Company.
Any speculative use of financial instruments is explicitly not authorised.
Interest rate risk
TenneT is exposed to interest rate risk on its debt portfolio. To limit this risk, our policy is to base the majority of our loan
portfolio on fixed interest rates. As of 31 December 2021, the long-term loan portfolio was for more than 95% based on fixed
interest rates. An increase or decrease in interest rates of 2 percentage points would result in an increase or decrease of
EUR 15million in our net interest cost (2020: EUR 8 million).
Furthermore, there is a risk that interest payable on borrowings exceeds the interest compensation received by TenneT under
the prevailing regulatory systems in the Netherlands and Germany, respectively. The ACM set the relevant interest rate which
linearly decreased from 3.58% in 2016 to 2.29% in 2021. In 2022 a new regulatory period will start in the Netherlands. In
Germany, actual interest costs are compensated up to a level customary to the market. The BNetzA determines marketability
on the basis of reference interest rates published by the Deutsche Bundesbank.Currently we expect that actual costs of
debt for TenneT are below the predefined maximum reference rates.in which ACM has decided to ex post settle the interest
rate for interest rates actually measured in the applicable year of the regulatory period.
Credit risk
TenneT is exposed to the risk of loss resulting from counterparties’ defaulting on their commitments including failure to pay
ormake a delivery on a contract. Our exposure to credit risk from operating activities and treasury activities is inherent to our
business activities.
Operational credit risk
In respect of our operating activities, TenneT has a credit policy in place, which takes into account the risk profiles of
ourcounterparties. We also have policies in place to monitor the financial viability of counterparties.
In both the Netherlands and Germany, TenneT is responsible for maintaining the balance between supply and demand of
energy. The associated costs are covered by income from parties with balance responsibility, which are charged for any
imbalances attributable to them. Any surplus is deducted from subsequent tariffs for system services. For certain situations,
securities in the form of bank guarantees and collaterals are held as protection against the default risk of parties with balance
responsibility.With respect to investment projects, we require counterparties to deliver bank guarantees or collaterals as a
protection against defaults.
The management of energy exchanges, the execution of the Renewable Energy Act in Germany and the maintenance of
theenergy balance between supply and demand requires transfer of significant cash amounts. Our policies are aimed at
minimising the risks associated with the clearing transactions in connection with these cash flows.
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Credit risk on trade and other receivables is limited, because most of our trade and other debtors have a low risk of default.
Consequently, TenneT requires no material collateral as security and no insurance for credit risk.The maximum exposure
tocredit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 13and 15.
Themovement of the allowance for expected credit losses of trade receivables is included in note 15.
The provision rates for expected credit losses are based on groupings of various customer segments with similar loss
patterns (such as customer type and arrears in payments). Any expected credit losses for financial guarantee contracts
andcommitment letters (if any) are also provided for. The calculation reflects the probability-weighted outcome, the time
value of money and reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables and other financial assets are written-off
if there is no reasonable expectation of recovering the contractual cash flows. The Group considers a financial asset in
default when contractual payments are 90 days past due. However, in certain cases, TenneT may also consider a financial
asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group.
Financial credit risk
In 2021, financial credit risk arose mainly from TenneT's transactions and positions with several financial institutions.
As at 31 December 2021, the maximum credit risk amounted to nil(2020: EUR 475 million).
In accordance with our treasury policies, counterparty credit exposure is monitored frequently against the counterparty
credit limits. We have concentration limits in place when funds are placed on deposit or when financial derivatives are
entered into.At 31 December 2021 we had nilat our free disposal. These depositshad a maturity of less than 3 months
(2020: EUR 475 million), see note 15.
At 31 December 2021 we had EUR 2,622 million deposits with third parties for EEG cash amounts (2020: nil) and no
financial derivatives outstanding. As of 31 December 2021 EUR 472million of these deposits had a maturity of more than
3months (2020: nil), please refer to note 15 and note 16.
Management does not expect any significant losses from non-performance by treasury counterparties.
Liquidity risk
Liquidity risk is defined as the risk that the Group cannot meet its short-term financial obligations. Liquidity is monitored every
quarter on a rolling 12-month forward-looking basis. Our request to maintain at least 12-month liquidity was met at each
quarter end date, including 31 December 2021 and 31 December 2020.
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The following maturity schedule presents our financial obligations on a contractual, non-discounted basis.
(EUR million)
Notes
<1 month
1 to 3
months
3 to 12
months
1 to 5 years
More than
5 years
Total
At 31 December 2021
Lease liabilities 9 12 21 100 251 69 453
Borrowings 20 704 548 268 2,701 11,408 15,629
Account- and other payables 24 1,797 1,293 3,660 4 - 6,753
Other financial liabilities 281 - - - - 281
Total 2,794 1,862 4,028 2,956 11,477 23,116
At 31 December 2020
Lease liabilities 9 12 23 103 263 125 526
Borrowings 20 158 47 683 2,592 8,972 12,452
EEG related Borrowings 20 1,528 - - - - 1,528
Account- and other payables 24 1,011 517 1,660 -5 - 3,183
Other financial liabilities 85 - - - - 85
Total 2,794 587 2,446 2,850 9,097 17,774
TenneT's borrowings have a diversified maturity profile, which reduces refinancing risks (see also note 20).
In order to reduce liquidity risk, TenneT had a EUR 3.6 billion committed revolving credit facility (RCF) at its disposal for
general corporate purposes. At 31 December 2021, this facility was undrawn. Furthermore, we had EUR 500 million of
undrawn long-term loan commitments from the EIB available at 31 December 2021 and a EUR 700 million committed
bilateral RCF, which was fully drawn at 31 December 2021. Next to that we had a committed bank facility of EUR 300 million
and an uncommitted bank facility of EUR 500 million available (both facilities were undrawn at 31 December 2021). Finally,
we had EUR 450 million of short-term uncommitted credit facilities available at year end of which drawn EUR 64million
(2020: EUR 90 million).
The EEG has a significant impact on TenneT’s working capital position and to prevent negative EEG bank account balances
and additional short-term bridge financing, a liquidity buffer is included in the EEG levy. In accordance with EEG legislation,
shortfalls are reimbursed through EEG levies and/or government contributions in subsequent years.
As a result of the Climate program 2030 (“Klimaschutzprogramm 2030”) the four German TSOs received EUR 10.8 billion
from the German government to finance the EEG in 2021. TenneT received 32% of this amount in three instalments (January
2021: EUR 1,632 million, May 2021: EUR 960 million and October 2021: 864 million) used to finance payments made to
renewable energy producers.
The size of our credit facilities is such that we expect that all substantial adverse financial developments and events can
reasonably be expected to be accommodated and that continuation of day-to-day operations is ensured for at least 12
months. The terms and conditions of our credit facilities include negative pledge and pari passu clauses. No security interest
over any of the Group's assets has been provided. All credit facilities have floating-rate interest conditions.
TenneT also has access to diversified funding sources through its medium-term note (EMTN) programme and our
commercial paper (CP) programme. Both programmes significantly reduce our dependency on bank financing.
TenneT expects to meet its financial obligations for 2022 with (i) cash and cash equivalents, (ii) funds from operations, (iii)
unused credit facilities and (iv) capital market transactions. We expect to meet our financial obligations for the subsequent
years through various capital market transactions and equity contributions and intend to manage future refinancing risks by
spreading the tenors of new financing arrangements.
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Equity risk
There is a risk of a lack of access to equity on a sustainable basis. This risk reflects the inability to raise additional equity in
atimely fashion in case of unexpectedly large increases in our investment portfolio or negative regulatory developments.
Actions taken in order to mitigate this risk are: (i) anactive financing strategy to create and maintain an optimal capital
structure as well as to diversify funding sources and manage financial risks, (ii) aproactive approach of potential investors
and active discussion with our shareholder to contribute additional equity (which effected in EUR 4.25 billion)and (iii) lobbying
activities to ensure that regulatory frameworks remain adequate to safeguard regulators income and returns to investors.
Commodity price risk
Energy purchase contracts for the forward purchase of electricity that are used to satisfy physical delivery requirements to
customers, or for energy that the Group uses itself, meet the expected purchase or usage requirements of IFRS 9. They are,
therefore, not recognised in the financial statements until they are realised. Disclosure of commitments under such contracts
is made in note 28.
Energy purchase contracts are considered to comprise two components, being a forward purchase of power at spot prices,
and a forward purchase of environmental certificates at a variable price (being the contract price less thespot power price).
With respect to our current contracts, neither of these components meets the requirement to be accounted for as a
derivative. As currently no liquid market for environmental certificates exists, this component meets the expected purchase
or usage exemption of IFRS 9. We expect to enter into an increasing number of these contracts, in order to meet our
compliance requirements in the short to medium term. It is possible that in future, if and when liquid markets develop, and
tothe extent that we are in receipt of environmental certificates in excess of our required levels, this exemption may cease
toapply, and we may be required to account for forward purchase commitments for environmental certificates as derivatives
at fair value through profit and loss.
26 Fair values
The table below provides an overview of the carrying value and fair value of financial instruments, including IFRS treatment
and the level in the valuation hierarchy. Instruments are measured at fair value.
Carrying amount Fair value
(EUR million)
Notes
2021 2020 2021 2020 Hierarchy
Financial assets
Other financial assets:
- Minority participating interests 13 14 6 14 - Level 3
Total 14 6 14 -
Financial liabilities
Borrowings:
- Borrowings – bonds 20 10,776 8,487 11,221 9,478 Level 1
- Borrowings – other 20 2,929 2,445 2,329 2,665 Level 2
- Borrowings – EEG related 20 - 1,528 - 1,528 Level 2
Total 13,705 12,460 13,550 13,671
As at 31 December 2021, no instruments carried at fair value were held (2020: nil). Furthermore, we concluded that the fair
value of the loans and receivables, cash and cash equivalents, account- and other payables and other financial liabilities
approximate their carrying amounts at year end 2021, due to the short-term maturities of these instruments.
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The following hierarchy by valuation techniquewas used tocalculate the fair value of assets and liabilities:
• Level 1: Measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: Measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset
orliability, either directly (that is, as prices) or indirectly (that is, derived from prices).
• Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data
(that is,unobservable inputs).
The fair value of the level 2 borrowings was based on discounted cash flows. A change in the assumptions used to calculate
the fair value should not result in a significantly different outcome. There were no transfers between the fair value hierarchy
levels during 2021 or 2020.
27i Accounting policies for financial instruments
Financial assets
All financial assets are recognised initially at fair value, net of directly attributable transaction cost.
After initial recognition financial assets are measured at amortised cost, fair value through other comprehensive income (OCI)
and fair value through profit or loss. All of TenneT's financial assets are classified as amortised cost, because the following
two conditions are met:
• The financial assets are held within a business model with the objective to hold financial assets in order to collect
contractual cash flows, and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment.
The Group recognises an allowance for expected credit losses (ECLs) for financial assets. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. For trade receivables and contract assets,
theGroup applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk,
butinstead recognises a loss allowance based on lifetime ECLs at each reporting date.
Financial liabilities
All financial liabilities are recognised initially at fair value and, in case of loans, borrowings and payables, net of directly
attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts.
After initial recognition at fair value, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in the statement of income when the liabilities are derecognised as
well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance expense in
the statement of income.
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28 Contingencies and commitments
Off-balance sheet rights and related obligations consist of the following categories:
(EUR million) 2021 2020
Investment related off-balance items
Off-balance sheet rights
Bank guarantees received 1,440 1,227
Comfort letters received 1,314 1,202
Total 2,754 2,429
Off-balance commitments
Capital commitments 7,468 7,133
Comfort letters issued 783 776
Total 8,251 7,909
Other off-balance items
Other off-balance obligations
Grid-related commitments 640 920
Other off-balance sheet commitments 55 43
Total 695 963
The expected cash flows in respect of capital commitments equal the amounts in the above table. For comfort letters issued,
no cash flows are expected.
Bank guarantees received
Bank guarantees received included guarantees for investment projects.
Comfort letters received
The majority of comfort letters received was from parties involved in the construction of German onshore and offshore
projects.
Capital commitments
Capital commitments are commitments entered into with regard to the purchase of tangible fixed assets. Approximately
EUR4.0billion of capital commitments were payable within 12 months, as at 31 December 2021 (2020: EUR 2.7 billion).
Comfort letters issued
The comfort letters issued mainly related to offshore projects in Germany.
Grid related commitments
Grid-related commitments included unused auction receipts, received in the Netherlands amounting to EUR 136million
(2020: EUR 482 million).
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Other
Other off-balance sheet commitments mainly consisted of:
• Compensation claimed by several parties for the delay or non-availability of the offshore grid connection. The related legal
proceedings are still pending. If and to the extent the claims are (partly) justified and the payments resulting therefrom
could not be passed through to the end customers, the binding rulings may have a negative impact on the financial
position;
• Capital commitments to minority participating interests;
• TenneT TSO B.V. is currently involved in a claim procedure because of alleged wrongfultermination of
constructioncontracts and in a counter claim procedure against this counter party regarding financial settlement &
damages due tothe alleged non-fulfilment of the construction contracts.
For these items, it is not practicable possible to determine the financial effect and possible timing of cash outflows and cash
inflows.
Various other off-balance sheet commitments and contingencies as well as other off-balance sheet rights existed as of
31December 2021 but were immaterial from a disclosure perspective. The majority of these claims related to (i) construction
contracts and planning damage where additional payments would be capitalised, or (ii) claims relating to compensation for
delays and interruptions where any compensation would be pass-through for TenneT or (iii) claims relating to refunds of
transmission services, which would be compensated in future tariffs. In the unlikely event that these claims would prevail
incourt, this could have a material impact on the Company’s financial situation.
Environmental obligations
The Group is exposed to risks regarding environmental obligations arising from past activities. For example, a number
ofsites have to be decontaminated and restored to their original condition before being handed back at the end of the
contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed
with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations
arise, a provision is formed based on the most reliable estimate possible of future expenses. TenneT is of the opinion that
thecurrently recognised provisions are adequate, based on information currently available.
29 Related parties
Note 30provides an overview of legal entities included in the consolidated financial statements.
TenneT has entered intotransactions with the following related parties:
• State of the Netherlands: TenneT Holding B.V. is controlled by the Dutch State, which owns 100% of the Company’s
ordinary shares (refer to note18);
• Joint ventures NOKA, OTC and BritNed (refer to note 12);
• AssociateHGRT (refer to note 12);
• Members of the Executive Board and Supervisory Board of TenneT Holding B.V.(refer to note 4).
• Copenhagen Infrastructure partners (CIP). As of 1 April 2022 Mr Jager will be a partner at CIP
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30 Consolidated subsidiaries
The following legal entities were included in the consolidation of TenneT Holding B.V:
Voting interest Economic interest
Subsidiary Legal seat Country 2021 2020 2021 2020
Direct subsidiaries
ETPA Holding B.V. Amsterdam Netherlands 50% 50% 50% 50%
NLink International B.V. Arnhem Netherlands 100% 100% 100% 100% *
NOVEC B.V. The Hague Netherlands 100% 100% 100% 100%
Relined B.V. Utrecht Netherlands 100% 100% 100% 100%
TenneT Duitsland Coöperatief U.A. Arnhem Netherlands 100% 100% 100% 100% *
TenneT Green B.V. Arnhem Netherlands 100% 100% 100% 100% *
TenneT Orange B.V. Arnhem Netherlands 100% 100% 100% 100%
TenneT TSO B.V. Arnhem Netherlands 100% 100% 100% 100%
TenneT TSO Duitsland B.V. Arnhem Netherlands 100% 100% 100% 100% *
Indirect subsidiaries
B.V. Transportnet Zuid-Holland Voorburg Netherlands 100% 100% 100% 100% *
CertiQ B.V. Arnhem Netherlands 100% 100% 100% 100%
Duvekot Rentmeesters B.V. Bathmen Netherlands 100% 100% 100% 100%
ETPA B.V. Amsterdam Netherlands 50% 50% 50% 50%
Nadine Netwerk B.V. Arnhem Netherlands 100% 100% 100% 100% *
Omroepmasten B.V. Vianen Netherlands 100% 100% 100% 100%
Saranne B.V. Arnhem Netherlands 100% 100% 100% 100% *
Stichting Beheer Doelgelden Landelijk Hoogspanningsnet Arnhem Netherlands N/A N/A N/A N/A
TransTenneT B.V. Arnhem Netherlands 100% 100% 100% 100% *
DC Netz DolWin4 GmbH Bayreuth Germany 100% 100% 100% 100%
DC Netz HelWin1 GmbH Bayreuth Germany 100% 100% 100% 100%
DC Netz SylWin2 GmbH Bayreuth Germany 100% 100% 100% 100%
Globalways GmbH Stuttgart Germany 100% 100% 100% 100%
NOVEC GmbH Emsbüren Germany 100% 100% 100% 100%
Relined GmbH Emsbüren Germany 100% 100% 100% 100%
Greennet Stiftung Bayreuth Germany 100% 0% 100% 0%
TenneT GmbH & Co. KG Bayreuth Germany 100% 100% 100% 100% **
TenneT Offshore 1. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 31% 31%
TenneT Offshore 2. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 31% 31%
TenneT Offshore 8. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 37% 37%
TenneT Offshore 9. Beteiligungsgesellschaft mbH Bayreuth Germany 51% 51% 37% 37%
TenneT Offshore Dolwin3 Beteiligungs GmbH & Co. KG Bayreuth Germany 51% 51% 30% 30% **
TenneT Offshore Dolwin3 GmbH & Co. KG Bayreuth Germany 51% 51% 30% 30%
TenneT Offshore Dolwin3 Verwaltungs GmbH Bayreuth Germany 51% 51% 33% 33%
TenneT Offshore GmbH Bayreuth Germany 100% 100% 100% 100%
TenneT TSO GmbH Bayreuth Germany 100% 100% 100% 100%
TenneT Verwaltungs GmbH Bayreuth Germany 100% 100% 100% 100%
WL Winet GmbH (in liquidation) Emsbüren Germany 100% 100% 100% 100% ***
* For these companies TenneT has issued a declaration of liability as referred to in Book 2, Part 9, Section 403 of the Netherlands Civil Code.
** This company, which has been consolidated in these financial statements, has opted for the exemption of Section 264b of the German
Commercial Code.
*** WL Winet GmbH exists since 2016 but never showed a positive result. Although sales were increasing, management didn't expect an improvement
ofthe result due to the lack of finding qualified personnel. Therefore, it was decided to liquidate WL Winet GmbH. The liquidation commenced on
1March 2019.
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As TenneT is able toexercise direct control over its management and financial and operational policies,Stichting Beheer
Doelgelden Landelijk Hoogspanningsnet, a foundation which temporarily manages funds arising from the maintenance of
theenergy balance and auctioning of cross-border capacity by TenneT TSO B.V., is included in the consolidation.
31 Events after the reporting period
The Russian invasion in Ukraine does not have an impact on TenneT’s tangible assets. It could have an impact on
TenneTthrough higher energy prices and higher cost of supplies that are needed for maintenance and investment projects.
The situation is continuously being monitored in close alignment with the Dutch and German governments.
In January 2022, due to the weather events related to storm Corrie, an adrift cargo vessel collided with the jacket of
Hollandse Kust Zuid Beta. We are currently investigating the effects of this collision, to get a clear picture of the exact
damage to the jacket so that we can make a plan for necessary repairs.
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Company financial statements
Company statement of financial position
For the year ended 31 December (EUR million)
Assets
Notes
2021 2020
Non-current assets
Investments in subsidiaries 36 8,216 8,651
Investments in joint ventures and associates 37 31 31
Other financial assets 38 12,861 9,828
Total non-current assets 21,108 18,510
Current assets
Other financial assets 38 274 2,093
Account- and other receivables 39 12 14
Cash and cash equivalents - 475
Total current assets 286 2,582
Total assets 21,394 21,092
Equity and liabilities
Notes
2021 2020
Equity 40
Paid up and called-up capital 100 100
Share premium 1,790 1,790
Revaluation reserve 10 22
Reserve for participating interests 64 94
Reserve for internally generated assets 87 55
Retained earnings 3,193 2,515
Unappropriated result -401 748
Equity attributable to ordinary shares 4,843 5,324
Hybrid securities 2,125 2,125
Equity attributable to owners of the company 6,968 7,449
Non-current liabilities
Borrowings 41 12,366 10,217
Deferred tax liability 8 6
Total non-current liabilities 12,374 10,223
Current liabilities
Borrowings 41 1,339 2,243
Bank overdraft 64 90
Account- and other payables 42 649 1,087
Total current liabilities 2,052 3,420
Total equity and liabilities 21,394 21,092
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Company financial statements
Company statement of income
For the year ended 31 December (EUR million)
(EUR million)
Notes
2021 2020
Revenue 1 -
Other operating expenses -8 -6
Other gains/(losses) - -
Total operating expenses -8 -6
Share in profit of joint ventures and associates 14 5
Operating profit 7 -1
Finance income 33 194 159
Finance expenses 34 -186 -202
Finance result 8 -43
Profit before income tax 15 -44
Income tax expense -14 1
Profit from subsidiaries 36 -345 835
Profit for the year -344 792
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Company statement of income
Notes to the company financial statements
These notes contain information about the company financial statements of TenneT Holding
B.V. Details related to TenneT Holding B.V.'s financial results and position are provided, as
well as a description of the specific accounting policies applied when compiling these
company financial statements.
32 Company accounting policies
The company financial statements for TenneT Holding B.V. have been prepared in accordance with the provisions of Part 9,
Book 2 of the Netherlands Civil Code. The same principles governing valuation and the determination of results (including the
principles governing the classification of financial instruments as equity or liability) have been applied when compiling the
company financial statements and the consolidated financial statements, as permitted by Article 2:362, clause 8 of the
Netherlands Civil Code.
Expected credit loss (ECL) provisions for receivables from subsidiaries have been eliminated as intercompany positions.
Changes in these ECL provisions may impact the carrying amounts of the financial assets in the company statement of
thefinancial position due to a possible provision. This may result in a difference between the company's equity and the
consolidated equity.No ECL provision was deemed necessary.
33 Finance income
Finance income was mainly related to the interest received on intercompany loans and other in- house financing activities
(see note 38). The intercompany agreements have terms equivalent to those that prevail in arm’s length transactions.
34Finance expenses
Finance expenses mainly related to interest on borrowings and credit facilities (2021: EUR 175million;
2020: EUR 187 million).
35 Personnel expenses
TenneT Holding B.V. did not employ any personnel during 2020 or 2021, and as a result did not incur any personnel
expenses inthose periods. Members of the Executive Board and Supervisory Board of the Company received their
remuneration, asdisclosed in note 4 of the consolidated financial statements, from other entities within the Group.
36 Investments in subsidiaries
Changes in investments in subsidiaries can be broken down as follows:
(EUR million) 2021 2020
At 1 January 8,651 7,552
Share in result -345 835
Capital contribution -36 284
Dividends received -110 -3
Re-measurement of defined benefit pension 56 -17
At 31 December 8,216 8,651
Investments in subsidiaries relate to the legal entities included in the consolidation as disclosed in note 30of the
consolidated financial statements.
i Accounting policies
Investments in subsidiaries are measured at net asset value. The net asset value of a participating interest is determined by
valuing assets, provisions and liabilities and calculating the result using the accounting principles applied to the consolidated
financial statements.
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Notes to the company financial statements
Notes to the company financial statements
When TenneT's share of losses in an investment equals or exceeds its interest on investment, (including separately
presented goodwill or any other unsecured non-current receivables, as part of the net investment), it does not recognise any
further losses, unless it has incurred legal or constructive obligations or made payments on behalf of this investment. In such
case, TenneT will recognise a provision.
37 Investments in joint ventures and associates
Investments in joint ventures and associates related to HGRT.In 2021, TenneT's share in HGRT's result amounted to
EUR4million (2020: EUR 3 million) and EUR 3 million(2020: EUR 3 million) dividends were received.Further reference
ismade to note 12of the consolidated financial statements.
38 Other financial assets
(EUR million) 2021 2020
Receivables from subsidiaries 12,843 9,818
Minority participating interests 14 5
Other financial assets 4 5
Total 12,861 9,828
In relation to the minority participating interests reference is made to note 13.
Receivables from subsidiaries mainly related to intercompany loans and cash management activities of TenneT Holding B.V.
The agreed interest rate for the intercompany loans is our cost of fund rating +0.125%. These receivables were unsecured.
The movement schedule is as follows:
(EUR million) 2021 2020
At 1 January 9,828 6,655
Additions 3,190 3,377
Repayments -57 -93
Transfer to current -108 -110
Fair value adjustment equity investments 8 -
Other movements - -1
At 31 December 12,861 9,828
TenneT Holding B.V. had EUR 271million (2020: EUR 2.1billion)ofcurrent other financial assetswhich were related to
receivables from subsidiaries. Certain subsidiaries have guaranteed the payment to, certain creditors of TenneT Holding B.V.
up to an aggregate amount of EUR 400 million (2020: EUR 2.5 billion).
39 Account- and other receivables
Account- and other receivables mainly related to corporate income tax receivable.
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40 Equity
(EUR million)
Reserve
Participating
interests
Reserve for
internally
generated
assets
Hedging
reserve
Revaluation
reserve
Total legal
reserve
At 1 January 2020 62 62 1 32 157
Result NOKA and HGRT 35 - - - 35
Dividend NOKA and HGRT -3 - - - -3
Internally generated intangible assets - 32 - - 32
Depreciation on internally generated intangible assets - -39 - - -39
Depreciation revaluation tangible fixed assets - - - -11 -11
Amortisation of hedges - - -1 - -1
At 31 December 2020 94 55 - 21 170
Result NOKA and HGRT 15 - - - 12
Dividend NOKA and HGRT -45 - - - -42
Internally generated intangible assets - 52 - - 52
Depreciation on internally generated intangible assets - -19 - - -19
Depreciation revaluation tangible fixed assets - - - -11 -11
At 31 December 2021 64 87 - 10 161
The statement of changes in equity and disclosures to that statement are included in the consolidated financial statements.
For details on the hybrid securities see note 18.
The revaluation reserve covers the IFRS 1 revaluation of tangible fixed assets in 2004.The reserve for participating interests
relates to HGRT and NOKA, for which TenneT does not control payment of dividends. In the consolidated financial
statements, the revaluation reserve, the reserve for internally generated assets and the reserve for participating interestswere
included in retained earnings.
The legal reserves are not freely distributable.
Appropriation of result for the year ended 31 December 2020
The annual report 2020 was approved in the General Meeting held on 11 March 2021. The General Meeting determined the
appropriation of result in accordance with the proposal being made to that end.
The appropriation of the 2021 profit is at the free disposal of the General Meeting of Shareholders and has not been
recorded in the financial statements.
41 Borrowings
Details on borrowings are included in the consolidated financial statements, see note 20.
42 Account- and other payables
(EUR million) 2021 2020
Payables to subsidiaries 544 983
Interest payable 105 104
Total 649 1,087
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43 Events after the reporting period
See note 31of the consolidated financial statements.
Arnhem, 14 March 2022
Executive Board TenneT Holding B.V.
M.J.J. van Beek (Chair)
T.C. Meyerjürgens
M.C. Abbenhuis
A.C.H. Freitag
Supervisory Board TenneT Holding B.V.
A.F. van der Touw (Chair)
A.C.C. van Els
L.J. Griffith
E. Kairisto
E.M. Schöne
TenneT Holding B.V.
Utrechtseweg 310
6812 AR Arnhem
The Netherlands
Postbus 718
6800 AS Arnhem
The Netherlands
Chamber of Commerce register 09083317
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Profit appropriation
Profit appropriation is governed by Section 38.3 of the Articles of Association, which states the following “To the extent that
the profit is not used to make up prior losses in accordance with the provision of paragraph 2, it shall be at the free disposal
of the general meeting. In the calculation of the profit amount to be distributed on every share, only the amount of the
compulsory payments on the nominal amount of the shares shall be taken into consideration. In the event of a tied vote on
aproposal to distribute or reserve profits, the profits to which the proposal relates shall be reserved”.
Other
information
Other information
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Other information Profit appropriation
Independent auditor’s report
To: the Shareholder and Supervisory Board of TenneT Holding B.V.
Report on the audit of the financial statements 2021 included in the integrated annual report
Our opinion
We have audited the accompanying financial statements 2021 of TenneT Holding B.V. (the “Company” or “TenneT”) based
in Arnhem, The Netherlands. The financial statements include the consolidated financial statements and the company
financial statements.
In our opinion:
• the accompanying consolidated financial statements give a true and fair view of the financial position of TenneT Holding
B.V. as at 31 December 2021, and of its result and its cash flows for 2021 in accordance with International Financial
Reporting Standards as adopted by the European Union (“EU-IFRS”) and with Part 9 of Book 2 of the Dutch Civil Code;
and
• the accompanying company financial statements give a true and fair view of the financial position of TenneT Holding B.V.
as at 31 December 2021, and of its result for 2021 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at 31 December 2021;
2. The following statements for 2021: the consolidated statement of income, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows; and
3. The notes comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
1. The company statement of financial position as at 31 December 2021;
2. The company statement of income for 2021;
3. The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under
those standards are further described in the “Our responsibilities for the audit of the financial statements” section of our
report.
We are independent of TenneT Holding B.V. in accordance with the EU Regulation on specific requirements regarding
statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the
Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional
Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands.
Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole
and in forming our opinion thereon. The following information in support of our opinion was addressed in this context,
andwe do not provide a separate opinion or conclusion on these matters.
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at
EUR55million. The materiality is based on 7% of underlying operating profit, as set out in note 2 of the consolidated
financial statements. We have also taken into account misstatements and/or possible misstatements that in our opinion
arematerial for the users of the financial statements for qualitative reasons.
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Independent auditor’s report
Component audits are performed using the materiality levels determined by the judgement of the group engagement team,
considering materiality for the consolidated financial statements as a whole and the reporting structure of the group. For the
largest reporting entities, the audits are performed using the following component materiality levels:
• TenneT TSO GmbH & Co. KG(“TSO DE”): of EUR 37.4 million;
• TenneT TSO B.V. (“TSO NL”): EUR 24.2 million; and
• TenneT Holding B.V.: EUR 22 million.
For the other reporting entities, the component materiality levels did not exceed EUR 11 million.
We agreed with the Supervisory Board that misstatements in excess of EUR 2.75 million, which are identified during the
audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
TenneT Holding B.V. is the head of a group of entities. The financial information of this group is included in the consolidated
financial statements of TenneT Holding B.V.
Because we are ultimately responsible for the opinion, we are responsible for directing, supervising and performing the group
audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for reporting
entities. Decisive were the size and/or the risk profile of the reporting entities or operations. On this basis, we selected
reporting entities for which an audit had to be carried out on the complete set of financial information or specific items.
In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed at
thecomponents by the group engagement team and the component auditors.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in the
audit work at those components to be able to conclude whether sufficient appropriate audit evidence was obtained as a
basis for our opinion on the group financial statements as a whole, also considering COVID-19 related travel restrictions.
Foreach component we determined whether we required an audit of their complete financial information or whether other
procedures would be sufficient.
Our group audit mainly focused on significant group entities TenneT Holding B.V., TSO DE and TSO NL, because combined
they make up more than 90% of the group’s revenue, underlying operating profit and assets. We included additional
reporting entities in the scope of our group audit to have additional audit coverage on the group’s consolidated financial
statements, and performed other procedures with respect to residual risk in components and account balances that have
not been included in audit scope.
The group consolidation, financial statements disclosures and certain centrally coordinated accounting topics were audited
by the group engagement team. These topics included among others treasury and corporate income tax. Specialists were
involved in the areas of tax, accounting, valuation, pension, and information technology.
We have obtained the following audit coverage of the group with our audit procedures:
Audit coverage
Revenue 99%
Underlying operating profit 97%
Assets 99%
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Due to the continued COVID-19 travel restrictions during 2021 we were able to visit Germany on a very limited basis.
Consequently, we maintained our strategy for direction and supervision of the TSO DE component auditors in line with prior
year's audit. The group engagement team among others held audit planning calls with all the individual component auditors,
held bi-weekly update calls with component management and the component auditors, and conducted remote file reviews
to evaluate the work undertaken and to assess their findings.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we
have been able to obtain sufficient and appropriate audit evidence about the group's financial information to provide an
opinion about the consolidated financial statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a
comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
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Key Audit Matters How the key audit matter was addressed in the audit
Tangible fixed assets
Securing supply and facilitating the integration of
sustainable energy sources into the high-voltage
grid require substantial investments and flexible
access to (equity) funding. TenneT expects to
increase its annual investment volume to at least
EUR 6 billion by 2025 in onshore and offshore grid
connections.
We have tested the internal control environment related to tangible fixed assets through testing
of operating effectiveness of relevant controls, including controls related to investment approval
and the financial closing of assets under construction as well as the periodic determination of
the useful life of tangible fixed assets. In addition, we have tested relevant controls for design
and implementation around the liquidity forecast safeguarding TenneT’s ability to finance
investments.
At yearend, we have performed test of details on the additions and other movements. We
obtained and discussed internal management reports about progress of the key assets under
construction. We evaluated management’s useful life estimations for reasonableness based on
economic, regulatory and asset health data.
Also, we have evaluated management’s impairment trigger analyses noting that such a trigger
was identified for the TSO NL cash generating unit. As a consequence, TenneT performed an
impairment test for these assets as at December 31, 2021. The impairment test comprised of
assessing the recoverable amount by means of a value-in-use calculation using a discounted
cash flow model. The resulting recoverable amount is higher than the carrying amount.
Therefore, no impairment is recorded in the financial statements 2021. The main assumptions
used in the calculation of the recoverable amount are disclosed in the financial statements Note 8.
Furthermore, we evaluated the approriateness of the disclosure of the accounting policy and
estimation uncertainty of the TSO NL impairment test.
Observation
No reportable matters were identified as a result of our procedures.
We have included this as a key audit matter
because of:
• the financial significance of the tangible fixed
assets and capital expenditures; and
• the risks associated with large investment
projects, complexity in procurement,
construction and timely completion; and
• the professional judgment required in
estimating the useful lives of assets and in
identifying any potential impairment (triggers).
Provision for decommissioning of (offshore) assets
Moving towards a renewable future involves
significant investments in (offshore) assets, that are
to be decommissioned over the next 20 to
40years, thus requiring recognition of decommis-
sion provisions. The corresponding provisions are
based on estimates of costs, timing of decommis-
sioning, discount rates and inflation.
We have obtained management’s position papers on the cost assumptions and alignment of
the methodology across The Netherlands and Germany. Our audit procedures include testing
of design and implementation of relevant controls around the periodical assessment of these
assumptions and the evaluation of the financial model used to calculate the provision.
Our substantive audit procedures further include an assessment of the reasonability of the key
assumptions (including involvement of a specialist with regards to the cost assumptions)
through comparison with observable market data and procedures to address the completeness
of the provision.
Furthermore, we evaluated the appropriateness of the disclosure of the accounting policy and
estimation uncertainty of these provisions.
Observation
Our procedures did not identify material observations and we considered management’s key
assumptions, to be within the reasonable range of our own expectations.
We have included this as a key audit matter
because of:
• the significance of the provision and
additions for the year triggered by the start of
construction of new (offshore) assets; and
• the uncertainty involved in measuring the
provision and sensitivity to changes in key
assumptions, including the cost base, the
inflation rate and the discount rate.
Accrual for in-feed management expenses
Due to a larger share of renewable energy
production in Germany, supply of energy may
sometimes exceed demand. In such instances,
TenneT initiates redispatch measures to maintain
the energy balance on its grids at 50 Hertz. If there
is no redispatch possibility on the transmission
grid, TenneT will direct distribution system
operators to curtail producers of (renewable)
electricity to secure system stability. These
producers are then entitled to reimbursement for
their lost in-feed.
We obtained an understanding of the external factors and market processes that drive the
estimation uncertainty, including an evaluation on the correlation between average wind
developments and in-feed management expenses for 2021 and the previous periods.
We have tested the internal control environment related to the in-feed management expenses
by testing design and implementation of relevant controls. This includes an assessment of the
methodology applied by TenneT to estimate the accrual at reporting date.
We performed the following combination of substantive testing procedures:
• we tested quantity (GWh) and pricing data of the accrual estimation with underlying
contract and counterparty quantity data.
• we performed back-testing of historical estimates, primarily aimed to test quantity
estimations (GWh) with the use of observable market data, as well as the pricing
estimations of the transactions based on contracts, and
• we evaluated underlying drivers of historical estimate updates to the current period
estimates.
Observation
Our procedures did not identify material observations and we considered management’s key
assumptions (quantity and price) to be within the reasonable range of our expectations.
We have included this as a key audit matter
because the accrual for in-feed management is
significant and subject to estimation uncertainty in
assessing variable renewable energy production,
where TenneT is dependent on information from
other market participants.
Moreover, final settlement of in-feed management
measures may take up to six years to resolve due
to regulatory terms.
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Consideration of fraud in the audit of the financial statements
Description Response
An auditor conducting an audit in accordance with
Dutch Standards on Auditing is responsible for
obtaining reasonable assurance that the financial
statements taken as a whole are free from material
misstatement, whether caused by fraud or error.
Owing to the inherent limitations of an audit, there
is an unavoidable risk that some material
misstatements of the financial statements may not
be detected. The risk of not detecting a material
misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepre-
sentations, or the override of internal control.
We have exercised professional judgement and
have maintained professional scepticism
throughout our audit in identifying and assessing
the risks of material misstatement of the financial
statements due to fraud, designing and perform-
ing audit procedures responsive to those risks,
and obtainingaudit evidence that is sufficient and
appropriate to provide abasis for our opinion.
We performed the following procedures:
• In identifying potential risks of material misstatement due to fraud, we obtained an
understanding of TenneT and its environment, including its internal controls. We
evaluated TenneT’s fraud risk assessment and made inquiries with management, those
charged with governance and others within TenneT, including but not limited to the
functions (i) Internal Audit, (ii) Compliance & Integrity and (iii) Financial Governance &
Services. We evaluated several fraud risks factors to consider whether those factors
indicated a risk of material misstatement due to fraud.
• Following these procedures, and the presumed risks under the prevailing auditing
standards, we considered the fraud risks in relation to management override of
controls, including evaluating whether there was evidence of bias by the Supervisory
Board, the Executive Board and other members of management, which may represent
a risk of material misstatement due to fraud. As part of the fraud risk of management
override of controls, we identified the risk of classification of operational expenditure as
capitalised expenditure due to the differences in related regulatory accounting and thus
future revenues.
• We made inquiries of management, those charged with governance and others within
TenneT regarding the risk of material misstatements in the financial statements due to
fraud, their process for identifying and responding to the risk of fraud, the internal
communication regarding their views on business practices and ethical behaviour and
whether they have knowledge of any actual, suspected or alleged fraud affecting the
company.
• We held discussions amongst team members and component auditors to identify
fraud risk factors and considered whether other information obtained from our risk
assessment procedures indicated risks of material misstatement due to fraud.
Fraud risk factors identified include among others:
• fraud, bribery and corruption;
• compliance with respect to trade regulations/sanctions;
• compliance with respect to environmental requirements; and
• compliance with procurement policies.
• We evaluated whether unusual or unexpected relationships have been identified in
performing analytical procedures, that may indicate risks of material misstatement due
to fraud.
• We involved forensic specialists, focused on our fraud and non-compliance risk
assessment, inquiries with management, the evaluation of the internal control
environment and in determining the audit response.
• We determined overall responses to address the assessed risks of material
misstatement due to fraud at the financial statement level or at the assertion level by:
• assigning and supervising personnel with the adequate knowledge, skills and ability;
• evaluating whether the selection and application of accounting policies by the group,
particularly those related to subjective measurements and complex transactions, may
be indicative of fraudulent financial reporting;
• incorporating an element of unpredictability in the selection of the nature, timing and
extent of our audit procedures. Among others, these Include the selection of fixed
asset project tested, expense sampling selection criteria and (physical) asset
inspection.
• tested the appropriateness of journal entries recorded in the general ledger and other
adjustments made in the preparation of the financial statements;
• evaluated whether the judgments and decisions made by management in making the
accounting estimates included in the financial statements indicate a possible bias that
may represent a risk of material misstatement due to fraud. Significant accounting
judgements, estimates and assumptions that might have a major impact on the
financial statements are disclosed in note 1 of the consolidated financial statements.
Impairment testing of the TSO NL assets, grid expense payables and the provision for
decommissioning were focus areas in our audit as the related account balances are
subject to significant management judgment. Reference is made to the section “Our
key audit matters”;
• performed a retrospective review of management judgments and assumptions related
to significant accounting estimates such as cost assumptions on the
decommissioning provisions and in-feed management accruals reflected in prior year
financial statements.
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Consideration of laws and regulations in the audit of financial statements
Description Response
We are responsible for obtaining reasonable assur-
ance that the financial statements, taken as a
whole, are free from material misstatement,
whether due to fraud or error taking into account
the applicable legal and regulatory framework.
However, we are not responsible for preventing
non-compliance and cannot be expected to
detect non-compliance with all laws and
regulations.
Owing to the inherent limitations of an audit,
thereis an unavoidable risk that some material
misstatements in the financial statements may not
be detected, even though the audit is properly
planned and performed in accordance with the
auditing standards. In the context of laws and
regulations, the potential effects of inherent
limitations on the auditor’s ability to detect material
misstatements are greater for such reasons as the
following:
We performed the following procedures:
• As part of obtaining an understanding of TenneT and its environment we obtained a
general understanding of the legal and regulatory framework applicable to TenneT and
the industry in which it operates and how TenneT is complying with that framework.
• We assessed the laws and regulations relevant to the Company through discussion
with management, those charged with governance and others within TenneT, including
but not limited to the functions (i) Internal Audit, (ii) Compliance & Integrity, (iii) Legal
Affairs, (iv) Regulatory Affairs and (v) Financial Governance & Services. We have read
related minutes and reports. We involved our forensic specialists in our evaluation.
• We obtained sufficient appropriate audit evidence regarding provisions of those laws
and regulations generally recognised to have a direct effect on the determination of
material amounts and disclosures in the financial statements such as (corporate) tax
and pension laws and financial reporting regulations, the requirements under the
International Financial Reporting Standards as adopted by the European Union
(EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code.
• Apart from these, TenneT is subject to other laws and regulations where the
consequences of non-compliance could have a material effect on amounts and/or
disclosures in the financial statements, for instance, through imposing fines or litigation.
Given the nature of TenneT’s business and the complexity of energy laws and
regulations in The Netherlands and Germany, as well as environmental laws, there is a
risk of non-compliance with the requirements of such laws and regulations. In addition,
we considered relevant laws and regulations applicable to listed companies.
Our procedures are more limited with respect to other laws and regulations that do not have a
direct effect on the determination of the amounts and disclosures in the financial statements.
These laws and regulations compliance may be fundamental to the operating aspects of the
business, to TenneT’s ability to continue its business, or to avoid material penalties (e.g.,
compliance with the terms energy laws in The Netherlands ang Germany or compliance with
environmental regulations) and therefore non-compliance with such laws and regulations may
have a material effect on the financial statements. Our responsibility is limited to undertaking
specified audit procedures to help identify non-compliance with those laws and regulations that
may have a material effect on the financial statements.
• Our procedures are limited to (i) inquiry of the Executive Board, the Supervisory Board
and others within TenneT as to whether the company is in compliance with such laws
and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or
regulatory authorities to help identify non-compliance with those laws and regulations
that may have a material effect on the financial statements.
• Naturally, we remained alert to the indications of (suspected) non-compliance
throughout the audit.
• Finally, we obtained written representations that all known instances of (suspected)
fraud or non-compliance with laws and regulations have been disclosed to us.
• There are many laws and regulations, relating
principally to the operating aspects of an
entity, that typically do not affect the financial
statements and are not captured by the
entity’s information systems relevant to
financial reporting.
• Non-compliance may involve conduct
designed to conceal it, such as collusion,
forgery, deliberate failure to record
transactions, management override of
controls or intentional misrepresentations
being made to the auditor.
• Whether an act constitutes non-compliance
is ultimately a matter to be determined by a
court or other appropriate adjudicative body.
Ordinarily, the less directly non-compliance is
linked to the events and transactions reflected in
the financial statements, the less likely the auditor
is to become aware of it or to identify the
non-compliance.
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Report on the other information included in the integrated annual report
In addition to the financial statements and our auditor's report thereon, the integrated annual report contains other
information that consists of the:
1. Director’s Report, consisting of:
• About TenneT;
• Our Performance in 2021; and
• Governance and risk management;
2. Supervisory Board Report.
3. Other Information as required by Part 9 of Book 2 of the Dutch Civil Code.
4. Other information included in the integrated annual report.
Based on the following procedures performed, we conclude that the other information:
1. is consistent with the financial statements and does not contain material misstatements; and
2. contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the
Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our
audit of the financial statements.
Management is responsible for the preparation of the other information, including the Director’s Report in accordance with
Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
Engagement
We were appointed by the General Meeting as statutory auditor of TenneT Holding B.V. on 18 December 2019. The audit
ofthe financial year 2020 was our initial audit engagement.
European Single Electronic Format (“ESEF”)
The Commission Delegated Regulation (EU) 2019/815 of 17 December 2018, supplementing Directive 2004/109/EC of
theEuropean Parliament and of the Council with regard to regulatory technical standards on the specification of a single
electronic reporting format, stipulates that the integrated annual report of the Company has to be prepared in an ESEF.
Therequirements to be met are set out in the aforementioned delegated regulation (the “RTS on ESEF”).
In our opinion, the integrated annual report made up in XHTML format, including the partly tagged consolidated financial
statements as included in the reporting package by the Company, has been prepared in all material respects in accordance
with the RTS on ESEF.
Management is responsible for preparing the integrated annual report including the financial statements in accordance with
the RTS on ESEF, whereby management combines the various components in a reporting package. Our responsibility is to
obtain reasonable assurance for our conclusion whether the integrated annual report in this reporting package, is in
accordance with the requirements. We have taken into consideration what is stated in Alert 43 ‘Vaststellen dat voldaan is
aanESEF-vereisten’ as issued by The Royal Netherlands Institute of Chartered Accountants.
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Our procedures included:
• obtaining an understanding of the Company’s financial reporting process, including the preparation of the reporting
package;
• obtaining the reporting package and performing validations to determine whether the reporting package containing the
Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the
technical specifications; and
• examining the information related to the consolidated financial statements in the reporting package to determine whether
all required tagging has been applied and whether they are in accordance with the RTS on ESEF.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific
requirements regarding statutory audit of public-interest entities.
Description of responsibilities regarding the financial statements
Responsibilities of management and the Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS
and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the Director’s Report in accordance with Part 9 of
Book 2 of the Dutch Civil Code.
Furthermore, management is responsible for such internal control as management determines is necessary to enable the
preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the Company's ability to
continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the
financial statements using the going concern basis of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the Company's ability to continue
as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the Company's financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate
audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material
errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The
materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance
with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:
1. Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error,
designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
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2. Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control.
3. Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
4. Concluding on the appropriateness of management's use of the going concern basis of accounting, and based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
5. Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.
6. Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the
group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group
entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group
entities for which an audit or review had to be carried out on the complete set of financial information or specific items.
We communicate with management and the Supervisory Board regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant findings in internal control that we identified during
our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU
Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this
additional report is consistent with our audit opinion in this auditor's report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of
most significance in the audit of the financial statements. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the
matter is in the public interest.
Rotterdam, 14 March 2022
Deloitte Accountants B.V.
Signed by J.A. de Bruin
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At a glance
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Assurance report of the independent auditor with
respect to the 2021 Sustainability Information of
TenneTHolding B.V.
To: the Shareholder and the Supervisory Board of TenneT Holding B.V.
Our conclusion
We have reviewed the sustainability information included in the Integrated Annual Report (“IAR”) for the year 2021, excluding
‘Box out: Eligibility of TenneT's activities with the EU Taxonomy’ included on page 55 of the 2021 IAR, of TenneT Holding
B.V. (“TenneT”) based in Arnhem. (the “Sustainability Information”). A review is aimed at obtaining a limited level of
assurance.
Based on our review performed nothing has come to our attention that causes us to believe that the Sustainability
Information does not present, in all material respects, a reliable and adequate view of:
• the policy and business operations with regard to the Sustainability Information presented; and
• the thereto related events and achievements for the year 2021.
In accordance with the reporting criteria as included in the section ‘Reporting criteria’.
The Sustainability Information consists of the performance information in the chapters ‘At a glance 2021’, ‘Letter from
theBoard’, ‘About TenneT’, ‘Our Performance in 2021’ (excluding the sections ‘Secure sustainable financial performance
and investor ratings’ and ‘Statements of the Executive Board’) and the section ‘About this report’ in the 2021
IntegratedAnnual Report.
Basis for our conclusion
We have conducted our review on the Sustainability Information in accordance with Dutch law, including Dutch Standard
3810N ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability
reports) which is a specified Dutch Standard that is based on the International Standard on Assurance Engagements (ISAE)
3000 ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’. This assurance engagement
is aimed at obtaining limited assurance. Our responsibilities under this standard are further described in the section
‘Ourresponsibilities for the review of the Sustainability Information’.
We are independent of TenneT in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence)
andother relevant independence regulations in The Netherlands. This includes that we do not perform any activities that
could result in a conflict of interest with our independent assurance engagement. Furthermore we have complied with
the‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Reporting criteria
The Sustainability Information needs to be read and understood together with the reporting criteria. TenneT is solely
responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to
reporting.
The reporting criteria used for the preparation of the Sustainability Information are the Sustainability Reporting Standards of
the Global Reporting Initiative (“GRI”) and the applied supplemental reporting criteria as disclosed in the chapter ‘About this
report” of the 2021 IAR.
The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for
different, but acceptable, measurement techniques and can affect comparability between entities and over time.
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Assurance report of the independent auditor
Limitations to the scope of our review
The Sustainability Information includes prospective information such as ambitions, strategy, plans, expectations and
estimates. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance
onthe assumptions and achievability of prospective information in the Sustainability Information.
The references to external sources or websites in the Sustainability Information are not part of the Sustainability Information
as reviewed by us. We therefore do not provide assurance on this information.Our conclusion is not modified in respect to
these matters.
Responsibilities of the Executive Board and the Supervisory Board for the sustainability information
The Executive Board is responsible for the preparation of reliable and adequate Sustainability Information in accordance with
the reporting criteria as disclosed in the chapter ‘Reporting Principles’, including the identification of stakeholders and the
definition of material matters. The choices made by the Executive Board regarding the scope of the Sustainability Information
and the reporting policy are summarised in the chapter ‘Our strategy and value creation’ of the IAR.
Furthermore, the Executive Board is also responsible for such internal control as it determines is necessary to enable the
preparation of the Sustainability Information that is free from material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for overseeing the reporting process of TenneT.
Our responsibilities for the review of the sustainability information
Our responsibility is to plan and perform the review in a manner that allows us to obtain sufficient and appropriate evidence
for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in
nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained
in review is therefore substantially less than the assurance obtained in an audit.
Misstatements can arise from fraud or errors and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the decisions of users taken on the basis of the Sustainability Information. The
materiality affects the nature, timing and extent of our review procedures and the evaluation of the effect of identified
misstatements on our conclusion.
We apply the ‘Nadere voorschriften kwaliteitssystemen)’ (NVKS, regulations for quality management systems) and
accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.
We have exercised professional judgement and have maintained professional skepticism throughout the review, in
accordance with the Dutch Standard 3810N, ethical requirements and independence requirements.
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Our review included amongst others:
• Performing an analysis of the external environment and obtaining an understanding of relevant social themes and issues,
and the characteristics of TenneT.
• Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the
Sustainability Information. This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness
of estimates made by the Executive Board.
• Obtaining an understanding of the reporting processes for the Sustainability Information, including obtaining a general
understanding of internal control relevant to our review.
• Identifying areas of the Sustainability Information with a higher risk of misleading or unbalanced information or material
misstatements, whether due to fraud or error.
• Designing and performing further assurance procedures aimed at determining the plausibility of the Sustainability
Information responsive to this risk analysis. These procedures consisted amongst others of:
• interviewing management, KPI owners and/or other relevant staff at corporate and business level responsible for the
sustainability strategy, policy and results;
• determining the nature and extent of the review procedures for KPI’s. For this, the nature, extent and/or risk profile of
the KPI’s are decisive. Based thereon we selected the KPI owners or other relevant staff whom we have interviewed.
Due to the COVID-19 travel restrictions during 2021 we were not able to execute the on-site visits. Consequently, we
revised our strategy in which we performed the interviews and documentation inspection virtually. For selected KPI’s
we performed remote documentation inspections with the KPI owners that were intended to:
• obtain assurance information that the Sustainability Information reconciles with underlying records of TenneT;
• review, on a limited test basis, relevant internal and external documentation; and
• perform an analytical review of the data and trends.
• Evaluating the consistency of the Sustainability Information with the information in the IAR which is not included in
thescope of our review.
• Evaluating the presentation, structure and content of the Sustainability Information.
• Considering whether the Sustainability Information as a whole, including the disclosures, reflects the purpose of
thereporting criteria used.
• Assessing whether the Sustainability Information has been prepared in accordance with the Sustainability Reporting
Standards Core option of the GRI.
We communicated with the Executive and Supervisory Boards regarding, among other matters, the planned scope,
timingand outcome of the review and significant findings that we identified during our review.
Rotterdam, 14 March 2022
Deloitte Accountants B.V.
Signed by J.A. de Bruin
Integrated Annual Report 2021 - TenneT Holding B.V.
At a glance
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About this report
Scope of this report
The scope of this report is TenneT B.V. and the subsidiaries in which it has a controlling interest (generally speaking
avotinginterest of over 50%). For example, our 50% stake in BritNed and BritNed’s activities are not included in our
results.This integrated report covers the full year 2021, i.e. 1 January 2021 to 31 December 2021. TenneT’s Integrated
Annual Report 2021 was published on 16 March 2022and is available online.
The 2020 Annual Report was published on 12 March 2021.
In 2021, there were no significant acquisitions or divestments impacting our non-financial reporting. A complete overview
ofall the entities consolidated in this Integrated Annual Report can be found in note 31 of the consolidated financial
statements.Our reporting policy in the event of acquisitions or divestments can be found in Notes to the consolidated
financial statements, 11 Business combinations. For non-financial performance we report acquisitions and divestments
fromthe day of purchase or when an entity is sold respectively. We recognise that in the event of acquisitions, reporting
improvements may be required which may result in data being estimated.
Reporting principles
Our non-financial qualitative and quantitative information is prepared according to the Global Reporting Initiative (GRI)
Standards, following the in-accordance option: ‘Core’. We also adhere to the sector guidelines for our industry
(G4sectordisclosures - electric utilities). For more information, please refer to the reporting guidance document
onourcorporate website.
The GRI context index, as included on our corporate website, shows which GRI aspects are material to TenneT and refers
tothose sections in the report describing this aspect. In addition, and in accordance with the policy on state-owned
companies (Nota Deelnemingenbeleid Rijksoverheid 2013), TenneT complies with the Dutch Corporate Governance Code,
as laid down in the Corporate Governance section of this report.
We have used the Integrated Reporting (IR) framework, as defined by the International Integrating Reporting Council (IIRC)
asa basis for this integrated report. This allows us to be transparent about our impact as an organisation. The financial
information in this report was prepared in accordance with IFRS, as adopted by the EU, and complies with Section 9 of
Book 2 of the Dutch Civil Code.
Furthermore, our Integrated Annual Report complies with the EU Directive on the disclosure of non-financial and diversity
information, which was translated to Dutch legislation and has been mandatory for annual reports since 2017.
This report is also a Communication on Progress, i.e. an update on how we implement the 10 principles of the United
Nations Global Compact (UNGC). We have endorsed these principles since 2015, not just to underline our own
commitment, but also to drive CSR performance in the value chain. The UNGC principles are the basis of our TenneT
Supplier Code of Conduct and mandatory for all suppliers. New suppliers who do not meet our standards during
suppliervisits, are disqualified from our tender procedures. Our Communication on Progress document can also be
foundonour website.
In 2015, the UN launched the Sustainable Development Goals (SDGs). These goals are accepted worldwide as driving
sustainability. The section in our integrated annual report 'The Sustainable Development Goals and TenneT' describes
ourimpact and the contribution we make to the SDGs that are most relevant to our business.
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About this report
Stakeholders and materiality
In accordance with the applied reporting principles, this integrated report covers topics considered material to our
organisation. TenneT uses the materiality principle to determine which subjects to include in the report and which activities
and supply chain to take into account. Our corporate website (www.tennet.eu) includes additional information which was not
considered material for integrated reporting purposes. How we defined the material topics and the results of this assessment
can be found in the materiality section below. The fact that we report on selected topics does not mean we do not manage
aspects that are not considered material to our business. Our activities and CSR policy are broader and are not limited to
theoutcome of the materiality analysis. For more detailed information, go to theCSR section of our website.
In 2021 we performed a new materiality analysis, which is performed biannually. The analysis is basedon a questoinnaire
that was distributed among our key stakeholders and in which we have asked them toprovide their views on the
importanceof specific aspectsincluded on the topic list. Furthermore, TenneT’s economic, social and environmentalimpact
was determined through an internal analysis. This determined whether our impact per topic is either high,medium or low.
This, together with the outcome of thestakeholder questionnaire, is the basis of the materialityanalysis. This resulted in
fourkeymaterial topics: financial health, security of supply, safety and driving the energy transition.The materialityprocess
isthoroughly embedded in the TenneT organisation.The final step in the validation process was the approval of the
Executive Board. After this validation step, the materiality analysis was completed and resulted in the following matrix.
Economic Environmental Social
Relevance for stakeholders
Significance of TenneT’s Economic, Environmental en Social impact
9
1
2
11
4
6
12
3
10
7
8
13
High
Low High
5
Subject#
1
2
3
4
5
6
7
9
11
13
Financial health
Security of supply
TenneT's own environmental impact
Creating a sustainable workplace
Safety
Responsible supply chain practices
Stakeholder engagement
Customer relations
Strategic partnerships
Driving the energy transition
(Cyber) security
Compliance
Connectivity of our grid
8
10
12
Materiality
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In 2021, the European Commission adopted a proposal for the Corporate Sustainability Reporting Directive (CSRD). This will
replace the aforementioned directive on Non-Financial Reporting (NFRD). With respect to materiality, the concept of double-
materiality is mentioned in both the NFRD as well as the CSRD, meaning that companieshave to report about how
sustainability issues affect their business and about their own impact on people and the environment. How we as TenneT
impact people and the environment is disclosed in IAR2021 in several ways. This is a part of the materiality analysis where
the significance of the impact TenneT has of the environment and society (and the economy) is assessed per relevant topic.
Key impacts are also disclosed quantitatively and qualitatively in the relevant chapters. From a people perspective this is
disclosed for instance how we engage with our stakeholders and how we aim to create a sustainable workplace. With
respect to the environment, we disclose this in our chapter 'Create value to transition to a climate-neutral economy'.
The impact of sustainability issues on our business is described for instance in the way we incorporate the TCFD (Taskforce
for Climate related Financial Disclosures) recommendations in IAR2021. The impact climate change has on our business and
how risks and opportunities arise from this is disclosed on page 92-93. We also disclose how societal trends, also related to
our people and future employees, might impact us, as for instance changing demographics and scarcity of (technical) talent
provides challenges.
Scope and boundaries
The table on the next page provides a clear overview of the material topics, their impact, our contribution and the
boundaries. Adetailed disclosure of our management approach on each material topic can be found in the CSR section
ofour website.
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Material topic
Security of supply Financial health Safety Drive the energy transition
Reference
• Reference • Deliver a high security of
supply
• Secure sustainable
financial performance
and investor ratings
• Create a sustainable
workplace
• Deliver a high security of
supply, Ensure critical
infrastructure for society,
Create value to transition
to a climate neutral
economy, Solve societal
challenges with
stakeholders and
through partnerships.
• Why material? • Our main task is to
ensure security of
electricity supply to
approximately 43 million
people across the
Netherlands and
Germany.
• Securing sustainable
performance and
investor ratings will
enable us to drive the
energy transition against
lower societal costs. We
need to invest in onshore
and offshore grid
infrastructure to realise
the energy transition over
the next ten years, which
includes additional
investments in
underground DC cables
in Germany following the
German government's
decision hereon.
• Our employees are our
most important and
valuable asset, which is
why the safety of
everyone involved in our
activities (employees and
contractors) is a top
priority.
• With our knowledge,
experience and vision
with respect to the future
energy landscape, we
believe that we can serve
society by helping to
drive the energy
transition in an effective
and efficient manner.
• What is the impact? • Electricity is the
backbone of the
economy of the countries
we operate in.
• It is important to carefully
make the right
investment decisions
and to manage them
properly to be sure we
are doing the right things
at acceptable costs.
• We need to make sure
our employees can
perform their work safely,
as every safety incident
is one too many.
• National governments in
the area we serve have
committed themselves to
national and international
climate agreements. We
are an important
stakeholder to help
realise this.
• What is our role? • We are responsible for
maintaining a balance
between supply and
demand; we operate and
manage the high-voltage
grid.
• We are responsible for
realising the investment
programme and living up
to our stakeholders’
expectations.
• We are responsible for
integrating safety into our
daily pratices as a TSO.
• To connect everyone
with a brighter energy
future, we need to lead
as a green grid operator,
be a thought leader in
the energy transition,
develop innovative
instruments to unlock
flexibility and establish a
pivotal role in the energy
data world to facilitate
innovation.
• What are the
bounderies?
• We are responsible for
transmission services.
Production is the
responsibility of
producers, distribution
lies with DSOs.
• We are responsible for
realising our investment
portfolio. The investment
programme is based on
the task we are given by
the Dutch and German
governments.
• We are responsible for
making sure all our
employees, both internal
and external, can return
safely to their homes at
the end of the day. The
scope of our safety
reporting relates to both
our own employees as
safety incidents from
employees working for
our contractors related
to our projects.
• Our boundaries related
to this topic align with
the scope of this report.
• Key Performance
Indicators (KPIs)
• Security of supply:
uptime in %
• Adjusted underlying EBIT
group FFO/Net debt
ROIC
• TRIR • Amount of GW of
offshore capacity realised
• Targets/ambitions • 99.99962% grid
availability onshore
95.10% grid availability
offshore
• In 2021, our investment
target was EUR 3.905
billion
• To finance our
investments, our target is
to deliver EUR 6 billion in
projects annually by
2025.
• 4.5 (in 2021) • TenneT aims to realise
thousands of kilometres
of new high-voltage
overhead lines,
substations and cables
and to connect nearly 30
GW of offshore wind
energy by 2030.
• Unit(s) responsible
within organisation
• Asset Management (AM)
Large Projects
departments (LPG),
(LPN), (LPD), (LPO)
System Operations (SO)
Grid Field Operations,
Maintenance &
(Baseload) Projects
(GFO)
• Strategic Investment
Committee Supervisory
Board Business
Guidance Corporate
(BGD)
• Safety & Security (SSC) • Large Projects
departments (LPG),
(LPN), (LPD), (LPO)
Digital & Process
Excellence (DPE) Asset
Management (AM) Grid
Field Operations (GFO)
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For most of our figures, our reporting focus is on our own operations, although we do take some aspects of the value chain
into account in our carbon footprint and safety (TRIR). We recognise that reporting outside our gate (so-called ‘value chain
reporting’) provides a better overview of our impact. We will strive to expand the boundaries of our reporting where possible
in the next years.
EU Directive on Non-Financial and Diversity Information
Our annual report complies with the EU directive on non-financial reporting. The table below provides a clear overview of
where the different aspects of this directive are reported.
A description of the
policies pursued,
including due
dilligence
The outcome of
those policies
Principle risks in
own operations and
within value chain
How risks are
managed
Non-financial key
performance
indicators
Topic
• Relevant social and
personnel matters
(e.g. HR, safety
etc.)
• Create a
sustainable
workplace
• Create a
sustainable
workplace
• Create a
sustainable
workplace
• Create a
sustainable
workplace
• Create a
sustainable
workplace
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Solve societal
challenges with
stakeholders and
through
partnerships
• Solve societal
challenges with
stakeholders and
through
partnerships
• Solve societal
challenges with
stakeholders and
through
partnerships
• Solve societal
challenges with
stakeholders and
through
partnerships
• Solve societal
challenges with
stakeholders and
through
partnerships
• Relevant
Environmental
matters (e.g.
climate-related
impacts)
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Climate related
risks
• Relevant matters
with respect for
human rights (e.g.
labour protection)
• Ensure critical
infrastructure for
society
• Ensure critical
infrastructure for
society
• Ensure critical
infrastructure for
society
• Ensure critical
infrastructure for
society
• Ensure critical
infrastructure for
society
• Create value to
transition to a
climate neutral
economy
• Create value to
transition to a
climate neutral
economy
• Relevant matters
with respect to
anti-corruption and
bribery
• Governance and
risk management,
Risk management
and internal control,
compliance and
integrity
• Governance and
risk management,
Risk management
and internal control,
compliance and
integrity
• Governance and
risk management,
Risk management
and internal control,
compliance and
integrity
• Governance and
risk management,
Risk management
and internal control,
compliance and
integrity
• Governance and
risk management,
Risk management
and internal control,
compliance and
integrity
A description of the
policies pursued Diversity targets
Description of how the
policy is implemented
Results of the
diversity policy
Topic
• Insight into the
diversity (executive
board and the
supervisory board)
• Create a sustainable
workplace Supervisory
Board report, Diversity
and culture
• Create a sustainable
workplace Supervisory
Board report, Diversity
and culture
• Create a sustainable
workplace Supervisory
Board report, Diversity
and culture
• Create a sustainable
workplace Supervisory
Board report, Diversity
and culture
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Data collection process
The reported data is obtained from financial and non-financial data management systems in our own operations, such as
IFSand SAP for financial and HR data, Mecoms for our electricity transport data, and Zenya for our incident reporting, i.e.
safety data. The key non-financial qualitative and quantitative data is included in the regular planning and control cycles
andreported internally at least once a quarter by the Business Guidance department which performs a check on the quality
and reliability of the data. TenneT’s Executive Board and senior management contribute to the context of the report and the
quantitative data.
The definitions and calculations used are disclosed in the abbreviations and definitions section of this integrated report and in
the CSR section of our corporate website. The definitions and calculations used were re-assessed based on such things as
process improvements, further alignment within the group and the materiality analysis. As a result, certain originally reported
comparative figures were re-classified to conform to the current year’s presentation.
The data for this report was measured, and where no data was available, it was estimated. An example of this is the energy
use at some of our smaller offices. Due to the nature and maturity level of non-financial data, we acknowledge that it is a
journey to fully align this with the level of financial systems and processes. Therefore, improvements can be made over time
with the aim to provide our stakeholders better and more relevant information. That is why 100% completeness and
accuracy of our data cannot be guaranteed as processes may be subject to a higher degree of manual data collection.
External assurance
The financial statements included in this report are subject to an independent external audit and TenneT’s non-financial
reporting is subject to a limited assurance review. These were both conducted by our external auditor, Deloitte Accountants
B.V.. Reliable data is essential in our dialogue with stakeholders, so we decided to have our non-financial data reviewed by
an externalassurance provider. We have requested Deloitte to reviewthe Integrated Annual Report sections 'At a Glance',
'Letter from the Board', 'About TenneT' and 'Our Performance in2021' (excluding ‘Secure sustainable financial performance
and investor ratings’ and ‘Statements of the Executive Board’) in accordance with the GRI Standards and audit the financial
statements in accordance with IFRS as adopted by the EU and Part 9 of Book 2 of the Dutch Civil Code.
Governance of CSR
For TenneT, CSR covers a broad range of subjects, all aimed at creating a sustainable future for our internal and external
stakeholders. CSR is embedded in our current strategy. We have set clear priorities, targets and key performance indicators
in this. For some areas we are currently developing new or updating key performance indicators. On an overall level, our
Executive Board is responsible for our strategy and company target setting, which includes the areas with respect to CSR.
Our Strategy and Partnerships department, is mandated by the Executive Board to make decisions based on the CSR areas
in our overall strategy and to execute studies for future ambitions with respect to CSR. In case new decisions and directions,
this will be approved by the relevant decision committee within our organisation depending on the topic (Future Design,
Asset, Integrated Work Planning or Systems & Market committee).
Progress with respect to our CSR policy and actions is reported and reviewed by our Executive Board and Supervisory
Board on a quarterly basis.
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Strengths
High level of security of supply
Attractive employer with competent, well educated and
experienced employees with high degree of engagement
Broad experience as a leading (North Sea) offshore
grid operator
First cross-border TSO in Europe and a favorable
corporate reputation amongst stakeholders
Proven track record in leading European
marketintegration in North West Europe
Strong financial health with strong
credit ratings
Opportunities
Growing ambitions of the governments
in the areas we serve regarding
decarbonisation targets
New technologies for smarter and more sustainable
project execution, operation and maintenance of our
grid(e.g. horizontal drilling, 525 kV connections)
Strong growth in electrification of society
System integration / sector coupling (a.o. hydrogen)
Ability to attract employees as a key player in the
energy transition
Weaknesses
Suboptimal performance culture (bureaucratic
internal processes and decision making procedures)
Aging assets
Scarcity in availability of technical staff
Big data capabilities
Operating a more volatile grid
Threats
Development in electricity mix causes a
more volatile environment to operate in
Growing and evolving cyber
security threat landscape
Insufficient public acceptance of new infrastructure /
rising cost of the energy transition
Supplier shortages and lack of technical
staff possibly leading tot project delays
Negative developments in the regulatory
framework, growing regulatory interventions
Due to high infeed of renewable energy the transport
capacity reaching its limits in certain areas in NL
Permitting time for projects to support the energy
transition is too long. This leads to a too
long lead time to realise projects
SWOT Analysis
WS
O
T
SWOT Analysis
In the section 'Our performance in 2021' of our report, we elaborated on TenneT's performance, strategic risks and the
outlook for 2022. Our SWOT provides an insight into our company's opportunities and strengths, as well as threats and
weaknesses, providing context to our stakeholders.
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SWOT Analysis
Company addresses
Head office
TenneT Holding B.V. and TenneT TSO B.V.
Mariëndaal Centre of Excellence
Utrechtseweg 310
6812 AR Arnhem
The Netherlands
Phone +31 (0)26 373 11 11
Postbus 718
6600 AS Arnhem
The Netherlands
communicatie@tennet.eu
www.tennet.eu
Regional offices
The Netherlands
TenneT region West
Tielweg 28
2803 PK Gouda
The Netherlands
TenneT region North
De Stroom 2
7901 TE Hoogeveen
The Netherlands
TenneT region South
Copernicusstraat 9
6003 DE Weert
The Netherlands
Germany
Head office Germany
TenneT TSO GmbH
Bernecker straße 70
95448 Bayreuth
Germany
Phone + 49 (0) 921 50740-0
TenneT Lehrte
Eisenbahnlängsweg 2a
31275 Lehrte
Germany
TenneT Berlin
Representative Office
Friedrichstraße 150
10117 Berlin
Germany
Belgium
TenneT Brussels
TenneT Holding B.V.
European Office
Rue des Deux Eglises 29
1000 Brussels
Belgium
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Company addresses
Key figures: five-year summary
(based on underlying figures)
2021 2020 2019 2018 2017
Net debt 15,584 14,004 10,815 8,712 7,687
Underlying EBIT group 834 910 768 853 897
Underlying profit for the year 493 516 401 450 531
Investments in tangible fixed assets 3,969 3,412 3,012 2,212 1,763
Grid availability 99.99999% 99.99995% 99.99982% 99.99884% 99.99895%
Interruptions 3 4 14 17 11
Interconnectors 16 15 15 14 13
Internal headcount 5,168 4,321 3,768 3,409 3,187
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Key figures: five-year summary
Glossary
2 GW project
To realise such an innovative direct current system,
TenneTlaunched the design phase with five HVDC suppliers
on the basis of an innovation partnership: ABB Power
Grids, GE Renewable Energy’s Grid Solutions (Netherlands),
Consortium Global Energy Interconnection Research
Institute Co. Ltd. (GEIRI) & C-EPRI Electric Power
Engineering Co. Ltd. (C-EPRI) (China), Siemens (Germany),
and Xian Electric Engineering Co., Ltd (China). These
suppliers will develop this innovative 2 GW 525 kV HVDC
solution based on criteria set by TenneT. They will provide
specific information on this to Iv-Offshore&Energy b.v.,
which is carrying out the Front-End Engineering Design
(FEED) study on behalf of TenneT. On this basis, a
standardised platform design will be developed for all
HVDCsolutions.
ABP – Algemeen Burgerlijk Pensioenfonds
ABP is the civil service pension fund for government,
education and energy employees in the Netherlands.
AC – Alternating current
In alternating current (AC), the flow of electricity periodically
reverses direction. By contrast direct current (DC), electricity
only flows in one direction. AC is used to transport
electricity over relatively shorter distances and DC longer
ones.
ACER – Agency for the Cooperation of Energy
Regulators
The European network organisation for energy regulators.
Ithas a key role in the integration of European electricity and
gas markets, providing a framework for cooperation at EU
level and regulatory certainty.
ACM – Autoriteit Consument & Markt
Dutch national regulatory authority.
Adjusted FFO –Adjusted funds from operations
Profit for the year plus depreciation, amortisation and
impairments minus gain/loss on the disposal of assets
minus capitalised interest on assets under construction,
plus interest on provisions, minus 50% of Hybrid interest.
Adjusted FFO/net debt
Adjusted funds from operations divided by net debt.
Balance Responsible Parties
A marketparty that is recognised as, and is permitted
toexercise, Programme Responsibility by TenneT.
Blockchain
The digital process of verifying and documenting the
performance of distributed flexible devices. Blockchain is
suited to connecting multiple parties and large numbers
ofdistributed computed nodes and enabling them to
undertake joint action in a scalable, transparent and
trustednetwork.
BNetzA – Bundesnetzagentur für Elektrizität,
Gas, Telekommunikation, Post und Eisenbahnen
German national regulatory authority.
BritNed
The 260 km-long high-voltage direct current BritNed cable
has a capacity of 1,000 MW and connects the Dutch and
British electricity grids.
Capex – Capital expenditure
Capital expenditure (capex) is the amount spent on
acquiring or improving long-term assets. Its benefits are
enjoyed over a long period time, not only in the current year.
Capex is of a non-recurring nature and results in the
acquisition of permanent assets.
Carbon footprint
The total amount of greenhouse gases produced to directly
and indirectly support human activities, usually expressed in
equivalent tons of carbon dioxide (CO
2
).
CEP – Clean Energy Package
On 30 November 2016, the European Commission
published its long-anticipated ‘Clean Energy for All
Europeans’ package, more commonly referred to as the
‘Winter Package’, consisting of numerous legislative
proposals together with accompanying documents, aimed
at further completing the internal market for electricity and
implementing the Energy Union.
CGU – Cash-generating unit
A cash-generating unit is the smallest group of assets that
independently generates cash flow and whose cash flow is
largely independent of the cash flows generated by other
assets.
CIP – Copenhagen Infrastructure Partners
Copenhagen Infrastructure Partners is a fund management
company that is joined between four senior partners and
PensionDenmark.
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Glossary
CO
2
–Carbon dioxide
Carbon dioxide is a greenhouse gas formed by the burning
of carbon-based fuels. Its concentration in the atmosphere
is rapidly increasing, leading to global warming.
COBRAcable
A 275 km-long high-voltage direct current cable that is
under construction to connect the Dutch and Danish
electricity grids. It will have a capacity of 700 MW.
COSO – Committee of Sponsoring Organisations
of the Treadway Commission
COSO has established the common internal control model
against which companies and organisations assess their
control systems.
CP programme – Commercial paper programme
A commercial paper is a flexible short-term debt instrument
that is issued directly to the market with different maturities
and is offered continuously.
CPI index
A consumer price index measures changes in the price level
of a weighted average market basket of consumer goods
and services purchased by households.
CSR – Corporate social responsibility
Corporate social responsibility relates to the socially
responsible business practices of a company, balancing
people, planet and profit.
CSRD –CorporateSustainability Reporting
Directive
The objective of the proposed CSRD is to improve
sustainability reporting andensure it is brought into a
company’s management report to better leverage the
potential of theEuropean single market and to contribute to
the transition to a fully sustainable and inclusiveeconomic
and financial system in line with the European Green Deal
and the UN SustainableDevelopment Goals (SDGs).
Cross-border TSO
A cross-border TSO is a TSO that operates in more than
one country.
CTA - Contractual Trust Arrangements
Acontractual trust arrangementis essentially a form of
company pension fund where the fund’s assets have been
transferred to a legal entity separate from the company.
DBO - Defined Benefit Obligation
Adefined benefit obligation pension planis a type
ofpension planin which an employer/sponsor promises
aspecified pension payment, lump-sum or combination
thereof on retirement that is predetermined by
aformulabased on the employee’searningshistory, tenure
of service andage, rather than depending directly on
individualinvestmentreturns.
DC – Direct current
In direct current (DC), the flow of electricity is only in one
direction. In alternating current (AC), the electricity flows
periodically reverses direction. DC is used to transport
electricity over relatively longer distances and AC over
shorter ones.
DSO – Distribution system operator
A regional electricity distribution company, that is connected
with end users and is responsible for providing (1) power
distribution services, by constructing and maintaining a
robust high-voltage grid, and (2) facilitating a smooth
functioning, liquid and stable electricity market.
E-wet – Elektriciteitswet 1998
The Dutch electricity law.
EAS– European Awareness System
The EAS is the technology platform which allows
transmission system operators to exchange information in
real-time. All operators input a number of measurements
including frequency and cross border exchange. These
measurements are then merged to provide an overall
European view of each TSO on the platform.
EBIT – Earnings before interest and tax
Earnings for the period before income tax expense and
interest payments are deducted.
EBITDA – Earnings before interest, tax,
depreciation and amortisation
Earnings for the period before income tax expense, interest
payments depreciation and amortisation are deducted.
EC – European Commission
The European Commission is the executive of the European
Union and promotes its general interest.
ECL - Expected Credit Loss
Expected Credit Loss is the probability-weighted estimate
ofcredit losses(i.e., the present value of all cash shortfalls)
over theexpected lifeof aFinancial Instrument.
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EEG – Erneuerbare-Energien-Gesetz
German Renewable Energy Act, designed to govern the
preferred supply of electricity from renewable sources into
the grid with guaranteed, fixed minimum producer prices.
Itis intended to serve and protect the climate and is one of
several statutory provisions aimed at reducing Germany’s
dependence on fossil fuels such as oil, natural gas or coal,
and nuclear power.
EIB – European Investment Bank
The European Investment Bank is one of the key financial
institutions of the EU. It is the only bank owned by and
representing the interests of the EU member states,
providing financing for sustainable investment projects that
contribute to furthering EU policy objectives.
EIR - Effective Interest Rate
Theeffective interest rateis theinterest rateon a loan or
financial product restated from thenominal interest
rateandexpressed as the equivalent interest rate
ifcompound interestwas payable annually in arrears.
EMTN – Euro medium-term note
A flexible medium-term debt instrument that is issued
directly to the market with different maturities and is offered
continuously rather than all at once like a bond issue.
Energinet
Energinet is the Danish TSO that TenneT is partnering with
to build the COBRAcable between the Netherlands and
Denmark. Energinet.dk is also participating in the
development of the North Sea Wind Power Hub.
EnWG– Energiewirtschaftsgesetz
The German electricity law.
ENTSO-E – European Network of Transmission
System Operators for Electricity
ENTSO-E is the organisation of transmission system
operators at a European level, representing 41 TSOs from
34 countries. Its mission is to promote important aspects of
energy policy, especially integrating renewable energy and
the completion of an internal energy market.
Equigy B.V.
Together with TenneT (Germany and the Netherlands),
Transpower (Germany), Swissgrid (Switzerland) and Terna
(Italy), four of the largest European transmission system
operators are now jointly developing a cross-border
blockchain platform - Equigy. This will enable millions of
European households and owners of e.g. electric vehicles
to actively offer the flexible capacity of their cars and house
batteries on the energy markets to stabilise the electricity
system and thus earn money from the energy transition.
ESG ratings
ESG ratings asses environmental, social and governance
information of TenneT.
EU – European Union
The European Union (EU) is a political-economic union of
28member states located in Europe.
Flexumers
Energy consumers simultaneously acting as producers
FTE – Full-time equivalent
Full-time equivalent is a unit that measures work by
converting workload hours into the number of people
required to complete that task.
Gasunie – N.V. Nederlandse Gasunie
Gasunie is a European gas infrastructure company that
transports natural gas and green gas in the Netherlands
and the northern part of Germany. Gasunie is participating
in the development of the North Sea Wind Power Hub.
GIS – Gas insulated switchgear
A switchgear insulated via SF
6
gas or other gasses.
Green (hybrid) bonds
The proceeds of the green bonds are used to finance,
refinance and/or invest in projects relating to the
transmission of renewable electricity from offshore wind
power plants into the onshore electricity grid using direct
current technology or alternating current technology.
Green hybrid bonds are perpetual bonds without an
end-date.
GRI – Global Reporting Initiative
The Global Reporting Initiative is a non-profit organisation
that promotes sustainability and produces global standards
for sustainability reporting.
GW – Gigawatt
A unit of power equal to one billion watts.
GWh – Gigawatt hour
A unit of energy equivalent to delivering one billion watts
ofpower for a period of one hour.
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Helaba – Helaba Pension Trust e.V.
Helaba Pension Trust e.V. is a subsidiary of German bank
Landesbank Hessen-Thüringen and holds a part of the
assets of the German pension plan.
HGRT – Holding des Gestionnaires de Réseaux
de Transport d’Électricité S.A.S.
Holding des Gestionnaires de Réseaux de Transport
d’Électricité S.A.S. is a holding company of EPEX SPOT
power exchange.
HR – Human resources
Our HR department aims to make a distinctive contribution
to TenneT’s position as a leading TSO by attracting,
recruiting and retaining qualified staff, as well as by creating
a healthy and stimulating working environment.
HVDC – High-voltage direct current
A high-voltage, direct currentsystem can transmit bulk
electricity over longer distances than an alternating current
system and with lower grid losses. As such, HVDC is used
for linking offshore wind farms to the onshore grid and for
our Interconnectors NorNed to Norway, BritNed to the UK
and COBRAcable to Denmark and NordLink to Norway.
IAS - International Accounting Standards
International Accounting Standards (IAS) are older
accounting standards issued by the International
Accounting Standards Board (IASB), an independent
international standard-setting body based in London.
TheIASwere replaced in 2001 by International Financial
Reporting Standards (IFRS).
ICF – Internal control framework
Framework for the set of internal controls, to provide
reasonable assurance on the reliability of our internal and
external reporting.
IFRIC - International Financial Reporting
Interpretations Committee
IFRIC Interpretations are developed by the IFRS
Interpretations Committee (previously the International
Financial Reporting Interpretations Committee, IFRIC) and
are issued after approval by the International Accounting
Standards Board (IASB).
IFRS – International Financial Reporting
Standards
The internationally prescribed and recognised reporting
guidelines.
IIRC –International Integrated Reporting Council
The International Integrated Reporting Council (IIRC) is a
global coalition of regulators, investors, companies,
standard setters, the accounting profession, academia
andNGOs. The coalition promotes communication about
value creation as the next step in the evolution of corporate
reporting. Together with the Sustainability Accounting
Standards Board (SASB) the IIRC formedthe Value
Reporting Foundation.
KfW – Kreditanstalt für Wiederaufbau
KfW is the Reconstruction Credit Institute development
bank owned by the German government.
kV – kilovolt
A unit of electric voltage equal to 1,000 volts.
KWK-G – Kraft-Wärme-Kopplungs-Gesetz
The German Combined Heat and Power Act.
LEAN
The core idea of LEAN is to maximise customer value while
minimising waste. Simply, LEAN means creating more value
for customers with fewer resources. The principles of LEAN
were developed by the Japanese car manufactory Toyota.
LoR – Letter of Representation
A Letter of Representation is signed by the management of
the Group and/or performance unit to attest to the accuracy
of the financial statements.
Moody’s
Moody’s Investors Service provides credit ratings, research,
and risk analysis.
MW – Megawatt
A unit of power equal to one million watts.
MWh – Megawatt hour
A unit of energy equivalent to delivering one million watts of
power for a period of one hour.
Net debt
Gross debt minus cash and cash equivalents at free
disposal plus lease liabilities plus net employee defined
benefit obligation plus 50% of hybrid securities.
Netbeheer Nederland
Netbeheer Nederland is the association in the energy sector
representing the interests of national and regional electricity
and gas network operators in the Netherlands.
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NEN
NEN is a Dutch non-profit organisation that supports the
standardisation process in the Netherlands.
NGO – Non-governmental organisation
A non-governmental organisation is a voluntary citizens’
group that is neither a government initiative nor a
conventional for-profit business.
NOKA – DC Nordseekabel GmbH & Co. KG
NOKA is jointly owned by TenneT and German development
bank KfW. It is responsible for financing and building the
German part of the NordLink cable.
NorNed
NorNedis a 580-kilometre longhigh-voltage direct
currentsubmarine power cable between
FedainNorwayand the seaport ofEemshavenin
theNetherlands, which interconnects both
countries’electrical grids.
NordLink
TenneT is jointly developing the NordLink interconnector
with its project partners, the Norwegian TSO Statnett and
German development bank KfW. With an overall
transmission capacity of 1,400 MW, the subsea cable will
run between Tonstad in the South of Norway and Wilster
inNorthern German.
NOVI – Nationale Omgevingsvisie
The Netherlands’ new Environment and Planning Act comes
into effect in 2021, part of which is a single national
roadmap for the living environment called the ‘National
Omgevingsvisie’.
NWb – WENB Sector Energie NWb
NWb is a Dutch NGO for employers in the energy sector.
NSWPH – North Sea WindPower Hub
The consortium of theNorth Sea Wind Power Hub
programmehas joined forces to realise climate goals.
Theconsortiums work is based on research, stakeholder
interaction and experience from earlier projects. Partners
inthe consortium are Energinet, Gasunie and TenneT.
OCI - Other comprehensive Income
Other comprehensive income comprises items
ofincomeand expense (including reclassification
adjustments) that are not recognised inprofitor loss
asrequired or permitted by other IFRSs.
OECD – Organisation for Economic
Co-operation and Development
The Organisation for Economic Co-operation and
Development is an intergovernmental economic
organisation with 36 member countries, founded in 1961
tostimulate economic progress and world trade.
Oekom
Oekom research AG is a sustainability rating agency
andexternal assessor for benchmarking CSR reports.
Opex – Operational expenditure
Operating expenditure (opex) is the expense that a
company incurs as a result of its normal business
operations.
OWF – Offshore wind farm operators
Offshore wind farms are constructed in bodies of water
togenerate electricity from wind.
PBA -Project Budget Approval
The process of formally identifying and approving the
project budget, prior to the start of the project.
RCF – Revolving credit facility
A line of credit where TenneT pays a commitment fee
andcan then use the funds as and when needed.
RES – Renewable Energy Sources
All sources of renewable energy including sunlight, wind,
tides, waves, biomass and geothermal heat.
ROIC – Return on invested capital
Underlying EBIT Group expressed as a percentage of the
average underlying invested equity plus loans and bank
overdrafts minus cash at free disposal during the year.
S&P – Standard & Poors
Standard & Poors provides credit ratings, research,
and risk analysis.
SASB – Sustainability Accounting
StandardsBoard
The Sustainability Accounting Standards Board is a
non-profit organisation that sets financial reporting
standards. SASB was founded in 2011 to develop
anddisseminate sustainability accounting
standards.Togetherwith the IIRC, the SASB
formedtheValue Reporting Foundation.
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SBTi–The Science Based Targets initiative
The SBTi is a partnership between CDP, the United Nations
Global Compact, World Resources Institute (WRI) and the
World Wide Fund for Nature (WWF). The SBTi call to action
is one of the We Mean Business Coalition commitments.
SCL – Safety Culture Ladder
TenneT uses the Safety Culture Ladder (SCL) as a tool to
increase safety awareness and enhance safety culture, not
only within our own organisation but also for our
contractors. The Safety Culture Ladder is a requirement in
the selection phase of a tender as described in the ‘Safety
by Contractor Management’ programme.
SDG – United Nations Sustainable Development
Goals
TheSustainable Development Goals(SDGs) are a universal
call to action to end poverty, protect the planet and improve
the lives and prospects of everyone, everywhere. The 17
aspirational ‘global goals’ with 169 targets between them
were adopted by all UN Member States in 2015, as part of
the2030 Agenda for Sustainable Developmentwhich set
out a 15-year plan to achieve the Goals.
SF
6
– Sulphur hexafluoride
An inorganic, colourless, odourless and non-flammable
greenhouse gas that is used in the electricity industry to
insulate high-voltage circuit breakers, switchgear and other
electrical equipment.
SHE – Safety, Health & Environment
SHE is the set of activities relating to safety, health &
environment.
SIC - Standard Interpretation Committee
SIC Interpretations were previously issued by the Standard
Interpretations Committee (SIC), and were subsequently
endorsed by the International Accounting Standards Board
(IASB). The IFRS Interpretations Committee has reissued
Interpretations in this series if it considers it necessary.
SLA – Service level agreement
A service-level agreement is an agreement between two or
more parties, where one is the customer and the others are
service providers.
SuedLink
A DC connection to transport electricity generated in
thenorth of Germany to the South.
SuedOstLink
A DC connection to transport electricity generated in
northof Germany to the South-East.
Sustainalytics
Sustainalytics is a sustainability ratings agency and external
assessor for benchmarking CSR reports.
TransnetBW
One of the four German TSOs.
TRIR –Total recordable incident rate
The total recordable incident rate is the number of total
recordable incidents per million hours worked. Recordable
incidents are fatalities, lost work day cases, restricted work
day cases and medical treatment cases.
TSCNET
TSCNET Services is one of Europe’s Regional Security
Coordinators (RSCs). The company based in Munich,
renders integrated services for power transmission system
operators (TSOs) and their control centres to maintain the
operational security of our electricity system – 24 hours a
day, seven days a week.
TSO – Transmission system operator
A transmission system operator transports electricity at
national or regional level from producers to distributers.
ATSO is responsible for providing (1) power transmission
services, by constructing and maintaining a robust high-
voltage grid, (2) system services, by maintaining the
balance between supply and demand of electricity 24/7
and (3) facilitating a smooth functioning, liquid and stable
electricity market.
UN – United Nations
An international organisation formed to promote
international peace, security, and cooperation under the
terms of the charter signed by 51 founding countries in
SanFrancisco in 1945.
UNGC – United Nations Global Compact
A call from the UN to companies to align strategies and
operations with universal principles on human rights, labour,
environment and anti-corruption, and take actions that
advance societal goals.
VKE – Versorgungskasse Energie VVaG
Versorgugnskasse Energie VVaG ispension fund for energy
mutuals and a subsidiary of E.ON SE. It holds a part of the
assets of the German pension plan.
WACC – Weighted average cost of capital
The WACC is the rate that a company is expected to pay
on average to all its capital providers to finance its assets.
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Colophon
TenneT Holding B.V.
Visiting address
Utrechtseweg 310, 6812 AR, Arnhem, the Netherlands
T: +31 (0)26 – 37 31 111
Concept & Design
DartGroup, Amsterdam
Copy
Stampa Communications, Amsterdam
Corporate Communications Department
T: +31 (0)26 – 37 32 600
E: communication@tennet.eu
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Disclaimer
`We´, `TenneT´, `TenneT Holding´, `the Group´, `the company´ or similar expressions are used in this report as a synonym for
TenneT Holding B.V. and its subsidiaries.
Parts of this report contain forward-looking information. These parts may include unqualified statements on future operating
results, government measures, the impact of other regulatory measures on the activities of TenneT as a whole, TenneT´s
shares and those of its subsidiaries and joint-ventures in existing and new markets, industrial and macro-economic trends
and TenneT´s performance in these. Such statements are preceded or followed by or contain words such as `believes´,
`expects´, `anticipates´ or similar expressions. These forward-looking statements are based on current assumptions
concerning future activities and are subject to known and unknown factors, and other uncertainties, many of which are
beyond TenneT´s control, so that future actual results may differ significantly from these statements.
All financial information in this integrated annual report is reported in millions of euro, unless stated otherwise.
As a result, small rounding differences may occur.
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TenneT is a leading European grid operator. We are committed to
providing a secure and reliable supply of electricity 24 hours a day,
365 days a year, while helping to drive the energy transition in our
pursuit of a brighter energy future – more sustainable, reliable and
affordable than ever before. In our role as the first cross-border
Transmission System Operator (TSO) we design, build, maintain
and operate 24,500 km of high-voltage electricity grid in the
Netherlands and large parts of Germany, and facilitate the
European energy market through our 16 interconnectors to
neighbouring countries. We are one of the largest investors in
national and international onshore and offshore electricity grids,
with a turnover of EUR 6.4 billion and a total asset value of
EUR32billion. Every day our 6,620 employees take ownership,
show courage and make and maintain connections to ensure
thatthe supply and demand of electricity is balanced for almost
43million people.
Together, we are lighting the way ahead
TenneT Holding B.V.
Utrechtseweg 310, 6812 AR, Arnhem, the Netherlands
P.O. Box 718, 6800 AS Arnhem, the Netherlands
Telephone: +31 (0)26 – 37 31 111
E-mail: communication
@
tennet.eu
Website: www.tennet.eu
© TenneT – March 2022
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